A Step Backwards For UK Mortgage Lending Conditions?..
Posted on:
09
Feb
2012
by James Farmer
Or a sensible policy to prevent homeowners being unable to pay off their mortgages? What do you think?
The case for the prosecution:
Today Santander has launched new lending terms that come into force with effect from Midnight on Thursday.They seem to be quite drastic, draconian and could badly effect London’s Professionals in particular.
From Friday onwards all applications for mortgages over 50% loan to value are required to be on a repayment basis. There is no discretion on this.
This does NOT meant that you have to have a repayment vehicle in place which you can prove (eg ISA, Pension, Endowment, Sale of Property) These will no longer be acceptable.
The whole loan must be set up on a capital and interest basis.
This will hurt those wishing to set their loan up on an interest only basis. For example anyone who receives bonuses, commissions, irregular income. The self employed will be hard hit – with their potentially lumpy income. Anyone who had choses an alternative route – such as investments in equities, cash or property to pay off their loan will have to rethink their strategy.
It will also make moving up the property ladder less affordable for a lot of people.
It seems very harsh and really reminds us of the dark days of 2009 and 2010 when lending conditions rapidly worsened and communications from UK lenders constantly provided news of their tightening conditions.
It also seems surprising in light of generally more positive news about the UK, European and US economies.
Santander is one of the main UK mortgage lenders, representing a large share of the mortgage market.
some pretty bad English there too
Santander, of course, are in quite a lot of bad grace with the regulators. I think they’re Britain’s most complained-about bank by quite a wide margin. All the banks are having to look over their shoulders at capital requirements, etc. But in Santander’s case, I wonder whether the Spanish element (government risk downgrading, etc) might also be adding to the pressure?
Unfortunately I think this tighter lending policy is broadly in line with what the FSA wants to see, so I expect this won’t be the first time that we see it happening.
But putting property up as security against a loan is something that only the very wealthy can normally get away with – or, perhaps, professional landlords with a fairly substantial portfolio of other properties and with significant net value in them.
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Alex616 says:
Unfortunately I think this tighter lending policy is broadly in line with what the FSA wants to see, so I expect this won’t be the first time that we see it happening.
But putting property up as security against a loan is something that only the very wealthy can normally get away with – or, perhaps, professional landlords with a fairly substantial portfolio of other properties and with significant net value in them.
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Santander, of course, are in quite a lot of bad grace with the regulators. I think they’re Britain’s most complained-about bank by quite a wide margin. All the banks are having to look over their shoulders at capital requirements, etc. But in Santander’s case, I wonder whether the Spanish element (government risk downgrading, etc) might also be adding to the pressure?
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carzy3 says:
some pretty bad English there too
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