Phoebus Software is celebrating the tenth anniversary of their partnership with GE Money Home Lending this
month. Currently in excess of £10bn of GEMHL loans are under management on a Phoebus system. The
consultancy provider’s software first went live assisting the servicing function on GEMHL’s mortgage book in
March 2002.
8 May 2012
For economic historians, the name Phoebus immediately brings to mind one of the defining moments in the development of modern corporate practice. While I’d like to say it’s because of our company’s gleaming contribution to lender software, the reason is rather darker and – fortunately – completely unrelated. The Phoebus lightbulb cartel was an agreement between Osram, Philips and General Electric that lasted from 1924 to the outbreak of the Second World War. It was the first time the world ever saw a formal agreement to design and produced products with planned obsolescence. The cartel levied fines on members who manufactured bulbs with life expectancies greater than 1,000 hours, allowing the cartel to scale back R&D, artificially hike prices and enormously boost their profits.
3 May 2012
After a long stay of execution, interest-only mortgages now seem condemned to the gallows. Co-op’s decision to remove all of its interest-only products confirms what most in the industry already know – non-repayment mortgages don’t seem to have any place in a recovering property market.
The only surprise is the announcement took so long to come. Lending to borrowers who may have no intention to try to pay off their principle is based on a thesis the credit crisis disproved. Property values don’t just rise and rise. Bricks and mortar, like any other asset, is only worth what somebody is prepared to pay for it – when that price goes down, interest-only becomes a very uncertain bet.
3 May 2012