You Are Being Ripped-off! The 2008 Mortgage Scandal
A new Government report has predicted that the current tightening of the mortgage market will last until 2010.
Predictably, the brains behind the report have stated that the current situation has led to the drop in house prices, and will inevitably lead to more repossessions - thanks for stating the obvious! Worryingly though, the report cautioned there was no quick fix to ease the log-jam in mortgage funding and stopped short of providing any firm solutions to the lending troubles.
The point that seems to being missed at the moment though is, "why are these problems still happening?" It is well know that the basic cause of the Credit Crunch was that mortgages were being given to those who couldn't afford to pay them back - these mortgages were then being bundled up and sold on as packages (the Securities Market).
Many Finance Houses were reliant on doing deals such as this to survive - people like Kensington, Mortgages PLC, GMAC, Wave etc.
However, if we take banking back to basics then all your lender has to do is lend you the money that they get over the counter in the form of deposits.
This is obviously a problem for the likes of the Finance Houses mentioned above or even the more provincial banks and Building societies like Northern Rock, Alliance and Leicester or Bradford Bingley who lend nationally but only bring in deposits from a relatively small network of branches.
Agree or Disagree? So why have the likes of Halifax, Lloyds TSB, Nationwide and Abbey put their rates up? The simple answer is they are profiteering.
They are taking advantage of the market.
They see that some of the banks had to put their rates up.
They were left exposed as brokers rushed to take the deals that were still cheap, so they pushed their rates up too.
Banks have also tried to use the current mortgage confusion to cut the middle men out.
The main tactics that have been used are a switch from 2year deals to 3year deals thereby reducing the churn between banks.
Also, they have brought in Dual Pricing - where deals are often available cheaper by going directly to the banks.
The "Credit Crunch" will end when the country becomes fully aware of this new version of rip-off Britain.
Once again - don't believe the hype.
Predictably, the brains behind the report have stated that the current situation has led to the drop in house prices, and will inevitably lead to more repossessions - thanks for stating the obvious! Worryingly though, the report cautioned there was no quick fix to ease the log-jam in mortgage funding and stopped short of providing any firm solutions to the lending troubles.
The point that seems to being missed at the moment though is, "why are these problems still happening?" It is well know that the basic cause of the Credit Crunch was that mortgages were being given to those who couldn't afford to pay them back - these mortgages were then being bundled up and sold on as packages (the Securities Market).
Many Finance Houses were reliant on doing deals such as this to survive - people like Kensington, Mortgages PLC, GMAC, Wave etc.
However, if we take banking back to basics then all your lender has to do is lend you the money that they get over the counter in the form of deposits.
This is obviously a problem for the likes of the Finance Houses mentioned above or even the more provincial banks and Building societies like Northern Rock, Alliance and Leicester or Bradford Bingley who lend nationally but only bring in deposits from a relatively small network of branches.
Agree or Disagree? So why have the likes of Halifax, Lloyds TSB, Nationwide and Abbey put their rates up? The simple answer is they are profiteering.
They are taking advantage of the market.
They see that some of the banks had to put their rates up.
They were left exposed as brokers rushed to take the deals that were still cheap, so they pushed their rates up too.
Banks have also tried to use the current mortgage confusion to cut the middle men out.
The main tactics that have been used are a switch from 2year deals to 3year deals thereby reducing the churn between banks.
Also, they have brought in Dual Pricing - where deals are often available cheaper by going directly to the banks.
The "Credit Crunch" will end when the country becomes fully aware of this new version of rip-off Britain.
Once again - don't believe the hype.
Source...