Vince Cable, the FSA and greedy incompetent tw't banks

Murphman · September 15, 2011

I should keep a log of the sh*t I run into now since the FSA got 'tough' under the stewardship of Mr Cable, they really REALLY don't have a f*cking clue.

Here's two for the log, all based around the general withdrawal of mortgages set up on an interest only basis with no repayment vehicle in place. The logic is, we should avoid people hitting 65 and having no way to repay their debt, fair enough, but downsizing is very often the way to go, you buy a big house, the kids leave home then you sell it and buy a little house. ,

Sometimes people can only afford to buy a property big enough for their family needs on an interest only basis, particularly when the kids are young and there's only one wage coming in.

There's nothing wrong with having a 'plan', this could include interest only for a number of years on the condition a repayment plan is put into place at a pre determined date.

In all cases, if there's loads of equity what's the big deal, I whole heatedly agree a loan up to say 80% LTV should be on a repayment basis by the way.

So....

Interest only without a repayment vehicle regardless of anything else has generally been binned, all but a few of lenders, noticably ING Nationwide and Barclays won't look at it regardless, those 3 will, provided there is a heap of equity in the property.

So great, no more interest only loans which f*cks up the housing market in itself. However those already on interest only deals now often can't switch to another lender for a better rate.

Those scumbags at Santander have realised this and taken advantage. I have clients owe £510000 on an interest only loan on a property worh £900000, they intend selling in 8 years and buying a little house in the country. He's an IT contractor which restricts those prepared to take him on anyway as he works 6 month contracts, albeit he earns well. Those that will take him on in this instance don't offer interest only so he's trapped, affordability on a loan of that size on a repaymant mortgage over 8 years doesn't fit affordability.

In his case Santander have completely ignored the range of products generally available to existing borrowers and offered 4.24% fixed for 1 year or stay on the 3.99% variable. for customers. Thi is because they CAN. The 'normal' punters they don''t have over a barrel can access a 2.79% fixed or a tracker at something like 2.99%. They know he can't move so they've priced him accordingly. People on interest only with Santander are being targetted and if they can't go elsewhere through their circumstances may well have a big problem.

On a slightly different note but equally as illustrative of what a f*cking mess all this bullsh*t regulation is, I have another customer scratching his head. ING WILL take him for a remortgage as his income is excellent and consistent, on interest only to be repaid by sale of property, it's a 50% LTV so that's cool. But the FSA rules are all lenders must assess affordability based on a repayment loan on the standard variable rate, REGARDLESS of whether or not it's a repayment loan. So they'll offer him the loan but only over 18 years and not 10 as required. even though the paynments are identical and an 18 year term takes him way past retirement.

It's a f*cking dogs dinner, they're a bunch of clowns trying to regulate a bunch of crooks and the banks are pissing themselves laughing all the way to the bank.

that is all.

smithdown · September 15, 2011

This post is not viewable to guests.

You can sign in to your account at the login page here