Back to Sub Prime
Discussion
https://www.bbc.co.uk/news/uk-politics-65973977
Seems Labour just jumping on a bandwagon again. In simple terms once again they are endorsing what is effectively sub prime lending, rather than leaving individuals to resolve their issues and financial constraints.
Whilst Labour may seem a shoe in at the next GE, things like this will not help their cause and will certainly remove their chance of majority rule.
Yes things are grim economically but government can't keep handing out. If things aren't affordable people need to change.
Seems Labour just jumping on a bandwagon again. In simple terms once again they are endorsing what is effectively sub prime lending, rather than leaving individuals to resolve their issues and financial constraints.
Whilst Labour may seem a shoe in at the next GE, things like this will not help their cause and will certainly remove their chance of majority rule.
Yes things are grim economically but government can't keep handing out. If things aren't affordable people need to change.
That's not how I read it.
To me it looks like labour are suggesting that banks allow borrowers to switch to IO mortgages if they're struggling. the borrowers get a temporary reduction in their payments, the banks don't lose any profits, and there's no need for a Govt. subsidy to anybody.
Not a bad idea IMO
To me it looks like labour are suggesting that banks allow borrowers to switch to IO mortgages if they're struggling. the borrowers get a temporary reduction in their payments, the banks don't lose any profits, and there's no need for a Govt. subsidy to anybody.
Not a bad idea IMO
Countdown said:
That's not how I read it.
To me it looks like labour are suggesting that banks allow borrowers to switch to IO mortgages if they're struggling. the borrowers get a temporary reduction in their payments, the banks don't lose any profits, and there's no need for a Govt. subsidy to anybody.
Not a bad idea IMO
Hasn't that always been an option since 2008?To me it looks like labour are suggesting that banks allow borrowers to switch to IO mortgages if they're struggling. the borrowers get a temporary reduction in their payments, the banks don't lose any profits, and there's no need for a Govt. subsidy to anybody.
Not a bad idea IMO
phil-sti said:
Countdown said:
That's not how I read it.
To me it looks like labour are suggesting that banks allow borrowers to switch to IO mortgages if they're struggling. the borrowers get a temporary reduction in their payments, the banks don't lose any profits, and there's no need for a Govt. subsidy to anybody.
Not a bad idea IMO
Hasn't that always been an option since 2008?To me it looks like labour are suggesting that banks allow borrowers to switch to IO mortgages if they're struggling. the borrowers get a temporary reduction in their payments, the banks don't lose any profits, and there's no need for a Govt. subsidy to anybody.
Not a bad idea IMO
Tom8 said:
Longer than that I think. Problem is it is like withdrawing a bet after you lost. You sign up to a mortgage, rates go up then you expect the bank to recalculate and change it for you. Surely that is the risk we all take and banks cannot operate like this, we as individuals know how we are leveraged and what we can afford, it is normal in securing mortgage deals.
To be fair, the banks are just as much at fault.The stress testing is a joke. HSBC said I could borrow in excess of £1m based on joint earnings a couple of years ago. We took a mortgage of just over £300k and even then we we're stressing over what we would do if one of us lost our jobs etc. There's no way in the world I'd have even considered borrowing half of what they were offering.
Stupid thing is it's the ones that did borrow shed loads 10 years ago at low rates who would have been screwed with a proper stress test, who will have done the best, by benefitting from house price growth. That in itself is an issue, as the public have seen others do very nicely from it, and as soon as rates drop they'll be piling in again assuming prices will always go one way. Same can be said for BTL - too many people saw others making a fortune and over-leveraged to do the same. Now they're asking for bailouts, which would have to be funded by everyone, including those that we're sensible.
Ultimately though, like you say, its the individual that is responsible for making sure they don't bite off more than they can chew.
phil-sti said:
Countdown said:
That's not how I read it.
To me it looks like labour are suggesting that banks allow borrowers to switch to IO mortgages if they're struggling. the borrowers get a temporary reduction in their payments, the banks don't lose any profits, and there's no need for a Govt. subsidy to anybody.
Not a bad idea IMO
Hasn't that always been an option since 2008?To me it looks like labour are suggesting that banks allow borrowers to switch to IO mortgages if they're struggling. the borrowers get a temporary reduction in their payments, the banks don't lose any profits, and there's no need for a Govt. subsidy to anybody.
Not a bad idea IMO
i think it's a million miles away from "sub prime" though.
Tom8 said:
Longer than that I think. Problem is it is like withdrawing a bet after you lost. You sign up to a mortgage, rates go up then you expect the bank to recalculate and change it for you. Surely that is the risk we all take and banks cannot operate like this, we as individuals know how we are leveraged and what we can afford, it is normal in securing mortgage deals.
