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UK banks and lenders suspend offering new mortgages amid market turmoil

29 points by mellavora 4y ago

Varyag 4y ago
Title reads like all banks have ceased trading mortgages, which is ludicrous. here's a BBC article with a more reasonable title: https://www.bbc.co.uk/news/business-63041679 https://www.bbc.co.uk/news/business-63041679
- dazc 4y ago
  A more reasonable title but also no mention of the fact that currencies elswhere are also under pressure.
  - happymellon 4y ago
    Because that would be whataboutism. There is currently inflation which is being stoked by the current government who is also making statements which don't add up that then makes financial institutions nervous. Mortgage rates jumping from 1.5% to 6% in one year is quite a lot regardless of other people's problems. Freezing new mortgage offers during a very volatile period is understandable and also concerning.
    - dazc 4y ago
      The current strength of the dollar against all other major currencies isn't wahtaboutism, is a basic reason for the current situation that has been purposely omitted.
      - happymellon 4y ago
        I think you mean the pound, since this is what we are talking about. The current situation in the UK is due to economic policy from the past 10+ years. Suppressing interest rates to nothing, and encouraging borrowing for extended periods is not fiscally responsible. Make hay while the sun shines unfortunately did not happen, so now the clouds are rolling in there is no buffer.
        dazc 4y ago
        Look at a graph of USD against GBP, Euro and Yen for the past 5 years. I agree with the general sentiment but this isn't a problem that is exclusive to the UK.
        happymellon 4y ago
        Do we have an article talking about some financial institutions suspending new mortgage offers in the Eurozone? I'm not saying that inflation isn't a problem elsewhere, I'm saying that the issue in this scenario is that the markets are panicking due to general long term financial mismanagement and doubt over the sustainability of current policy from both the Government and the Bank of England.
        dazc 4y ago
        Borrowing rates will have to rise, as they have done already in the US, as everyone has been fully aware for sometime. My confidence in financial institutions ability to see what is clearly in front of them has been severely tested over the past few months.
  - shapefrog 4y ago
    > no mention of the fact that currencies elswhere are also under pressure Apparently other currencies under pressure is a sign of https://www.express.co.uk/news/world/1653931/eu-news-euro-currency-eurozone-inflation-recession-russia-gas-europe https://www.express.co.uk/news/world/1653931/eu-news-euro-cu... Last month, the Euro fell to parity against the US dollar last month for the first time in more than 20 years. It has bounced back to €1.03 but is still massively short of the €1.18 hit nearly a year ago. Eric Noirez, a prominent EU critic and member of the Generation Frexit campaign in France, told Express.co.uk: "The Euro is a system that has reached the end of its tether. Their policy has consisted of massive monetary creation, and this in a totally unreasonable way ... it will lead to eurozone collapse ... The recession is obvious ... the biggest financial crisis in its history ... An absolute madness! But when the UK currency is selling off ... https://www.express.co.uk/news/politics/1674629/Liz-Truss-critics-Brexit-growth-tax-cuts-Tory-chairman-Jake-Berry-update https://www.express.co.uk/news/politics/1674629/Liz-Truss-cr... Presumably all those woke traitor hedge fund managers are to blame. 'They don't believe in Britain!' Tory chairman says tax cut critics are like Remainers New Conservative chairman Jake Berry has given his first interview since being appointed 20 days ago with a broadside at the people who "don't believe in Britain".
Neil44 4y ago
Misleading title. A couple of mortgage lenders have temporarily paused some of their products because of uncertainty about interest rates in the short term. BofE is holding fast on interest rates despite tremendous pressure to put them up to protect the pound. Many predict they will give in and raise them.
- jonatron 4y ago
  They're probably avoiding an immediate kneejerk emergency raise, which would look like they're panicking. If they wait a little bit before they raise, it'll look more calm and considered which should give the market more confidence.
  - highwaylights 4y ago
    Time is a factor here, too. The longer they wait the harder it’ll be to get it back under control - which may not even be possible at this stage, given that they’ve grossly underestimated the scale of the problem at every step. The thing that really worries me is that most people don’t understand how any of this works and are still worried about fuel costs. They have no idea that a further (minimum) 1.5% hike is imminent, and those worst affected (renters/trackers) won’t know that they’re the ones who’ll get wiped out by it. A freeze on rent increases (like the fuel cap) might be needed, but good luck getting this government to agree to that. Edit: as I think about it a rent freeze would be great for shaking the exploitation out of the housing market too.
