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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:
Iseenyou · 26/04/2014 16:59

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noddyholder · 26/04/2014 17:01

Mortgage lending has decreased since march there was a flurry because of help to buy but our agent said a high % fall through once they are checked out. The new rules have been vaguely in place for a while but only law from today so some banks were definitely still over lending. I think every time it is tougher to get a mortgage prices fall.

noddyholder · 26/04/2014 17:07

This will be enough to slow the market before the election and afterwards when rates rise we will see the real effect of over borrowing.This can't continue. The successive govts have used every trick in the book rather than allow prices to fall. It is cyclical and bubbles always burst it is just QE silly rates help to buy and payment holidays etc that have stopped it. It is not good for the country and our children for this to continue.

Apatite1 · 26/04/2014 17:17

I'm really, really hoping you are right noddy! We've been holding out from buying for 3 years now.

AntoinetteCosway · 26/04/2014 17:34

Iseenyou I'm not sure-when we borrowed two years ago our joint salary was £60k and we borrowed just under £120k. Now DH earns £40k and we borrowed £110k. So it's hard to work out as we didn't take the maximum offered to us last time-and actually I can't remember what that was...it may have been £150k? So we may have been offered 2.5x joint? And this time we're borrowing just under 3x single?

IfNotNowThenWhen · 26/04/2014 17:38

I'm fucked. I did the Nationwide mortgage calculator thing, and I can borrow £38,000, so about £80k short of what I would need for a teeny tiny house where I live.
If I were paying that off, as a mortgage it would be, what? £280 a month? My rent is £650 a month. Hmm
Having said that, I did the Halifax one, and got 90,000 , so maybe Nationwide are the most stringent?
This childcare costs thing totally screws single parents if it doesn't take Tax Credits into account.

Apatite1 · 26/04/2014 17:48

Yes, the childcare costs make a big difference as far as I can tell. I think it's v unfair not to take into account tax credits if they are going to take childcare costs into account!

Eminybob · 26/04/2014 17:55

Tax credits can still be taken into account post MMR, my employer accepts them, but other lenders may not. It's not an FCA rule

juneybean · 26/04/2014 17:58

Oh god this is worrying, I'm just starting to look for a house am single part employed/part self-employed and Financial Advisor said I could get £70k but reading this thread I'm worried she was vastly over!

nightbuscentral · 26/04/2014 18:00

I think the longer term effects will be couples ensuring their childcare costs will be low - either by limiting the family size, living closer to family who can help out or focusing on having one earner. We have never paid for childcare as we live near family, and we only have one dc. Our disposable income is much higher than families who might have a much higher income but 2 or 3 dc using childcare. I put our household income through the most recent Nationwide calculator and we'd seem to be approved for a mortgage twice as much as our current place.

Also, having smaller families means that we are fine living in a smaller, city centre property. It's not unusual here for couples to remain childless, or have just one child, but just a bit further out in zone 2/3, couples tend to have 3-4 dc. I think that those areas will become inaccessible to families of that size in the same way that central London has.

DollyTwat · 26/04/2014 18:10

I work for a software house that writes the mortgage software for several big banks.

The MMR rules are indeed differently applied with different lenders. The biggest change is that the lender has to prove they've lent responsibly. So all outgoings and incoming earnings are taken account of, including tax credits etc

You'll be asked about how long you've been employed and about any previous employment, and anticipated reduction in income. Any loans you have and the end date for those

MaryWestmacott · 26/04/2014 18:15

You'll also get a lot of couples rushing to get house moves through when pregnant! (There was a thread a few weeks ago with a pregnant woman who wasn't sure about moving out of rented to bought house, and people were saying "wait until they baby has arrived and you know what your requirements are" - but now that's really bad advice unless you know you've got cast iron family childcare lined up)

morethanpotatoprints · 26/04/2014 18:41

My ds and his gf have been approved and are looking for a house now.
They had several different experiences and a couple were really sticky.
In the end Halifax was the best for them but it was ds friend who approved them.
Some companies are really bad and it pays to shop around.
My ds is a scrimper and saver and lives very frugally, many were trying to estimate their bills far higher than they would be. Some were trying to make out they would be having holidays and a budget for entertainment far higher than they would ever spend.

LightastheBreeze · 27/04/2014 08:39

So families with childcare will struggle to get mortgages but pensioners will be able to be cash buyers with the new pension rules. We looked and we will be able to buy a house outright with pensions but DS will struggle because he has a student loan. Is this the plan to have the DC on our apron strings all our life.

