Prudent Lending

If there was ever a sign that the market has topped, and is struggling to stay afloat, here it is.

From the Financial Times:

Lenders set to launch the ‘five-minute mortgage’

A number of specialist mortgage lenders are drawing up plans for instant mortgage approvals that would give house hunters access to immediate mortgage offers without even requiring them to obtain a formal property valuation.

The move comes as strong growth in the availability of electronic information accelerates the process of securing finance on property purchases. Fierce competition among lenders is also driving greater product innovation as they seek new ways to attract business.

The new service could mean that home buyers are able to secure an unconditional loan in a matter of minutes rather than the typical one or two-week time frame they currently face.

However, some property experts have voiced concerns over these unconditional offers. Melanie Bien at Savills Private Finance, says: “They do look extremely risky. Lenders want evidence that the property is worth what is borrowed and without this they could end up with their fingers being burnt.”

Reading this piece makes me ill. The only reason for the 5-minute loan is to enable impulse-purchasing of homes.

Can anyone help me understand why a one week timeframe to secure funding is a problem? Because, well, I can’t really think of any reason at all.

Contrarians take notice, if this piece represents the state of the market, the burst of this bubble is going to be painful.


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4 Responses to Prudent Lending

  1. seattle price drop says:

    Wow. When is somebody with a big stick going to step in and stop this lending insanity?

    Doesn’t it seem like this ought to be the really big signal that there is no such thig as self-regulating in the US loan industry?

    And they come out with this just as the ARM resets and foreclosure rises are beginning to hit the local news?!

    Is anybody in charge?!

  2. Anonymous says:


    The first few that come to market with this time of product are going to corner the market on ex-NAR/ex-MLS Websites.

    After that, they can tighten their standards.

    But after the FTC breaks up the RE
    “Cartel” it’ll be a free-for all to get the site up and going, and there’s going to be some bloodshed.

    Did you see the article this week about the venture capital seeking a CEO with this type of experience?


  3. Anonymous says:

    Gosh darn, 11:29, now you’ve gone and ruined reinvestor’s Saturday.

    I was hoping he didn’t see that one.

    Now we’re in for it.


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