Bradford & Bingley being nationalised, just as Northern Rock was, spells the end of self cert mortgages.
Bradford & Bingley were the leading provider of self cert mortgages and buy-to-let mortgages and now we will see the two mortgage products being phased out.
Over the next couple of years B&B’s mortgages will be slowly run down and it is very unlikely that the government will want to use taxpayer’s money for new self cert mortgages or buy-to-let mortgages.
This means that we will be looking at the end of an era for self cert mortgages and buy-to-let mortgages. This means that two huge mortgage products will be all-but ruled out, as many of the other banks are loathe to offer these kinds of mortgages, noting the risk that they pose in today’s volatile climate.
The removal of both self cert mortgages and buy-to-let mortgages, will mean more pressure on house prices and on those who have buy-to-let mortgages that are going to need refinancing.
There is mounting evidence that the so-called necessity for building societies to ‘evolve’ into banks has only put pressure on these specialist self cert mortgage lenders to grow their profits as public companies and therefore taking on mortgages and loans that were only going to cost the British economy.
Self cert mortgages raised too much money too cheaply on global money markets, which, although helped people onto the property ladder, has landed the economy and other people hoping to buy in hot water.
It seems that every single building society that has become a public trading bank, has collapsed under the pressure of self cert mortgages and buy-to-lets and is now hoping to be rescued or swallowed up by a bigger bank.
In the days were Northern Rock hit rock bottom and was taken into public ownership and HBOS, owner of the Halifax, was bought by Lloyds TSB, in a bid to rescue the bank, we are seeing the end of a credit country.
Nationwise – one of the only building societies that refused to follow suit – is still be standing, quite strong in fact.
Let’s hope that the B&B nationalisation is the last serious crisis for UK banking, but is this just optimistic? And although this looks like the end of self cert, have we really seen the end of this type of mortgage product?