Eminybob · 27/04/2014 08:46

I know this is worrying a lot of people, but the FCA have made these changes for the benefit our the home buyer! So we don't get into debt we can't afford and lose our homes!

Of course someone who pays £1000 per month for full time childcare is less likely to be able to afford a mortgage than a childless couple with the same incomes. That's just common sense and I'm really surprised that some people on This thread don't get it!

CogitoErgoSometimes · 27/04/2014 09:12

I agree with you Eminybob. We've been browbeating the banks for years now about irresponsible lending and, now that they are making sure we can afford our borrowing, suddenly this is a bad thing? Hmm

@Lightasthebreeze... if you've got enough money in your pension to be able to buy a house cash, why not give your DS his inheritance early so he can pay off loans or buy a place of his own?

Ruby1080 · 27/04/2014 09:15

This reply has been deleted

The OP has privacy concerns about this post, so we've agreed to take it down.

noddyholder · 27/04/2014 09:16

It is a good thing but we have become used to irresponsible multiples for years and no regard for inflation or circumstance changes and a focus on the monthly repayment and whether we can meet that (often at a push) instead of the bigger picture.

Iseenyou · 27/04/2014 09:21

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Message withdrawn at poster's request.

Eminybob · 27/04/2014 09:29

Can I also add that a mortgage is a loan, just like any other, which just happens to be secured against a house. It's not a god given right, and the banks can decide on what terms they want to lend that money to you on (within the constraints of regulation) and whether they want to lend it at all.

I think that people are forgetting that "well I know I can afford it" well you're not the one handing hundreds of thousands of pounds over...

Sorry to get snippy, but I get this all the time at work, and find it frustrating!

noddyholder · 27/04/2014 09:31

I have several friends who knew they could afford it in 2007 but life changes and as the previous,poster said its a loan not a right.

Iseenyou · 27/04/2014 09:57

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BillStickersIsInnocent · 27/04/2014 10:15

I think it's generally a good thing, though I hope lenders are sensible and take into account prior behaviours in addition to pure affordability. For example, if you've paid out 1k a month for the last 5 years in rent/mortgage, and your income and outgoings are still the same, another loan equalling 1k a month isn't likely to be a risk, even if their calculations indicate otherwise.

We are currently re-mortgaging. We've had to provide bank statements for all accounts, savings info, childcare info, 3 months worth of pay slips, plus they've asked lots of questions on individual items on statements and my commute.

Sharp contrast to last time (2007) when we self certified with no questions asked. But I know which one I prefer!

Bad news for us is that the bank have valued our house at 75k less than recent estate agent valuation, so they can't lend us quite as much as we want (by 2k so not awful). But still, 75k? Guess they are being super cautious.

LightastheBreeze · 27/04/2014 10:21

We wouldn't buy a house anyway as as iseenyou says it is far too risky and we would need the income also our DS should be able to stand on his own two feet at over 21 and sort out his own finances or are our DC going to be dependant forever. I was giving an example that a lot of pensioners if they wanted could buy up the houses that they could rent out with the pension rule changes if they wanted so there may not be a drop in prices and people with children will be frozen out.

I also don't think people should borrow above their means and it all goes back to houses are too expensive now for the average family with children and it probably seems those with hefty student loans also.

IfNotNowThenWhen · 27/04/2014 10:28

I don't think it will bring house prices down, or redress the balance.
Pensioners will still be able to BTL with their cashed in pensions, people on large incomes/bonuses will be fine.
I am applying for a promotion right now, which would bring me in another 5k a year. I had done the sums, and thought that maybe , in another 2 years, I might, just, be able to get a mortgage.
But my childcare costs will be more (more hours), so, there is actually little point me doing this. I don't want to work longer hours, but I was doing it for me and DS to have a proper home. I could end up seeing my child less, making us both miserable, and still be stuck in my crumbling rented house.

No, getting a mortgage isn't a right, but having a secure home should be, in one of the richest countries in the world.
Yes, banks took insane risks in the past, but it wasn't banks lending to people like me that toppled the economy.
It was banks selling other banks "bundles" of debt, comprising of a few mortgage debts of people with excellent credit, and bulked out with "sub prime" debts-people who were expected to default.
I am currently paying the equivalent of a £110k mortgage, in rent, and my childcare costs on top of that.
Under Nationwide's new rules, I would only qualify of 39k.
That makes no logical sense, it just doesn't.