Thread by @db_fink

So I searched for news of banks "battening down" the hatches this morning.

The results weren't exactly reassuring😬

But I found the story I was looking for.

There are some lovely nuggets of the "finger in the air" approach to risk assessment in here.

Some snippets:

bloomberg.com/news/articles/…

One in six mortgage holders has already paused their repayments.

Regulators, meanwhile, say they don’t know how much was loaned to those most at risk of losing their jobs in the downturn: the workers in the booming gig economy.

Sub-Prime

Mortgages for workers without guaranteed hours were common before the pandemic, with banks charging interest rates in line with more secure borrowers...

High LTV

Banks and customer-owned lenders advanced as much as 95% of the house price to the borrowers, he said.

The pandemic is already throwing up some surprising home loan data.

One in two borrowers in some prime residential mortgage-backed securities took a payment holiday compared with an average of 28% for subprime pools, data compiled by Moody’s in July show.

Banks aren't passing on the rate cuts

bloomberg.com/news/articles/…

Meanwhile, the latest FCA draft guidelines are very open to interpretation.

fca.org.uk/news/press-rel…

"We are proposing that firms contact their borrowers in good time before the end of a payment holiday, and work with them to come up with a tailored plan to help get them back on track. Firms should not take a ‘one size fits all’ approach.”

Where borrowers require further support from lenders, either at the end of payment holidays under our guidance, or where they are in need of support for the first time, this would be reflected on credit files in accordance with normal reporting processes.

Whilst support is being encouraged, the easy ride appears to be over, and credit profiles will surely begin to slip.

The end of the furlough scheme on the 30th of October will see unemployment rise.

So, what will Rishi do?

news.sky.com/story/coronavi…