Thursday, Sep 20, 2007
Building Society mortgage approvals plummet
Building Society Association: Savings Reach Record August High
The Building Society Assocation press release this morning headlined with a positive message of savings growth. The real story is the 22% fall in gross mortgage advances in August 2007 compared to August 2006. This follows an 8.7% drop in July.
Posted by david2000york @ 11:49 AM (1863 views) Add Comment
27 Comments
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1. planning4acrash said...
Flippin heck, big news. Combine that with the fact that many advances now will be re-financing of existing fixed rates.This will have a dramatic effect on prices given that supply of houses is increasing.
2. Equitystasher said...
This is very good news. 39% fall compared with last year is a big drop and 8.9% drop in one month for July before the credit crunch and the bearish news really got going points to even better figures in the months to come.
Hopefully these figures will find there way into the main stream press to ram home a few more home truths about what is going on with the property market.
3. Tulipmania said...
Those are pretty startling figures, especially the net mortgage figures which seem to me to be the best indicator of future trends.
Seems to conflict with figures from the British Bankers Association however. http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=103
4. David2000york said...
CORRECTION - Fall in 22% not 39% - sorry for my bad maths!
"Building society gross advances amounted to £4,341m in August 2007, compared to £5,582m in August 2006" - 22%
"Net advances were £656m in August 2007, versus £2,190m in August 2006" -70%
"Approvals were £4,168m in August 2007 down from £5,540m in August 2006" -25%
5. inbreda said...
With the exception of news items relating to Gordon Browns latest thefts, I enjoy visiting this site more and more every day thanks to news stories like this!!
6. shipbuilder said...
Sometimes with most of the articles you get on here I get almost numbed to the hype, with headlines of plummets, crashes and soars etc., then when you read the article there's been a 1% fall or a 1.5% increase. In this case (and in more and more over the last month) there genuinely do seem to be some impressive changes. Are we finally seeing the top of the slope?
7. mrmickey said...
If our banking system is in a shambles without a houseprice crash, what will it be like when the banks are carrying mountains of bad debt from repossessions. Carol Voderman is still pushing dodgy loans on tv what happens when all these debts go belly up.
8. voiceofreason said...
Though 3 days earlier, they published this report !!
"BSA report into UK public’s attitudes to homeownership reveals steadfast confidence in housing market"
http://www.bsa.org.uk/mediacentre/press/house_price_expectations.htm
quote "A fall in house prices will not result in panic selling"
9. planning4acrash said...
"Those are pretty startling figures" - What's really startling is that we have been allowed borrowed more than the Country's GDP!!
10. harold said...
The BSA's report is toilet paper-thin prodaganda.
11. harold said...
Prodaganda? I think I mean propaganda.
Prodaganda is a cruel sport involving geese, I believe.
12. paolo88888 said...
All this money flooding into building societies puts paid to the idea that everyone is in debt. And it means that the "mountains of bad debt from repossessions" can be absorbed.
13. harold said...
"And it means that the "mountains of bad debt from repossessions" can be absorbed."
...and they all lived happily ever after.
14. inbreda said...
Paolo8888 - you'll have to explain yourself - your comments make no sense.
15. uncle tom said...
When people save more, they spend less, which in turn puts a reverse thrust on the economy.
They save more when consumer confidence falls, so if the population believe there is going to be a recession, their reaction to that belief tends to cause one.
These figures might be slightly skewed by the scramble to attract savers with ever higher savings rates - need to check the BOE data at the end of the month.
16. Drewster said...
This data only covers building societies. It doesn't include banks who make up an increasingly large proportion of lending, nor does it include specialist mortgage lenders like Paragon, Kensington, MortgagePoint, etc. I imagine the mortgage approval figures for the latter group have fallen even larger due to the collapse in demand for their bonds; but we won't know until they release their own figures.
17. confused76 said...
Paolo
Absorbed by whom??
Who is in debt and who has deposits are (in general) distinct individuals
unless you want savers to bail out people in deep debt
18. p. doff said...
I think that Paolo is merely pointing out that savers substantially outnumber borrowers, and that only a small proportion of borrowers are in any sort of difficulty.
Also note that some of those in difficulty are arrangeing to sell to these 'buy-your-house-dirt-cheap.com companies - so won't get repossessed. The numbers that do get repo'd are unlikely to lead to HPC. It will take a more substantial trigger, such as escalation of the current banking liquidity problems. Hence the governments 'bail them out at all costs' policy.
19. mrmickey said...
Ok so we've suddenly gone from spend, spend, spend to save, save, save that to my mind spells deflation as the money circulating in the economy ends up in savings accounts and not in houseprice inflation.
20. dugmug said...
p.doff..."Also note that some of those in difficulty are arrangeing to sell to these 'buy-your-house-dirt-cheap.com companies - so won't get repossessed. The numbers that do get repo'd are unlikely to lead to HPC."
Repossessions will often get sold at auction, and in lean times usually below market value, hence making the Land Registry average sale price data (amongst others) go down. Hence showing up an HPC.
buy-your-house-dirt-cheap.com companies also have to register their purcahses with the Land Registry just like everyone else, and by definition the pruchase will have been at below "market" value, hence making the average house price data go down........you get the picture (I hope).
21. inbreda said...
What Paolo fails to realise is that people are saving more rather than buying property thus exacerbating the number in repo.
The very fact that they are saving is going to add to the woes of property holders.
22. Worried said...
i wonder how much of this represents the SOLD TO RENT FUND!!!!!
23. wage slave said...
After the events of the last week I would be sitting tight if I were a FTB or BTLer, at least for a while, taking out a big mortgage is a huge commitment in these turbulent times.
This should reduce demand and hence asking prices.
24. enuii said...
There is a very significant factor that has been missed here as a lot of people have moved their savings to the relative calm of savings accounts. I know a number of people who have shifted not insignificant ammounts from stock market / property investments to high interest savings accounts.
These figures are not people all of a sudden saving, they are simply moving their existing wealth.
25. inbreda said...
worried has a point.
Confirms the fact that these increased savings are probably the end of the boom for housing.
26. su said...
I don't know how the stockmarket works. What is the likely effect on the stockmarket if investors are withdrawing substantial amounts of money to put in savings accounts?
27. cyril said...
Su - The stock market is indeed mysterious, but here's how it works. In the old days it was a big room with a bunch of overpaid yobs shouting at each other. But now they stare at screens and shout at each other over the phone.
If people withdraw their money they shout louder, but nobody knows what effect it has on anything else.