Mrs Perrin, who works in mortgage admin, reported tonight that most of the main lenders today gave notice that they're withdrawing their 95% LTV mortgages. A 10% deposit will be the norm from now on.

Even during the last crash I can't remember lenders not excepting a 5% deposit for a house purchase, things must be REALLY bad for them. My heart bleeds :-)

It's a nice start, but I want to see ML's asking for at least 20-25% deposit.

Hello Reggie and Mrs Perrin

I'm a newbie with less than 10 posts, had to reply to your post though.

I like some of the anecdotal stuff, it is often a good reflection of what will be coming up in the next few weeks when it is from people who are working at the coal face.

Mr's Perrin obviously sees the latest actions the banks are taking.

This is very good news for the burst, and I would like to hear details and facts as they come- which banks, % of LTV and any other important info and the links.

Would you keep us up to speed as soon as you have details, could be a good thread.

Thanks

Yakov

Some more info from the front line.

• 12 months ago they were handling 18 applications a day, 5 per day is now considered busy.
• Of those 5 applications, about 60% will be refused by the lender.
• Lenders are not bothering to tell the brokers that products are about to be pulled, before they gave a couple of weeks notice, this changed to a few hours, now the broker only finds out when an application is submitted. The brokers now have to fill in application forms over the phone with the client to ensure they can get the application in before the product is pulled. Application forms mailed to clients and then posted back will invariably fail.
• A client can be refused a mortgage if the lender thinks the client is not financially astute, even if the they can meet the affordibility criteria, e.g. if they have loans/debts greater than 50% of income (This is new).
• House values are regularly downvalued by surveyers, this means a lot of client can't meet the LTV criteria of the lenders.
• Miss a credit card payment, let alone a mortgage payment, and the clients will be considered high risk.

The mortgage industry is suffering real pain at the moment.

:edited out a typo

Sorry Yakov, The mortgage lenders are making so many changes to their product lines at ATM this wouldn't be possible. The LTV's etc are small beer, it's the tightening of who they lend to that has changed a great deal.

People who last year could have got a mortgage for 150K, for example, will now be refused. This may explain why so many houses go STC, the buyer then applys for a loan, gets refused and the houses goes back onto the market.


edited to get rid of another typo.. I'm having a bad night with my typing

Scottish Widows made a statement this week when they withdrew some products along the lines of "the demand was too great". Which is almost like admitting "we suddenly realised we were in danger of being the last one standing in a game of musical chairs".

great anecdotal.Recently we've had some excellent anecdotals from honestEA and the conveyancer.Greta to have mrs perrin aboard as we have been short of some good stuff from inside the banks

As a man at the coalface HonestEA (I see you're reading the post), have you anything to add?

Cheers

Scott

EDIT: HonestEA - you were until I'd posted. Damn, not quick enough!!!

Hi ReggiePerrin

What was the percentage of clients being turned away 12 months ago? I'd imagine it was no more than 5%, can you confirm this please?

Thanks

Scott

Hi Scott

Rejections where virtually unheard of, there was always a lender willing to hand out the money. The clients income could always be changed anyway as proof of income was never checked up on... this has changed a lot. Most clients now have to provide paperwork to support their income claims, it's amazing how many clients simply "disappear" when they're asked to send in the docs

Hi Reggie

So let's assume that of the 15 per day 12 months ago only 1 would not be accepted, that means we've gone from 14 a day to 2 a day. Crikey!!!!!

A friend of mine sold his flat last July (£92k) and a carbon copy one just round the corner is on the market for £104k. Do they seriously think they're gonna sell it for that? Why is the estate agent not begging them to reduce the price?

If I were an estate agent I would be pulling together all the negative press reports, sitting down with my vendor and convincing them to sell at whatever best price will get a buyer!

I can't comment on EA's but I agree with what you say, although this would trigger one heck of a crash when/if they start being honest with the sellers... cool

I didn't get where I am today by taking out a 95% mortgage!

Problem is your not the only agent in town. When we put our place on the market back in 2004 we have valuations from £165k - £195k, it was obvious that the one valuing it at £195k was just doing it to see the dollar signs in our eyes and get the business. We sold at £167k which we were more than happy with, the person who purchased it has it on the market for £200K, it's been on for close to 8 months now.

I'm sure there are plenty of EA's out there desperate to reduce asking prices but at the end of the day they need some business. Not that there is any sympathy for them from me, you reap what you sow.

speaking to a lad in work, whose dad is a mortgage broker... and he's telling me that a lot of the lenders are asking for 25% DEPOSITS!!!!

BTL Mortgages are almost GONE COMPLETELY!!!

And there are a LOT of people getting turned down for mortgages that would have sailed through at the start of the year!!!

LOOKS LIKE THE BANKS AINT GONNA TAKE THE HIT ON THIS HPC!!!

TB

That's right - I bought my first flat in 1992 and had a reasonable choice of 95% mortgages to pick from and there were even a few 100% deals around, although the rates were crap. This time it's looking very different indeed.

Abbey were still offering a 99% mortgage or a 100% with 5% cashback as of yesterday according to my in branch mortgage advisor. This may now have been withdrawn as I am on a day off today and am unable to check. Things are certainly changing on a daily if not hourly basis. If you are buying at the moment and do get offered an attractive rate, it is not kidology on behalf of the broker to grab it now, it is in fact the true position at the moment.

Spoke with she who knows everything [at least compared to me] and Abbey seem to be the lender of choice at the moment, all the other major lenders are falling over themselves in their efforts not to take on new business, notifications of product changes/withdrawals are coming in every 5 minutes. I wonder if some financial genius at Abbey has decided that this a good time to grow the business (he or she probably found £5 down the back of the sofa and now they have more money than the other lenders)?

Interestingly over the last couple of days mortgage applications have once more started flooding in, it's actually gone back to 2007 levels, although the mix has radically changed. Vast majority are looking for remortgages, very little BTL, FTB or new purchases. My theory is that this has been triggered by the recent press coverage about lenders not accepting any new applications, people are getting worried and trying to rearrange their finances while they still have the chance?

It'll be interesting to see in a few weeks time if the current refusal rate changes.

abbey are owned by the spainish who have a different agenda as their own market is collapsoing.personally,I feel many of these Spainish takeovers ,much like private equity are way too leveraged.WOuldnt be in a rush to put my cash with the abbey if they are writing new business

Just to put some of the other stuff I've reported on into perspective there's a basic but never-the-less interesting article on the BBC website which amongst other things states that the range of mortgage products has strunk by 2/3rds since last July, an amazing fall in such a short period. Link

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