New 0% Mortgages: The Fools Mortgage?

[mairteenpak]

Some Developers, are devising new ways, for Buyers to purchase expensive apartments.

With the reluctance of the Banks to lend 7 times earnings, to borrowers, to purchase apartments, any longer and instead simply lending up to 5 times earnings, the shortfall in purchasing power, will be made up by the Developers, lending the balance required, of up to 30% of the purchase price, @0% interest for seven years, by such time the builders, say they confidently envisage, the property value, will exceed the total price, enabling the buyer to remortgage, for the outstanding sum, or to trade the property.

Am I the only one who hears the alarm bells.

1) Who would pay more for a property than a bank would lend against it?
2) Do the Builders not need a Banking licence to do this since they would hold a second charge on the property?
3) Should Builders be allowed to lend in this fashion?


Are there fool's out there who would buy such properties as opposed to waiting for the fire sale that must come?

If you cant afford to pay the interest on the total cost of the property you can't afford the property.

Is it really just a device, ( using smoke and mirrors) to allow banks to lend 100% funding to purchasers who can't afford to buy?

[digoutday]

Its going to be very interesting to see the moves from Zanu-FF regarding propping up their buddies in the building business. I have noticed that yer man from the CIF is looking more and more tired as he makes his appeals to be bailed out by the masters of corruption and economic mismanagement.

The only way to solve this problem is to let some of the foolish builders and banks go to the wall.

[Aindriu]

Is it really just a device, ( using smoke and mirrors) to allow banks to lend 100% funding to purchasers who can't afford to buy?

More like Bertie's famous 'smoke and daggers' - the smoke to blind you into what you are agreeing to and the daggers to stab you in the back when you suddenly find you can't afford it anymore.

[Supermanpolitician]

This offer should send alarm bells ringing.

They want to sell the property, but they don't want to face the harsh reality of the market. People can't afford to pay the price. So instead they are stumping up the price of the difference between what you need and what the banks are willing to offer. Theoretically they will only get caught for the interest while the purchaser still gets to repay the prniciple of the loan. SOunds nice. Until you appreciate that the price is set by the person offering the loan. It simply does not make sense. It's a grasping at straws measure. Whoever thought of it has no grasp of economics and is relying on having enough stupid people come in and take up the offer.

Yes indeed. A fools's mortgage.

[wysiwyg]

Yup, people should go ask the developer if he's willing to "loan" them say.. 50 grand... if he says ok, just say, no, take 50 grand off the price... actually.. make it 100 grand. About time they faced up to the mess they were involved (amongst others) in creating

[Supermanpolitician]

Actually a couple of interesting points.

1. In order to offer a loan you must be approved by the financial regulator.
There was a case a few years back where (and I could be corrected on this) I think a trade union had a svaings scheme which then allowed them to give out loans to members. Illegal and was s hut down, even though there was no illegal intention on their part.

2. Tom Parlon was advocating government backing of the CIF. Surely government backing of industry is the very antithesis of PD ideology. Not a huge fan of government intervention myself except where it is areas which are essential such as health, education and infrastructure. Government has no business interferring with industry.

3. House prices are too high. Facing the reality now is better in the long run. If you try to prop things up now, they will fall eventually. If you let them reach their natural level on their own, then they will rise back up on their own.

4. The housing market on its own is not the economy. No industry on its own will make an economy. Others tried to warn them. They ignored it and they are still ignoring it. If people don't have other jobs to pay the mortgage, then why do we need more houses.

5. There are sixty tousand unoccupied units in the country. Old school economics. Supply has outstripped demand. Something has to buckle.

6. Other areas of the economy are surviving, especially higher skilled value added areas. They will see this as an opportunity to buy larger houses formerly occupied by construction workers.

[Aindriu]

The housing market on its own is not the economy. No industry on its own will make an economy. Others tried to warn them. They ignored it and they are still ignoring it. If people don't have other jobs to pay the mortgage, then why do we need more houses.

I fully agree. The problem is that no FF TD believes that. They have built an economy on people buying and selling houses and thinking they had become rich. Anyone who voted FF last year only have themselves to blame if they are in the pooh now.

[Supermanpolitician]

The housing market on its own is not the economy. No industry on its own will make an economy. Others tried to warn them. They ignored it and they are still ignoring it. If people don't have other jobs to pay the mortgage, then why do we need more houses.

I fully agree. The problem is that no FF TD believes that. They have built an economy on people buying and selling houses and thinking they had become rich. Anyone who voted FF last year only have themselves to blame if they are in the pooh now.

Totally agree. I was at the home of a very wealthy FF supporter last year who believed exactly that. She said that McWilliams was trying to talk the housing market into a depression. I tried to point outthat things were inbalanced but she put her fingers in her ears and went la la la la la la...a bit like Biffo.

[HanleyS]

The loans currently on offer are from Simply Mortgages? According to The Pin.

[digoutday]

The loans currently on offer are from Simply Mortgages? According to The Pin.

Desperate measure by them.....prices need to fall. In the next 6 weeks there will be no activity in the market as people wait and see, its now a case of who can survive the next 6 weeks.