Home loan personal uk

In Wooler, Northumberland, last month a Barclays cash machine started paying out twice the money requested. Within hours, the machine was emptied as a throng of grateful Woolerites queued to take advantage of its largesse.

Something similar happened in Urmston, Manchester, one night the following week, when a Halifax cash machine gave out an extra [pounds sterling]20 note with every transaction. Word spread fast. Urmstonians gathered. "There was a real street-party atmosphere, with everyone walking around with massive grins," a local taxi driver told the Daily Mail.

We like our "Cash machine goes haywire" stories. A few ordinary Joes enjoy a windfall. We all have a chortle at the incompetence of the big banks. And after all, they can afford it, can't they? But there is an irony, in that the industry we choose to hate, deride and pilfer from is now the biggest single chunk of the British economy. For better or worse, the fortunes of the banking industry--more than any other--will determine our economic well-being in the next few years. The banks have always been central, because of their control over the supply of capital to business and consumers. But they are doubly important now because of their weighting in terms of jobs, assets, spending, dividend flow and tax contributions. They are big beasts.

Of the top dozen biggest companies in Britain, five are now banks. The biggest, HSBC, is valued at [pounds sterling]90bn - which is precisely 36 times the size of that erstwhile symbol of blue-chip corporate Britain, ICI. Royal Bank of Scotland is worth about [pounds sterling]49bn, which would buy you all of Tesco's, Sainsbury's, Boots, Dixons, Next and Marks & Spencer and still give you change.

Barclays, at [pounds sterling]32bn, is more valuable than BT, British Airways, B Ae Systems and BAA (which owns Heathrow and Gatwick) combined.

As I write, Luc Vandevelde has just been turfed out as chairman of Marks & Spencer, triggering reams of media speculation about who will succeed him, not to mention acres of analysis of what has gone wrong (again) at Middle England's favourite shop. Meanwhile, Royal Bank of Scotland's chief executive, Fred "The Shred" Goodwin, has rather more quietly just spent [pounds sterling]5.8bn in cash buying an obscure bank in the US called Charter One--a deal that barely made a mention outside the business pages.

The future of M&S is very important. But, as far as the macro economy is concerned, forays such as Goodwin's are just as influential.

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After personal pensions, endowment mortgages and split cap trusts, what is going to be the next mis-selling scandal? There is, alas, little doubt that there will be another scandal. Until financial institutions completely reform the way they reward their sales staff and their bosses--and their bosses' bosses, too--more mis-selling there will be. What with short-term bonuses, all the way up to board level, rules will be bent and blind eyes turned. One very senior banker whispered in my ear the other day that self-certified mortgages are going to be the next problem area. With these home loans, customers do not have to prove their income levels and lenders take what they say on trust.

As I have previously written in this column, it's possible that huge numbers of people, in their desperation to buy a home, are lying to secure the necessary mortgage. And they are being abetted by the home-loan industry, which is eager to meet lending targets and secure bonuses. Self-cert mortgages are booming. Given that they are really only suitable for the self-employed (for anyone else, it is simplicity itself to provide proof of income through a payslip), one has to wonder why. The obvious answer is that, for many people, they are the only way of securing a big enough home loan.

My banker chum tells me that independent financial advisers receive at least 0.3 per cent of the loan in commission. That's [pounds sterling]300 on a [pounds sterling]100,000 loan. Even ordinary bank counter staff are given [pounds sterling]20 or so for every mortgage completion. There are many ploys designed to bypass the rudimentary checks that banks still make. One is to tell a nurse on [pounds sterling]20,000 to call herself a medical technician and say she's on [pounds sterling]40,000. Suddenly, that previously unattainable [pounds sterling]120,000 flat comes within reach.

If the housing market does eventually go into sharp reverse, leaving some of these buyers in negative equity, they may well have a claim against the bank or IFA that encouraged them in their fabrications.

The squillion-pound derivatives industry is enormously innovative and versatile, we are led to believe. You can bet on the future movement of any price, hedge against any eventuality. So why is it that, when there's a spike in the price of oil, the world's airlines (including, most recently, British Airways) are always caught short and have to introduce fare surcharges?