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Original poster

In the News: Mortgage Market Review - Is this really a case for panic?

140 replies

SnowBells · 25/04/2014 01:38

Starting to panic.

We are in the midst of buying a house. And now the MMR kicks in, and the media is awash with horror stories. Is anyone here in the same boat???

Problem is, we didn't do the 'scrimp for 3 months' plan. We should have, but always knew we could adjust all spending, etc. when the time comes… until we found THE house. I mean we do save hundreds a month, etc. but we didn't get rid of every single luxury there is!!!!

OP posts:
AntoinetteCosway · 26/04/2014 10:55

When we took out our last mortgage two years ago it was based on two full time salaries. We were approved yesterday to switch providers based on one full time salary as I've gone self-employed and will be on mat leave anyway soon. They did ask quite a lot of questions about income and outgoings but nothing intrusive. One thing that surprised me was they took into account DH's student loan, which I had always thought was ignored for mortgage purposes.

Iseenyou · 26/04/2014 10:55

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MrsDesperado · 26/04/2014 10:58

Yes noddy, it is. Far greater than having a few grand on a CC.

What will be the consequences to the market of loads of families with kids (or who are planning to have kids) stuck unable to move for many years?I'd be interested to hear from people who are more knowledgeable regarding this, or be pointed to somewhere I can read more about it.

I suppose no longer being able to buy (remortgage) your own house isn't a new thing though is it?

Looks like a long slog ahead for us.

CogitoErgoSometimes · 26/04/2014 11:03

"What will be the consequences to the market of loads of families with kids (or who are planning to have kids) stuck unable to move for many years"

Presumably better than having loads of families facing repossession or bankruptcy because they have taken on massive mortgages that they cannot really afford on top given their existing commitments and then get into debt paying for day to day expenses.... Hmm The last crash was only six years ago. Memories are very short.

Iseenyou · 26/04/2014 11:06

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miramar · 26/04/2014 11:08

So does this mean that valuations for family homes may come down in the near future, due to families not having as much buying power?

Iseenyou · 26/04/2014 11:12

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MrsDesperado · 26/04/2014 11:15

That doesn't answer my question Cogito. Anything is better that having loads of families facing repossession or bankruptcy. I'm not talking about the people who took on massive mortgages that they can't afford to repay. Wondering if the consequences will be another crash/what miramar said? I'm asking cos I don't really have a clue about the market.

noddyholder · 26/04/2014 11:16

This along with raising rates will cause prices to fall They will have to surely.My only real concern is it will fuel more btl as they can get mortgages easier and will trap people in rentals for longer.

Iseenyou · 26/04/2014 11:25

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noddyholder · 26/04/2014 11:36

The return on btl is so good though if you are in it for the long term. Those investors will buy more as they will be cheaper and more people will be renting Temporary landlords will hopefully stop. The govt need to regulate rent and build and stop the unfair circus

Sheldonswhiteboard · 26/04/2014 11:36

We took out a mortgage for 200k last year with the Nationwide, LTV was just under 40% and they were prepared to lend us up to 450k based on our income/expenditure. I've just been on their mortgage calculator, input the same details and the maximum they would be prepared to loan is 187k. The stress testing that they are now supposedly doing must be having a big impact on their lending criteria.

noddyholder · 26/04/2014 11:40

My sister had a good grilling for a 25k mortgage extension to do building works. She is very well paid single no kids and masses of equity. She said it was the first time they had ever asked her anything!

Iseenyou · 26/04/2014 11:47

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noddyholder · 26/04/2014 11:49

Well it happens now. If a BTL investor knows the yield is high eg student lets he will pay more for it Its not just that they will pay more but they have access to the funds on the back of what they already own. Won't encourage new landlords but could encourage people who already are to buy more.

Badvoc · 26/04/2014 11:51

We took out a mortgage 2.5 years ago.
Only had a 10% deposit but got a 5 year fixed rate we were happy with.
Tried to look onto re mortgaging to get a better rate - house had gone up in value and rates are much lower now - and have been turned down by 2 major high street lenders!!
No change in circumstances, and in face we didn't borrow as much as we could have!!
Our problem seems to be dh being the sole earner....or at least it's a problem now.

Sheldonswhiteboard · 26/04/2014 11:55

school fees, but they were disclosed as an expenditure item when we applied for the mortgage anyway. I think they have to stress test at 7% which isn't an unreasonable figure ( we just got used to ridiculously low rates in the last few years). We over pay our mortgage every month to the maximum allowed and have 2k or so left at the end of each month, so even at 7% we would be fine? I think this will be a trigger for house price falls, good thing to in my view as the high cost of housing is incredibly damaging to the UK, I'd like to think my DD will be able to live in her own home before she is 50!

noddyholder · 26/04/2014 12:04

Me too sheldon!

clam · 26/04/2014 12:55

So, what do they do about a couple who have young children, but who don't pay for childcare as they have grandparents who do it for free? And what then happens of that arrangement subsequently falls through and the couple is unexpectedly hit with an additional commitment of hundreds of pounds a month?

noddyholder · 26/04/2014 12:59

Thats the problem clam they won't be able to legislate for every eventuality. Its like looking at 30somethings statements and seeing meals out and cinema etc it is perfectly possible and in fact likely that once you get a mortgage this stops and your priority is paying it and not going out!

Eminybob · 26/04/2014 13:18

Clam the same could be said for a reduction in income - anyone could lose their job at any time, but lenders can only base assessments on your current circumstances, and any reasonably foreseeable changes to them. Eg if you knew for sure the grandparents were going cease child care in 6 months you would need to declare that.
I'm a mortgage adviser and the company I work for started using the new rules 2 weeks ago.
Yes, there are come customers we can no longer help and can't lend enough to, but equally I still have customers who can borrow more than enough. I'm taking as many applications per week on average as I was pre changes. We do the decision in principal on the phone before the customers come in so I know before I am sat with a customer whether I can help them or not.

MrsDesperado · 26/04/2014 13:20

Yeah but clam's point is worse if the main earner lost their job - I imagine it'd be easier to find a new job than to replace free childcare!

clam · 26/04/2014 13:42

And you can take out insurance for potential job loss (not that I'm recommending that, necessarily - never done it myself). Not sure that would work for childcare.

Eminybob · 26/04/2014 13:47

You can, same as illness ( which could keep you off work indefinitely, but it's not compulsory (should be IMO)

CogitoErgoSometimes · 26/04/2014 15:42

"Wondering if the consequences will be another crash/what miramar said? "

I don't think there will be another crash for the simple reason that lenders have been consistently tightening up their criteria since 2008 and working the new rules in since the start of the year. All the stats coming out are showing, if anything, an increase in first time buying and in mortgage agreements.

There may be a slow-down in the very expensive areas as people make the decision to choose cheaper locations but commercial ventures, overseas buyers and private landlords may pick up the slack.

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