Will Changes in Mortgages and Remortgages Be Witnessed however Again?
A shared characterize of the credit crunch has been the changes in the finance industry caused by mergers and take overs. Britain is the only G20 country nevertheless to be in the grip of the recession. The collapse of The Northern Rock was the first and biggest collapse of any major lending institution.
Savers throughout the UK were reduced to a state of panic due to what was occurring at The Northern Rock and many thousands waited outside all their branches for hours to withdraw their savings in case they were lost for ever. The Government took over the ailing society and no member of the public lost out as a consequence.
After which the RBS sailed into extremely stormy waters and had to be bailed out however again by the UK tax payer and the major part of that bank is now also tax payer owned. The recession was to a large extent caused by the reckless lending in loans mortgages and remortgages by these very edges.
Prior to the credit crunch 125% mortgages and mortgages were freely obtainable from The Northern Rock. This meant that a mortgage or remortgage borrower could borrow up to 25% more than the character was worth. This was all very well when character prices were rising at a fast speed, but when prices started to fall the society really was in serious and thorough trouble.
Individuals, who in the 60’s would have been regarded as simply crooks in their character development activities, were until recently being granted loans and commercial mortgages by RBS and HBOS.
All this has been tightened up and such things as self certifications of income for self employed loan, mortgage and remortgage borrowers is no longer obtainable.
There are always changes made in underwriting criteria when edges and building societies merge or experience a take over. With today’s announcement of the merger between The Chelsea Building Society and The Yorkshire it is to be expected that underwriting criteria changes will occur with them as it always has with other mortgage lenders in the past
Of course already before the recession mergers and take overs did occur, most notably when the Spanish giant, Santander, took over The Abbey National Building Society and later on The Alliance and Leicester also became Spanish owned.