Is anyone else hacked off at the greed of banks who've lent money to those who can't repay and are now causing economic meltdown????

[MrsMar]

all caused by greedy people cashing in when the housing market is good, and then freaking out when it's unstable

I know the markets usually recover, but what if they don't? Do we all have to take a hit because of someone else's greed?

Why do people love blaming banks? its like that old favourite term 'money-lenders' aren't they terrible lending money and expecting people to pay it back.

Isn't it the same as blaming macdonalds for letting people eat themselves to obesity?

or pubs for selling alcohol?

or...where shall we draw the line?

the list is endless. People have to take responsbility for their actions..etc..etc

'I still don't think it's right though... if you're selling any product you have a responsibilty when selling that product. '

err ..surely you only have a responsibility to supply the product as promised, on time to the right amount etc, you don't have any say about what the purchaser does with it. That would be intrusive to say the least!

I agree Lil, but I still think responsibility has to come from both sides... In the States a bar can be sued if they sell alcohol to someone who is obviously very drunk who then goes on to harm someone or cause damage... it's an acknowledgement that there is responsibility on both sides.

"if you're selling any product you have a responsibilty when selling that product"

do you really though?
i mean fire-arms,poisons,potentially deadly weapons? yes i'll give you.
cars/alcohol? yes of course.that's why we have laws in place. even then you don't have to have a drivers licence to buy a car, only to drive them on a public road.
should all car dealerships take people out to make sure they are not dangerous/up to that particular garages standards which are somehow stricter than the actual laws?
why impose this ridiculous moral obligation on banks when we don't do it with other businesses which cause far more harm over all.
things like cigarettes or alcohol. far more dangerous to our health so we have laws about who may purchase. over 18 etc. once the patron is over that age then they are assumed to be able to take responsibilty for their own actions and we don't hold the local tesco responsible for a rise in lung cancer because they agree to sell them to adults with a mid of their own.
similarly banks have these restrictions over 18 etc. and if an adult decides to agree to the terms of the bank then how in the hell is it the banks fault. especially when 999 times out of 1000 it is the adult who has initiated the process and come to the bank asking for a loan. the bank is not putting a gun to their head.

Mrs Mar I see what you mean, but how do the banks judge what to lend a person? circumstances chage so often in a 25 year loan situation...women get preggers and stop working, redundancy is always around the corner, pay rises are probable/

possibly an impossible calculation.

"the bank is not putting a gun to their head"

People are just desperate for a place to live. The high amounts that banks are prepared to lend just fuel the market.

Prehaps its kinder if someone just rents and never gets the chance to buy than goes through the humilation of repossation.

But then why do banks ask to see our payslips and bank statements whiskeyandbeer? why is that information important to them at all. Surely they make a judgement on whether to make the loan based on that information? I'm not disagreeing totally that people should be responsible about how they borrow money, but this isn't just one or two people, the sub prime market in the US is huge, and instability was enough to cause repercussions across the world.

Lets be honest here. Sometimes people borrow more than the usual amount because they earn well and by being careful they make the repayments BUT sometimes circumstances change. This is not the fault of the banks or the individuals involved - life is just crap sometimes.

The banks have an obligation to lend responsibly - everything in their code demands it but they don't - they see pound signs and every customer is someone to sell to in any way they can. People equally have a responsibility to be sensible but if somebody is struggling and someone offers a potential way out - however unwise that is - sometimes that offer will be accepted.

Part of the problem is this country's obsession with owning houses. other europeans are quite happy to rent all their lives. The government could encourage us in the UK to do the same, as its clearly cheaper to rent than buy. It would cool off the housing market as well.

There everything sorted

"But then why do banks ask to see our payslips and bank statements whiskeyandbeer? why is that information important to them at all. Surely they make a judgement on whether to make the loan based on that information?"

yes i've never denied that. and when they've seen this information they alter their terms and conditions to make sure they do not lose money. bank do refuse loans where they feel they might lose money, so they want to make sure people have an income to repay the loan.this is not out of some moral obligation they feel towards the customer, it is out of a financial obligation to the shareholders of the company. and so once they have all the information they need they set out terms and conditions and the amount of money they are willing to loan. if people are stupid enough to take a loan beyond their means then they deserve everything they get. if people hit upon hard times and lack insurance/assets to cover it that is a real tragedy, but not one the banks can be blamed for. as i've said before i feel this is a huge art of the blame culture which we have today where people want praise and rewards for something they are supposed to do and shift the blame when something in their life is going wrong.

