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Friday, 19 December 2014

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First mortgage? Then pay attention

It was a tense day of deep strain and toe-curling fear. The man in the suit, leaned forward across his desk and demanded an answer...

“Are you absolutely sure you can afford this?”

It was my first mortgage application. Actually, to be more correct, it was an application for my first mortgage. He – the man who was making my palms sweat – was the first building society director to have taken me seriously.

In those days single young women weren’t considered reliable enough to entrust with property purchase. Flibbertigibbets at best, unlikely to be able to hold down a job at worst – just women and therefore inferior.

At least he’d deigned to listen to my pleadings and promises... even told me to call him Geoff.

“Not absolutely sure, no.” It seemed wisest to be truthful. “It’s a lot of money, a large part of my monthly pay and if interest rates go up, I’ll be right in the soup.”

“Then you’d better pay attention,” he warned.

Expecting another brush off, anticipating one more of those “come back when you’re married” or “what happens if you get pregnant?” lectures, I braced myself for humiliation.

“This will always be your priority,” he said. “Until you’ve covered your monthly mortgage payment you don’t go out socialising, you eat jam and bread – all month if necessary – you don’t use the phone for other than emergencies and you certainly don’t shop for clothes and makeup. Get it?”

“I get it.”

“Then, congratulations! You’ve got it. And by the way, expect interest rates to go up.”

They did. From eight per cent to 13 per cent in six months... there was a lot of jam and bread involved in the struggle to keep roof over head and wolf from door. It seemed like an interminable period of intense nervousness.

Now, in attempts to avoid reckless mortgage lending, applicants are going to have to itemise their spending habits – in detail – from what they spend down the pub of a Friday evening to how much and how often they splash out on a hairdo. From how frequently they indulge in a Sunday roast to why they need to drive a car.

There might well be some method in the madness. I think we all know interest rates are going to have to go up from their mercifully low base pretty soon. Those of us with first hand experience of punitive rates, would hope to avoid young first-time buyers having to go through what we did.

But the logic of the revised strategy would seem to owe everything to how times and attitudes to financial dealings have changed since a young woman with trembling hands, asked for a 25-year millstone to be hung round her neck.

He, a banker through and through, was a man who could be trusted. Not many of those to the pound now.

His advice wrapped in caution was solid, well-intentioned and scrupulously true. You take on responsibilities and service them with all you can muster for as long as is necessary – or you lose your home. And Geoff was a man you didn’t feel you’d want to let down.

Are lenders who today want to factor the price of highlights and a blow-dry into ability to meet repayments, looking after the best interests of borrowers – or, fearful of heel-snapping regulators – watching their own backs? I know what Geoff would say... and I’d agree with him.

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