    - Neil44 4y ago
      You seem to be talking about inflation rather than interest rates
      - highwaylights 4y ago
        Both. Raising the base rate is a tool to reduce inflation. They’re two sides of the same coin.
highwaylights 4y ago
I imagine it’ll nix all fixed rates for a good lot of years. There’s a lot of people that are going to be really hurt in the UK this winter. Many will lose their homes, even those that are renting (who probably won’t see it coming). It’s all well and good to smugly say “you should have understood what you were signing up for” but that doesn’t help people in this situation or their families. It was already becoming impossible for many people to get by with the fuel increases, a lot of people are going to be pushed over the edge before January.
- simonswords82 4y ago
  I’m sorry but I just don’t see how “many will lose their homes”. Mortgage companies are ruthless but not in the business of turfing out families that legitimately cannot afford their repayments. Evicting people is risky long winded and generally speaking their last option. Unless you've got some data to back up what you are saying in which case I’ll shut up. Edit: Lots of replies saying "but they're not charities etc...". Of course I respect that. I also respect that not all lenders are created equal. If you miss a payment to the mafia you're going to get a different reaction than say to Lloyds bank. I'm referring to your typical UK high street lender. They will not hoof you out of your house if you miss or under pay on one or two payments. Of course, if you do not engage with them and setup a repayment plan - then they will of course take further action.
  - mschuster91 4y ago
    > Mortgage companies are ruthless but not in the business of turfing out families that legitimately cannot afford their repayments. German mega-landlord corporation Vonovia announced just a few days ago that they will evict everyone too far behind on payments for heating [1], in order to pacify investors. Never trust rabid capitalism to keep the people in mind. For the beancounters, all that matters is the current stock price. [1] https://www.spiegel.de/wirtschaft/nebenkosten-vonovia-droht-saeumigen-mietern-mit-kuendigung-a-ccab3b65-e4f2-46aa-b681-801c3aadc7db https://www.spiegel.de/wirtschaft/nebenkosten-vonovia-droht-...
    - 4y ago
roenxi 4y ago
Not exactly on topic, but a good moment to think - are mortgages even fundamentally desirable? The price of a house is always going to be exactly savings + mortgage, if nobody was taking out mortgages the prices would adjust and people would end up in the same house as before. It is interesting to ask if mortgages should be rare. It isn't obvious why everyone needs to pledge years of their life to the wealthy in order to own a home. I can imagine alternative scenarios where I own a home without agreeing to give large amount of money to bank shareholders. Mortgages are the entry point to a world of debt that doesn't make sense. The market keeps trying to draw down debt with financial crisis after crisis and the people in control of the monetary system keep making sure it comes back.
- the_mitsuhiko 4y ago
  For as long as society thinks home ownership is fundamentally desirable so will be mortgages as most people won't be able to afford a place otherwise. Generally speaking life is so fast and unpredictable for people, that home ownership for many is probably individually a lifestyle choice but a fundamental risk. So I think if you want to question mortgages, it's better to question the entire idea of everybody being forced into home ownership.
  - roenxi 4y ago
    > For as long as society thinks home ownership is fundamentally desirable so will be mortgages as most people won't be able to afford a place otherwise. Why not? Who do you think would end up owning the houses & how would you expect the market to be structured? Why, fundamentally, would it look much different from today?
  - sph 4y ago
    > For as long as society thinks home ownership is fundamentally desirable I'm in favour of challenging that assumption only iff we make private renting illegal. No one except the public (i.e. the state) should be able to extract payment upon the unlucky masses that do not have or can't afford their own home.
- justsomehnguy 4y ago
LightG 4y ago
I despair at what the cumulative actions of a good number of assholes have done to a once Great Britain. It's over.
SilverBirch 4y ago
It's getting pretty scary over here in the UK. The government's strategy seems like it's in a doom loop. We have inflation so the BoE is going to hike rates and cause a recession to tackle inflation. But the government have announced a bunch of measures to boost growth (whilst blowing up the deficit). So which is it, will BoE win and cause a recession to tackle inflation (thus causing a debt crisis with massive debt we can't afford to pay?), or will the government win and boost growth (presumably causing spiraling inflation?). Meanwhile, the level of uncertainty caused by this simply must be putting off investors?