From a practical point of view it's far better for both parties to try and work through any short term issues. Otherwise there's the risk that the bank forecloses and loses money in a forced sale, and the owners are made homeless.The Ferret said:
To be fair, the banks are just as much at fault.
The stress testing is a joke. HSBC said I could borrow in excess of £1m based on joint earnings a couple of years ago. We took a mortgage of just over £300k and even then we we're stressing over what we would do if one of us lost our jobs etc. There's no way in the world I'd have even considered borrowing half of what they were offering.
Stupid thing is it's the ones that did borrow shed loads 10 years ago at low rates who would have been screwed with a proper stress test, who will have done the best, by benefitting from house price growth. That in itself is an issue, as the public have seen others do very nicely from it, and as soon as rates drop they'll be piling in again assuming prices will always go one way. Same can be said for BTL - too many people saw others making a fortune and over-leveraged to do the same. Now they're asking for bailouts, which would have to be funded by everyone, including those that we're sensible.
Ultimately though, like you say, its the individual that is responsible for making sure they don't bite off more than they can chew.
HSBC are ridiculous - they offered similar to us, despite the fact that £1m could buy most of the town I live in! The stress testing is a joke. HSBC said I could borrow in excess of £1m based on joint earnings a couple of years ago. We took a mortgage of just over £300k and even then we we're stressing over what we would do if one of us lost our jobs etc. There's no way in the world I'd have even considered borrowing half of what they were offering.
Stupid thing is it's the ones that did borrow shed loads 10 years ago at low rates who would have been screwed with a proper stress test, who will have done the best, by benefitting from house price growth. That in itself is an issue, as the public have seen others do very nicely from it, and as soon as rates drop they'll be piling in again assuming prices will always go one way. Same can be said for BTL - too many people saw others making a fortune and over-leveraged to do the same. Now they're asking for bailouts, which would have to be funded by everyone, including those that we're sensible.
Ultimately though, like you say, its the individual that is responsible for making sure they don't bite off more than they can chew.
It'd have been an absolute disaster if I'd been tempted by their offer.
vxr8mate said:
All I keep hearing is windfall tax.
We can't run the country off a windfall tax.
It's about time Labour came up with some credible pledges instead of saying 'we will sit down and discuss it' and 'windfall tax.'
Then and only then some of us might consider voting for them.
You aren’t paying attention if that is all your are hearing. Especially in the context of this thread. We can't run the country off a windfall tax.
It's about time Labour came up with some credible pledges instead of saying 'we will sit down and discuss it' and 'windfall tax.'
Then and only then some of us might consider voting for them.
mattyprice4004 said:
HSBC are ridiculous - they offered similar to us, despite the fact that £1m could buy most of the town I live in!
It'd have been an absolute disaster if I'd been tempted by their offer.
Exactly. But you (and I) had the financial sense to be prudent, and not like a kid in a sweet shop.It'd have been an absolute disaster if I'd been tempted by their offer.
How many people without any financial savvy would have taken it that the stress test meant everything would be ok, and all bases were covered?
It's a good reasonable idea, and frankly one the Banks shouldn't need reminding off, but you can't trust them.
I worked for RBS for 10 years, I don't think for a second that they wouldn't force repo's to get some cash in and mortgages off the books if it suited them, and who cares about their customers or the economy as a whole.
Anyone who thinks people should just suck it up / face the consequences of their recklessness... It just sounds bitter and frankly an incredibly bad idea for the economy.
Ramping up interest rates to cool and economy doesn't work like it did, it hurts a minority of people disproportionally – should we be discouraging credit card spending, HP on consumer goods and easy/cheap PCP deals, yes probally. Should we be taking hundreds of pounds a month from mortgages payers, especially those who are more heavily leveraged? No, for every ‘flash git’ who’s got a nicer house than you even though they’ve clearly not done so well in life, there’s dozens of young families who bought in the last few years and haven’t got the headroom for it.
I worked for RBS for 10 years, I don't think for a second that they wouldn't force repo's to get some cash in and mortgages off the books if it suited them, and who cares about their customers or the economy as a whole.
Anyone who thinks people should just suck it up / face the consequences of their recklessness... It just sounds bitter and frankly an incredibly bad idea for the economy.
Ramping up interest rates to cool and economy doesn't work like it did, it hurts a minority of people disproportionally – should we be discouraging credit card spending, HP on consumer goods and easy/cheap PCP deals, yes probally. Should we be taking hundreds of pounds a month from mortgages payers, especially those who are more heavily leveraged? No, for every ‘flash git’ who’s got a nicer house than you even though they’ve clearly not done so well in life, there’s dozens of young families who bought in the last few years and haven’t got the headroom for it.
vxr8mate said:
All I keep hearing is windfall tax.
