Tuesday, 29 July 2008

Crosby report confirms funds are available

The Crosby report is out now with a small review here

The key phrase is

While there is still good availability of finance for those borrowers who offer significant security, the availability of finance to all other consumers is considerably reduced and likely to remain so.

This is exactly what I have been saying here

If you have a 10% deposit,good credit, can prove your income, want to borrow 3 or 4 times your incomes and have a repayment plan then there is no problem. (Remember this was how mortgage lending was up to 2000)

if you have less than 10% deposit(100% was available last year),bad credit (sub prime was available last year), can't prove your income (self cert was available last year), want to borrow 6 times your income (Northern Rock was available last year)or can't afford a repayment mortgage (interest only with no repayment plan was available last year) then the lenders no longer want to lend to you.

No matter how much money you chuck at the lenders they will not go back to their reckless lending. Know why?

Because the FSA is breathing down their necks with their 'Treating Customers Fairly' initiative. Is it fair to lend to non prime borrowers during a housing crash?


Anonymous said...

It is more to do with the collateralised lending model than TCF.

When collateral is strengthening, a lender can take risks wrt the borrower.

When collateral softens, then the collateral safety blanket is taken away, exposing the lender to the borrower in all their glory.

Hotairmail said...

Anonymous above was me hotairmail.

CROWN said...

Hotairmail - I agree with your point on collateralisation, however when credit unfreezes I do not think lenders will go back to the loose lending that we have had for 8 years as the FSA is now busy shutting stable doors.