I’m getting tired of the credit crunch stories now. Every day we hear of cases where people are having to sell their homes because they can’t afford their mortgages, even though they’re in negative equity and will still be paying for something they no longer have for a good few years to come.
Yes, I think it’s sad when hard-working people who are simply trying to create a decent home for themselves are hit by this but isn’t it a fact that if you take out a mortgage that you can’t afford to pay, then you’ll have to forfeit your home? Didn’t these people know that before they went to the bank?
Once upon a time you could borrow around 3 times your income up to about 80% maximum to invest in a property. In other words, you had to actually save for a deposit and BE ABLE to repay the loan but 100% mortgages eventually became the norm, being offered to all and sundry regardless of income and repayment ability. Surely, if somebody borrows more than they can reasonably afford then it’s their own look out when they can’t keep up the payments? And similarly, if the banks are stupid enough to lend money to people who don’t have the means of repayment, shouldn’t it be their loss when things go tits up?
Yes, I know that interest rates have risen but anybody with any sense surely knew that was a possibility when they take out a mortgage? Shouldn’t they have calculated with that possibility before they dived in? Or is the desire to own property so strong that we’re willing to risk anything for the sake of it? People say they want the security of owning their own homes but in all honesty, I feel a whole lot more secure in my rented property (housing association with secure tenure) than I would in a mortgaged house that I couldn't afford.
Just a few days ago I heard of a case where a woman was offered, before the credit crunch, a ‘self assessment mortgage’. Her mortgage broker put her income down as £95,000 even though she actually earns just over half of that. Shouldn’t mortgage brokers who advocate this kind of procedure also be held responsible when problems arise? And what have credit institutions been thinking when they’ve been willing to throw money at people without even checking their income? Not that those who took out self-assessment mortgages based on fabricated figures are innocent - far from it - but why on earth should the tax-payers have to bail out the banks because of their own stupidity?
If people had just stuck to what they can afford (and I’ve lived beyond my means before so am not entirely innocent either) instead of thinking they deserve a big house, better car, luxury holidays or whatever, then this housing crisis would never have arisen. Banks wouldn’t have had the opportunity to lend more money than people could afford to repay and nobody - with the exception of the few whose circumstances have changed drastically since taken out a mortgage/loan - would be in danger of losing their home or spending sleepless nights waiting for the bailiff to knock.
If you ask me, greed is synonymous with stupidity, whether it’s on the part of the banks or the borrowers themselves.