• Blog: It's a waste of time to keep bashing the bankers

Reader views (21)

 Add your view

Darius is right about 2-income mortgages: all the house prices are forced up to the level afforded by a couple with no children - if you have children you've also got fewer properties on offer as most 3 bed flats were converted into 2 beds both ensuite so that single friends could share the mortgage. Then you have the problem that the State only educates children from the age of 5 and the cost of most pre-school childcare plus commuting costs and taxes pretty much wipes out most mothers' incomes before they've got anything to contribute as the second mortgagee. I bet the over-whelming number of UK mothers in work have jobs like working on Woolworths' tills rather than as the local GP or a City high-flyer: children are a normal part of society and the future of the country, not a luxury of the rich because they can afford a deposit. If families had not managed to raise the ever-increasing deposit that was necessary to buy a house whose price always outstripped their income, they are probably now p!ssing away the equivalent on renting something similar off a cynic who calls it 'second income' or 'my pension'.

Perhaps a more useful measure would be to slap a huge Capital Gains tax on anyone who sells a 'second' (third/fourth/fifth?!) home in under 30 years simultaneously making it a treasonable offence for the Chancellor to raid pensions - then perhaps the housing market would be a place to buy a home instead of being a get-rich-quick scheme.

- Roz, France

Too many mortgage products (were there THOUSANDS OF THEM?) have caused utter confusion and potential misery for those that chased after "the best deal for you" and took out low interest short-term fixed rates. It was a housing-bubble-bonanza which sucked in the naive in their millions, and the financial fallout is just beginning.

And the lesson? Never overcommit on anything, period.

- Ted, London

Do you hear that?

It's the sound of the stable door flapping in the wind as the state-backed horses gallop towards their next bonus pot.

- Nobby Clark, Perth, the Scottish one

There are two distinct issues. One issue is that there will have to be further debate on how to deal with the many people who have to renew/re-mortgage and would fail the new lending criteria. The other issue is how to treat new applicants and the proposed affordability checks are just re-introducing prudent Banking practices that existed in the 60's and 70's. Had people not lied about their income on self-certification loans, many of the current problems would not be evident today.
The effects of the credit crunch are far from over and, yes, there will be a lot more pain before the country enters a real recovery mode.

- Realistic., London. UK.

This is going to be a major problem for those who need to refinance but want to continue living in the same property and, through no fault of their own, have seen the value of their property fall and/or their income head in the same direction.

Even if they have an excellent credit record they will not meet the Lender's criteria. What happens then?

- Mark Myword, London

Can we talk about how the bankers' are making record bonuses again just as the average Bitton prepares to plunge into the worst phase of the hangover from the credit crunch with unemployment hitting 3m... I don't think we have really learnt anything. Some poor sucker who had to self-certify to be able to get onto the property ladder has now been locked out of the mortgage market permanently, how is that of any benefit when somehow property prices in London are back at peak levels. Better checks are needed, not complete bans on entire sections of the population. the health of a nation correlates closely with the number of start up companies and self-employed individuals. We have failed to achieve a healthier balance than we had pre-credit crunch, the gap between the lifestyles of the haves and have nots will continue to widen, all thanks to the bailout money that the less well-to-do majority in society have so generously provided.

- Dan O., London

"Shadow financial secretary Mark Hoban said: “It's a bit late now to start clamping down. Gordon Brown should have acted much sooner on this.”"

A curious comment from a Conservative. There was a time when Conservative policy would have been that lending decisions were a matter for lenders and government should keep out.

- Tonyb, Melbourne, Australia

Actually Mike, those dodgy "sub-prime" American mortgages ended up in financial packages that were resold on to banks all over the world, who resold them on to other banks at a larger price, etc, etc. Had anyone actually bothered to check what was in them they'd have seen at least 25% of it was garbage. The idea was to keep on passing on the hot potato and not get stuck with it but in the meantime massively overinflate the price and make a huge profit. So whilst the British banks were not directly involved with the mortgages, they were involved with the dodgy selling of the financial packs.

- Bob, Cheam

Who cares what the basis is regarding how much the institutions are prepared to lend or how they go about doing it, provided ALL of the following key points are met:-

[1] that it is responsible lending?

[2] that the basis of their lending is explicitly? advertised.

[3] that the lending institution is held "totally responsible" for their actions i.e. for the lending of mortgage funds?

[3] that there is a "Regulatory Body" in place that has teeth and that will take action against any institution NOT conforming to the explicit Rules & Regulations? (Note: Ideally this new Regulator should also be fully responsible for regulating estate agency activities as well)

[4] that the use of credit cards are NOT permitted to be used to make up any shortfall in deposit funds required to secure any mortgage? (Note: The government should limit Credit card interest rates charged to a maximum of 5% over bank base rate)

[5] that all mortgage deposit funds are those "belonging 100% to the borrower" as opposed to additional borrowings from anyone else whoever these lenders may be i.e. neither parental loans nor gifts with reservation?

So what exactly is so difficult in implimenting "a system that works" in relation to mortgage practises and why has our New Labour government failed to come up with ANY "viable solution" in the last 12 or so years?

- Fraser, Telford Park

Dan, Manchester - there`s nothing sexist about HER being on the tills Dan - she just wanted it that way (He would`ve liked to have choosen stress free work too, but then they couldn`t afford that big big house she wanted!)

