Archive for January, 2010
Northern Rock Together Mortgages – Higher Repos
Northern Rock has revealed that its controversial 125% Together mortgage now accounts for two thirds of its repossessions. Mr. Vince Cable of The Liberal Democrats used to warn that these mortgages were potentially dangerous to the banking industry and certainly with the amount of repossessions there are from this type of mortgage is proving true.
Northern Rock did not want to notice that if people could not raise a deposit or enough money for legal fees, furniture and whatever else when buying a home that they were a risky bet. A home bought for £100,000 meant that Northern Rock on their Together Mortgage would often lend £120,000. Of course if house prices were to continue to sky rocket some equity may have been gained but 25% was a lot to hope for particularly in the last year of the bubble when most sane people were realising that this could not go on indefinitely with or without the banking crisis.
Mortgage Fraud Accounts for 18% of all Fraud in UK
In 2009 fraud in the Uk has broken the £2 billion barrier for the first time. Mortgage accounts for 18% of that figure.
With numbers like these it is easy to see why banks and building societies have become more careful about lending money and checking applicants income claims more carefully. The UK land registry system also needs an overhaul as some of the fraud takes place on homes where the owners do not know that a mortgage has been raised against their property. Identity theft is becoming a huge problem and we all need to be very careful about disclosing personal information and checking our records that nothing unusual is happening.
The forecast is that the problem will get worse and possibly the amount of fraud may reach £5 billion per year! That is a staggering amount. Unfortunately it will be as usual the innocent that have to help pay back the amounts defrauded through higher interest rates and charges.