We can't run the country off a windfall tax.
It's about time Labour came up with some credible pledges instead of saying 'we will sit down and discuss it' and 'windfall tax.'
Then and only then some of us might consider voting for them.
It's the Lib Dems saying there should be a windfall tax. We can't run the country off a windfall tax.
It's about time Labour came up with some credible pledges instead of saying 'we will sit down and discuss it' and 'windfall tax.'
Then and only then some of us might consider voting for them.
TEKNOPUG said:
Surely a better way would be an emergency budget and put up income tax and VAT? That way everyone's spending power is reduced.
Interest rate hikes just seem like an easy get out for the government as they can blame it on the BoE.
Fiscal policy can be used to try and suppress inflation but usually works alongside monetary policy when it does so. A classic example being Thatcher in the early eighties. Interest rate hikes just seem like an easy get out for the government as they can blame it on the BoE.
A large part of this mess is monetary so it seems correct for a large part of the response to be higher interest rates.
Tom8 said:
https://www.bbc.co.uk/news/uk-politics-65973977
Seems Labour just jumping on a bandwagon again. In simple terms once again they are endorsing what is effectively sub prime lending, rather than leaving individuals to resolve their issues and financial constraints.
Whilst Labour may seem a shoe in at the next GE, things like this will not help their cause and will certainly remove their chance of majority rule.
Yes things are grim economically but government can't keep handing out. If things aren't affordable people need to change.
Have you provided the wrong link? The plan reported in that article is not related to "effectively" sub prime lending. Seems Labour just jumping on a bandwagon again. In simple terms once again they are endorsing what is effectively sub prime lending, rather than leaving individuals to resolve their issues and financial constraints.
Whilst Labour may seem a shoe in at the next GE, things like this will not help their cause and will certainly remove their chance of majority rule.
Yes things are grim economically but government can't keep handing out. If things aren't affordable people need to change.
TEKNOPUG said:
Surely a better way would be an emergency budget and put up income tax and VAT? That way everyone's spending power is reduced.
Interest rate hikes just seem like an easy get out for the government as they can blame it on the BoE.
... and that's the point isn't it. BoE has the responsibility to manage inflation now, and whilst cutting at least interest rates away from political control was a good thing, that's all they've got really, and it doesn't work as well as it used to, plus only impacts a proportion of people. Interest rate hikes just seem like an easy get out for the government as they can blame it on the BoE.
It's not immediate either.... we managed to get a 1.19% deal literally weeks before the inflation noise started to grow, and that goes all the way till November 2026. So changing rates doesn't have the immediate shock even for those who own homes.
Tax rises if designed right (VAT a pretty blunt instrument) would be a smarter way to slow demand, but - no government, especially one looking likely to be voted out, and *especially* a tory one, is going to do that....
Tom8 said:
https://www.bbc.co.uk/news/uk-politics-65973977
Seems Labour just jumping on a bandwagon again. In simple terms once again they are endorsing what is effectively sub prime lending, rather than leaving individuals to resolve their issues and financial constraints.
Whilst Labour may seem a shoe in at the next GE, things like this will not help their cause and will certainly remove their chance of majority rule.
Yes things are grim economically but government can't keep handing out. If things aren't affordable people need to change.
Most lenders already offer IO options when people get in arrears.Seems Labour just jumping on a bandwagon again. In simple terms once again they are endorsing what is effectively sub prime lending, rather than leaving individuals to resolve their issues and financial constraints.
Whilst Labour may seem a shoe in at the next GE, things like this will not help their cause and will certainly remove their chance of majority rule.
Yes things are grim economically but government can't keep handing out. If things aren't affordable people need to change.
The problem as I see it is that people in trouble will end up of the so-called SVR, a rate nobody would sign up to.
Halifax's SVR is (was) 7.49%.
IO in the SVR is pretty similar to a repayment with 20 or 30 years to go.
In my view, while inflation is above 3%, there's not much wrong with IO if you've got 20+ years of career ahead of you.
I think the current system of 2 years fixes has got out of hand, it's a needless gift to salesweasels.
If people were talking of regulating SVRs to a sensible level above base rate or something, I wouldn't argue against that.
Personally, I was quite happy with a full-term tracker mortgage, although it was never the cheapest option, it was never badly overpriced.
I'm hearing a lot of ordinary people laughing at the hardship cases the BBC trots out..
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