Lil!! It's true, all my family in France think we're bonkers buying houses!

I've been saying about the US sub prime market, I have...

I think bankx do have a responsibility here, partly because the current problems are actually more to do with the over complication of mortgage lending in an effort to squueze more profits out of the sector, and partly because, lets face it, those people needing sub-prime loans do often tend to be people who are less well educated in financial matters and so do not always understand the products that tehy are buying. The seller (bank) does have a responsibility to make sure that that teh buyer knows all possible scenarios (and I do know that this doesn't always happen - US brokers gloss over the fact that sub-prime loans are often offered at a huge short term discount for first time borrowers, and when that discount runs out, borrowers are left having to re-mortgage often at a rate 2% higher than their original, and many people then end up in difficulties). That's irresponsible lending.

By expatinscotland on Fri 17-Aug-07 16:43:19
Don't people have a personal responsibility to borrow responsibly?

Sorry, I know banks are greedy, but they're a function of greedy people.

Anyone who borrowed that much over the limits based on pure speculation is just plain stupid and if it all goes tits up well then they have only themselves to blame.

Sometimes, in the game of life, you lose.

Totally with you girl!

"Anyone who borrowed that much over the limits based on pure speculation is just plain stupid and if it all goes tits up well then they have only themselves to blame. "

Prehaps so, but how would your small child like losing their home and ending up in a B and B with cocroaches and damp? Prehaps Mum and Dad have split up because of rows about money. Your mum won't play with you because she is clinically depressed and on the edge of hospitalisation.

With repossessions there are innocent victims. Most people buy property to live rather than to make money. Many young people don't remember property crashes of the past. They naively don't expect interest rates to go up.

If there were laws to control how much banks could lend homeowners then the young and innocent would be protected from their parent's mistakes.

I agree in that sense, tired.

But until people start taking some responsibility for their actions, even if they are mistakes, we are doomed as a society.

Shit happens. You lose sometimes. Things go tits up sometimes and no one is to blame. Sometimes even accidents occur.

Get up, dust off, walk on.

Story of my sorry life. At least try to learn from it.

years ago wwe were looking to buy our first house, but because we left it late ( dh is in the army so we lived in married quarters) we needed a bigger than usual first home, considering we had 3 children, etc...
we looked into things and looked at things as realistically as we could, and dispite banks, etc..offering us more then dh 3 times yearly wage, we decided to keep or budget jsu thtere and accomondated this by looking into areas that aren't great, but show improvement, and we ended up with a good sixed 4 bed house with huge garden and parking...for just under 92K...by now, dispite us not improving the home, the price is at least 120k if not more...in this area....and it will raise...all I can say to people looking for a house, look at rightmove website, comare prices and look when the rpices fall etc...all I can say is that we bought at the ecat right time!

"Prehaps so, but how would your small child like losing their home and ending up in a B and B with cocroaches and damp? Prehaps Mum and Dad have split up because of rows about money. Your mum won't play with you because she is clinically depressed and on the edge of hospitalisation."

that's a really tragic scenario that can't help but tug at the heart strings, but once again why is this the banks problem? why not blame estate agents,or the people selling their home,or the peoples jobs for not paying them more or the inome tax dept. for taking too much out of the pay check already or the peoples parents for not leaving them a house in their will etc. unfortunately the poor choices parents make effect children in every aspect of their life(diet,education,morals etc). how do you think a young married couple would react if a bank said "we can't lend you the amount you want as gerry in the loan dept. thinks you might divorce soon and she looks like the kind of person who will spiral into depression and become an unfit mother".

I think the financiers are really irresponsible. The way they parcel up debt, buying parts of debts, all on some merry go round of bizarre financial instruments. The stock market swings from greed to panic - the banks and brokers and whathaveyou are bloody sheep who in good times seem to completely forget that bad times are always around the corner. They make Mr Magoo look like someone with perfect vision.

But every time you carve up debts and sell them on, someone makes some money. And every time you carve up a business and sack people, someone makes money out of it. The City is mad and operates only to make money for itself IMO, doesn't act in the long term interests of any business.