29 points by mellavora 4y ago

Title reads like all banks have ceased trading mortgages, which is ludicrous. here's a BBC article with a more reasonable title: https://www.bbc.co.uk/news/business-63041679 https://www.bbc.co.uk/news/business-63041679

dazc 4y ago
A more reasonable title but also no mention of the fact that currencies elswhere are also under pressure.
- happymellon 4y ago
  Because that would be whataboutism. There is currently inflation which is being stoked by the current government who is also making statements which don't add up that then makes financial institutions nervous. Mortgage rates jumping from 1.5% to 6% in one year is quite a lot regardless of other people's problems. Freezing new mortgage offers during a very volatile period is understandable and also concerning.
  - dazc 4y ago
    The current strength of the dollar against all other major currencies isn't wahtaboutism, is a basic reason for the current situation that has been purposely omitted.
    - happymellon 4y ago
      I think you mean the pound, since this is what we are talking about. The current situation in the UK is due to economic policy from the past 10+ years. Suppressing interest rates to nothing, and encouraging borrowing for extended periods is not fiscally responsible. Make hay while the sun shines unfortunately did not happen, so now the clouds are rolling in there is no buffer.
      - dazc 4y ago
        Look at a graph of USD against GBP, Euro and Yen for the past 5 years. I agree with the general sentiment but this isn't a problem that is exclusive to the UK.
        happymellon 4y ago
        Do we have an article talking about some financial institutions suspending new mortgage offers in the Eurozone? I'm not saying that inflation isn't a problem elsewhere, I'm saying that the issue in this scenario is that the markets are panicking due to general long term financial mismanagement and doubt over the sustainability of current policy from both the Government and the Bank of England.
        dazc 4y ago
        Borrowing rates will have to rise, as they have done already in the US, as everyone has been fully aware for sometime. My confidence in financial institutions ability to see what is clearly in front of them has been severely tested over the past few months.
- shapefrog 4y ago
  > no mention of the fact that currencies elswhere are also under pressure Apparently other currencies under pressure is a sign of https://www.express.co.uk/news/world/1653931/eu-news-euro-currency-eurozone-inflation-recession-russia-gas-europe https://www.express.co.uk/news/world/1653931/eu-news-euro-cu... Last month, the Euro fell to parity against the US dollar last month for the first time in more than 20 years. It has bounced back to €1.03 but is still massively short of the €1.18 hit nearly a year ago. Eric Noirez, a prominent EU critic and member of the Generation Frexit campaign in France, told Express.co.uk: "The Euro is a system that has reached the end of its tether. Their policy has consisted of massive monetary creation, and this in a totally unreasonable way ... it will lead to eurozone collapse ... The recession is obvious ... the biggest financial crisis in its history ... An absolute madness! But when the UK currency is selling off ... https://www.express.co.uk/news/politics/1674629/Liz-Truss-critics-Brexit-growth-tax-cuts-Tory-chairman-Jake-Berry-update https://www.express.co.uk/news/politics/1674629/Liz-Truss-cr... Presumably all those woke traitor hedge fund managers are to blame. 'They don't believe in Britain!' Tory chairman says tax cut critics are like Remainers New Conservative chairman Jake Berry has given his first interview since being appointed 20 days ago with a broadside at the people who "don't believe in Britain".

Neil44 4y ago

Misleading title. A couple of mortgage lenders have temporarily paused some of their products because of uncertainty about interest rates in the short term. BofE is holding fast on interest rates despite tremendous pressure to put them up to protect the pound. Many predict they will give in and raise them.

jonatron 4y ago
They're probably avoiding an immediate kneejerk emergency raise, which would look like they're panicking. If they wait a little bit before they raise, it'll look more calm and considered which should give the market more confidence.
- highwaylights 4y ago
  Time is a factor here, too. The longer they wait the harder it’ll be to get it back under control - which may not even be possible at this stage, given that they’ve grossly underestimated the scale of the problem at every step. The thing that really worries me is that most people don’t understand how any of this works and are still worried about fuel costs. They have no idea that a further (minimum) 1.5% hike is imminent, and those worst affected (renters/trackers) won’t know that they’re the ones who’ll get wiped out by it. A freeze on rent increases (like the fuel cap) might be needed, but good luck getting this government to agree to that. Edit: as I think about it a rent freeze would be great for shaking the exploitation out of the housing market too.
  - Neil44 4y ago
    You seem to be talking about inflation rather than interest rates
    - highwaylights 4y ago
      Both. Raising the base rate is a tool to reduce inflation. They’re two sides of the same coin.

