Self Cert Mortgages and the ghost of Christmas past.
The Bank of England has tried pouring many billions into the economy, yet it doesn't appear that lending institutions want to lend any of it to allow people to buy or develop property. Interest rate levels have basically dropped to never seen before lows. So with all this effort to get lending and borrowing back on track why has it failed so badly?
It has been caused mostly through the banks indecisiveness to which loan will be a sound investment and which will not. The banks are trying to avoid liability to their businesses caused through bad lending and so are reluctant to lend for fear of what will happen.
The lenders have had a nasty shock of late and this reality check has caused a more pessimistic approach to the markets. In the last several years, their lending has been surplus of up to 95% with many borrowers being allowed to borrow on a self certification basis. Now they are more likely to stop their lending business in this high risk fashion to high risk clients and therein lies the problem. They have huge amounts of people who they lent enormous amounts of money to, it is now quite hard for them to come across borrowers able to provide full proof of income and especially with a low loan to value mortgage.
So banks may have the money to lend to you and interest rates at an all
time low but can you find a lender willing to lend you 80% or more on
a self cert basis. Some may argue that the ease with which these mortgages
were obtained has caused price rises in the housing industry and many
of them in hindsight should of been unobtainable.
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