IS it the shops fault that I am fat because they sell me too much chocolate?

No

Tis my fault.. I shouldn't have bought so much...

It is the banks fault for letting Joe Bloggs bborrow too much money which they can't really afford..

No

Joe Bloggs shouldn't have asked for more than he could afford to pay back..

BUT

There will be other overweight people around that are fat through no fault of their own (although not a high %)

AND

There will be other people around in too much debt due to no fault of their own (again I don't believe a high %)...

Bottom line, although I shouldn't buy so much and Joe Bloggs shouldn't live beyond his means..

There are always going to be the innocent ones that are not to blame for their precament but sorry I don't believe that the banks and shops are to blame...

BUT

Is that why you chose your MN name, heifer?

"No

Joe Bloggs shouldn't have asked for more than he could afford to pay back.. "

Joe had no problems when interest rates were 4% . The interest payments were only £8000 a year. (And a bit more for repaying the capital) so he might be paying £10000 a year for his mortgage. Although this seemed high he was already paying £800 a month for renting a two bedroom flat in London. He felt confident that he would be able to cope with £35K salary

Now he has has had this mortgage for two years and the fixed period of having an interest rate is now over. His mortgage rate is almost 7%. (Or interest of £14000) a year. The 14K doesn't include any costs of repayment so his mortage will be even more. He cannot downsize to a smaller house because he has negative equity.

Joe Bloggs never antisipated mortgage rates rising so much. He had also hoped for pay rises that have not happened. Prehaps Joe Bloggs also has other loans as well and the interest on these loans have increased.

A 2% rise is not much. In the past interest rates have been as high as 15%. It is possible that interest rates might go this high again.

I think interest rates will go up further in the next few months. It will be interest to see if heifer has any sympathies with fellow mumsnetter who get repossessed.

Last christmas we were offered a mortgage that was 6 times my husband's income. We chose not to move as I felt the risk of repossession was too much.

But you clearly aren't Joe Bloggs as you turned down the offer from the Bank....

Don't get tied into a mortgage offer that looks great for 2 years and then can cripple you later..

Change every couple of years for a better deal... tis a hazzle but worth it with the savings you can make.

It will be interest to see if heifer has any sympathies with fellow mumsnetter who get repossessed

Of course I would be sympthatic - I would hate to see anyone in that predicament - but doesn't mean that I would only blame the banks....

I would certainly feel sorry for those that bought the cheapest that they could afford, and were really pleased to get on the housing market only to suffer this way..

Will I feel sorry for those that got greedy and wanted a bigger and better house, and put themselves in this position without thinking of the consequences... assuming that they would be ok, assuming that it would be ok to borrow 6 x their annual salary?

No, probably not.

If you can't afford it - don't buy it...

We are looking at houses right now - I have seen loads that I would really love to buy, but as I am a SAHM and want to keep the low mortgage we are lucky enough to have, we are only looking at those that we can afford to buy.

So bottom line for me again is

Just because the banks/shops offer you the money/chocolate, you don't have to take it...

heifer,

Do you live in the south east? First time buyers have a horrendous time. If they don't stretch themselves they can't even afford a simple one bedroom flat.

Go on to rightmove.co.uk and see how much it costs to buy a one bedroom flat in Surbiton.

We aren't talking about large houses. Just see how much it costs to buy a studio flat in Surbition. Incidently Surbiton is in Greater London.

Joe Bloggs has a job in London. He doesn't own a car and wants to get to work within 40 minutes.

Interest rates don't affect me or my family. Our mortgage is tiny. We don't live in Surbiton, but it would be nice to live near my parents.

I understand that some parts of the country are having a really tough time with the house market..

But, if Joe Bloggs doesn't have to buy a house if it would stretch him that much.

There are plenty of people here on MN that say they would love to buy but know that they can't afford it..

My honest answer would be to carry on renting or move elsewhere!

We currently live in Wiltshire - but want to move away, would really like to move to Devon, but too expensive and not great job opportunites for DH.

So we are moving up to the Wirral, (not cheap but have a good range of affortability).. and hopefully a good range of jobs for DH.

You have a choice in life, you don't have to follow the leader and buy a house if you can't afford it and you don't have to buy in a place that you can't afford either.

Bottom line either rent in a place you really want to live or buy a house in a place you can afford.

Sorry, but this is how I feel.