highwaylights 4y ago

I imagine it’ll nix all fixed rates for a good lot of years. There’s a lot of people that are going to be really hurt in the UK this winter. Many will lose their homes, even those that are renting (who probably won’t see it coming). It’s all well and good to smugly say “you should have understood what you were signing up for” but that doesn’t help people in this situation or their families. It was already becoming impossible for many people to get by with the fuel increases, a lot of people are going to be pushed over the edge before January.

simonswords82 4y ago
I’m sorry but I just don’t see how “many will lose their homes”. Mortgage companies are ruthless but not in the business of turfing out families that legitimately cannot afford their repayments. Evicting people is risky long winded and generally speaking their last option. Unless you've got some data to back up what you are saying in which case I’ll shut up. Edit: Lots of replies saying "but they're not charities etc...". Of course I respect that. I also respect that not all lenders are created equal. If you miss a payment to the mafia you're going to get a different reaction than say to Lloyds bank. I'm referring to your typical UK high street lender. They will not hoof you out of your house if you miss or under pay on one or two payments. Of course, if you do not engage with them and setup a repayment plan - then they will of course take further action.
- mschuster91 4y ago
  > Mortgage companies are ruthless but not in the business of turfing out families that legitimately cannot afford their repayments. German mega-landlord corporation Vonovia announced just a few days ago that they will evict everyone too far behind on payments for heating [1], in order to pacify investors. Never trust rabid capitalism to keep the people in mind. For the beancounters, all that matters is the current stock price. [1] https://www.spiegel.de/wirtschaft/nebenkosten-vonovia-droht-saeumigen-mietern-mit-kuendigung-a-ccab3b65-e4f2-46aa-b681-801c3aadc7db https://www.spiegel.de/wirtschaft/nebenkosten-vonovia-droht-...
  - 4y ago

roenxi 4y ago

Not exactly on topic, but a good moment to think - are mortgages even fundamentally desirable? The price of a house is always going to be exactly savings + mortgage, if nobody was taking out mortgages the prices would adjust and people would end up in the same house as before. It is interesting to ask if mortgages should be rare. It isn't obvious why everyone needs to pledge years of their life to the wealthy in order to own a home. I can imagine alternative scenarios where I own a home without agreeing to give large amount of money to bank shareholders. Mortgages are the entry point to a world of debt that doesn't make sense. The market keeps trying to draw down debt with financial crisis after crisis and the people in control of the monetary system keep making sure it comes back.

the_mitsuhiko 4y ago
For as long as society thinks home ownership is fundamentally desirable so will be mortgages as most people won't be able to afford a place otherwise. Generally speaking life is so fast and unpredictable for people, that home ownership for many is probably individually a lifestyle choice but a fundamental risk. So I think if you want to question mortgages, it's better to question the entire idea of everybody being forced into home ownership.
- roenxi 4y ago
  > For as long as society thinks home ownership is fundamentally desirable so will be mortgages as most people won't be able to afford a place otherwise. Why not? Who do you think would end up owning the houses & how would you expect the market to be structured? Why, fundamentally, would it look much different from today?
- sph 4y ago
  > For as long as society thinks home ownership is fundamentally desirable I'm in favour of challenging that assumption only iff we make private renting illegal. No one except the public (i.e. the state) should be able to extract payment upon the unlucky masses that do not have or can't afford their own home.
justsomehnguy 4y ago

LightG 4y ago

I despair at what the cumulative actions of a good number of assholes have done to a once Great Britain. It's over.

SilverBirch 4y ago

It's getting pretty scary over here in the UK. The government's strategy seems like it's in a doom loop. We have inflation so the BoE is going to hike rates and cause a recession to tackle inflation. But the government have announced a bunch of measures to boost growth (whilst blowing up the deficit). So which is it, will BoE win and cause a recession to tackle inflation (thus causing a debt crisis with massive debt we can't afford to pay?), or will the government win and boost growth (presumably causing spiraling inflation?). Meanwhile, the level of uncertainty caused by this simply must be putting off investors?