- Darius, London UK

I remember ITV doing a programme about self certified and 5 times income mortgages. That was three maybe four years ago now and they were warning of impending problems if this was allowed to continue. Gordon Brown took his usual stance and said he was not worried about either issue and that it was a matter of personal choice for the borrower what they did. Now its all gone belly up the FSA etc are doing what they should have been doing all along. Only lending to individuals who were capable of paying the money back. After all you won`t lend someone thousands just on their say so that they had the income and guarantee of security to pay the debt back. Peopple do have the habit of telling porkies. Another classic case of shutting the stable door after the horse has bolted.

- Brian G, Norfolk Gorleston

"he may have been a manager at Woolworth’s, she on the tills!" - Darius

This is the 21st Centuary. Didn't know people still had such sexist views.

Anyway, house prices rose to stupid levels all over the developed world so the bad debts on mortgages were not restricted to the US and the UK. It is not just the banks faults, but the regulators who took their eye of the ball under political pressure and of course the people who bid up prices and gladly took on 125% mortgages. Nobody is without blame. Unless you paid cash for everything, you took out credit, and the cheaper credit became, the more we took out whether we needed to or not. QED

- Dan, Manchester

There so many people struggling to pay their mortgage, because they had to get on the property ladder at any cost. Hopefully these new rules will make housing more affordable and this will put an end to home owner poverty.

- Mike, London

If you artificially restrict access to mortgages, then you just store up problems for the future.

While I appreciate there is a desire to 'control' prices and avoid another boom & bust cycle, it really isn't possible. Trying to control any financial product is like trying to squeeze jelly.

In any case, this measure is aimed at addressing the last crash, not the next one. Closing the stable door AFTER the horse has bolted.

Politicians' desire to pass new laws is clearly undiminished. Why can't they just let the market do its own thing and stop trying to control it. History shows that trying to control markets is ineffective at best, and causes unintended consequences at worst.

- George, London

I sold my house 4 years ago to a person who self-certified himself for a mortgage, 3 years later he self-certified himself as bankrupt. The morgage company has now been nationalised. Need I say more. OR "Birds of a feather f---k togther. Sorry I wasent sure if flock was a swear word.

- Nosmo King, Brighton

Actually Mike, British banks and borrowers were also responsible for the Crash. Self certificated mortgages (or liar loans) were encouraged by the bans. They did not pay due diligence. THis easy money made crazy prices climb to even higher levels. It was not sustainable.

Now, by restricting mortgages, house prices will continue to fall, which is a good thing for anyone buying for the first time, anyone trading up and anyone looking for a home rather than an "investment vehicle".

We have a housing market in the UK, and especially London, at stratospheric prices with no visible means of support. Well, the party's over, and back to sanity we go.

- Rob, London, UK

Sensible lending ratios and evidence of income & expenditure should both be required. Absolute 'no brainer'. If anyone is in any doubt, ask yourself what you would require if you were lending your money!

- Colin, Woking

We should be as angry with the estate agents over-inflating house prices so they can get a higher percentage fee, as we are with the idiot bankers. People don't borrow excessively due to greed, but because they need to keep a roof over their heads and eat. Capitalism has proved disasterous for all except the city fat cats.

- Philip, London, England

"People who deserve a mortgage because their income warrants it" hopefully will now mean "those who have shown they can save a deposit, can show their outgoings plus the mortgage repayments don’t equate to more than one income (what is she decides to get pregnant), and that the primary income is based on a "sound" job!
OK, but firstly we need an EXPERIENCED manager to decide whether the outgoings are extravagant (says a lot about lifestyle/attitudes to excess), whether they really need a four bedroom house when a three would do, and of course, who can possibly say what jobs are safe nowadays (he may have been a manager at Woolworth’s, she on the tills!)
Two income mortgage allowance is a major factor in house price inflation - seen as good by those already with a double garage full of big foreign cars bought on the back of it’s "value", great for the money lenders and estate agents percentage, but in NuLabour Britain, not so healthy.
So, the voice of reason and experience needs to be in charge of who gets what, not solely based on how much they appear to earn at the outset.
This, of course, will snag the system - and that will tend to cost the banks, but eventually lead to more affordable house prices .
That, of course, won’t be popular with everyone who has grown very fat (thank you very much) on the property gamble.
Like everything else in life, only self control guided by experience would lead to success in this "new" idea.

- Darius, London UK

What caused the financial crisis was problems with US borrowers, not British borrowers.
An effect of the crisis was that people lost their jobs here etc and then could not afford to pay however in many cases that would be the case regardless of whether their income was checked or not.

Personally I think the lending ratios need looking at, if they were realistic then there would not be the same demand for self certified mortgages.

Realistically most people can not afford to buy in London if mortgages are applied strictly. However the same people who are deemed not to be able to afford to maintain a mortgage are expected to pay rent in excess of £800 for a 2 bed flat? Sure I understand that mortgage commitments may rise but not that much and usually not for that long.

- Mike, London

I have never been offered a mortgage without showing my payslips and outgoings/incomings. I'd love to know who gives a mortgage without wanting that info ..

- Louise, Essex

Add your comment