2 years ago, May 2006 to be precise, due to impending birth of our second child & my job at the time going no where I decided to retrain myself as a mortgage broker. Safe job I thought, potential good money & the housing market is a safe bet in which to prosper in a new career (quack quack oops)
Passed CEMAP 1 2 3 while processing for a senior broker, got signed off & started trading in earnest a year ago within a succesful brokerage. Just as I am ready to start making money the mortgage market collapses! Since records began in 1999, mortgage lending is today at its lowest level since records began!
I deal with buy to let (BTL), Below Market Value (BMV), Bridging, residential, life cover and insurances.
I don't give a monkeys what Gordon Brown or Melvyn King are saying - the fact is we are up the creek and the paddles went ages ago!
What annoys me the most is me, you, our families, have to act responsibly with our finances - we insure our car, cat, lives and loved ones. If we over spend we get charged & our credit reports get ruined, we can't borrow. The banks however, they make hay while the sun shines, pay out massive bonuses to all the fat cats, declare huge profits & its happy days for the pin stripes....HOWEVER....
now the goings bad - the banks get bailed out by the taxpayers and the government - its grand larceny, the brinks mat, Grand Theft Auto - I cannot believe what is happening. Where are all the profits now for these rainy days Mr Bank Managers? ????
I go to the bookies and win £1,000,000's over a decade. I have a great time, a fantastic time in fact, plundering my money on all sorts with abandon, consider yourself, my MATES! Then, hard times occur, I am overdrawn, can't pay my debts and cannot borrow money to continue my errant ways. For me and you - we go bankrupt with a smacked wrist BUT if you are a big bank Oh NO, No sirree Bob, The Old Lady of Threadneedle street and Gordon Brown open the cheque book & say
"Sorry to hear you're in hard times old chap, here, take £59 BILLION QUID as a bale out & see if you can start your gambling again-but be careful this time,OK,there's a good chap"
I bank with Northern Rock - the FSA allowed them to operate by borrowing money on the money market. Other traditional banks saw this as risky and did not take this strategy. LIBOR goes up, Northern Rock cannot borrow money, hey presto, out of business BUT hey, here comes Brown and Darling - Laurel and Hardy with their cheque book again
"Sorry to hear your in hard times old chaps, here, take £xx BILLION QUID
as a bale out & see if you can start your gambling again, but this time we'll be watching! Psst please don't tell the tax payer as they are funding this. Oh and here is £800,000 for the chief exec, Appleforth, well done old chap, here, take £800,000 for screwing the company with your high risk lending strategy" (today 2000 job losses were announced at Northern Rock - 01.05.2008)
So back to me as a broker.
1. There are 75% less deals available for BTL today as a year ago
2. I am dealing with more declined cases than approved, even clean credit customers, lenders do not want to lend
3. Even if you do pass a mortgage lender credit score - deals don't fit any more as rates are too high and keep going higher.
What to do?
1. The government will have to invest £billions more into the banking system over the coming months
2. Lenders need to declare their losses IN TOTAL - NOW and move on.
I believe we are heading into times of stagflation, recession possibly depression & Brown and Darling are Thelma and Louise....
Lenders got us into this mess and they have a duty of care to continue sensible lending policy to get us out. Moral Hazard indeed.
Its one rule for the banks and other rules for us...reminds me of a quote from the book Animal Farm - All animals are equal BUT some are more equal than others...
Today 1st May 2008, a builder mate of mine had to lay off 3 workers. He liked them all so could not face telling 3 people from his 5 employees - so they played cards for who goes, who stays, true story.
Watch this space..as Karen Carpenter says "we've only just begun...