Tuesday, Sep 30, 2008
More proof that the BBC are unbelievably stupid
Bank of England: Monetary & Financial Statistics - September 2008
Yesterday, the BBC insisted that mortgage lending was down 98% compared to a year ago, and that mortgage lending was down to £143 million a month. A glance at the tables on page T20 of the actual BoE report shows that gross lending was £20 bn (down a third on a year earlier). It is only NET lending (advances minus repayments) that is down to plus-minus-nothing.
Posted by mark wadsworth @ 09:34 AM (668 views) Add Comment
10 Comments
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1. paul said...
Most BBC editors and newsdesk people studied arts at uni - their graduate intake programme doesn't take geeky economists or mathematicians because they don't have floppy fringes and are sometimes northern.
2. jake said...
Thanks for that Mark.
Lots of newspapers have screwed up these numbers in the last 24 hours. It just shows how little these journalists understand of the financial markets.
A fall of 98% fall is ludicrous. Even in today's terrible economic conditions, we would not see swings that much and they seemed to think it was a month-on-month swing of that degree! Common sense should tell them that would never happen. It's like relying on a calculator to do your sums and blindly following the results without checking them in your head.
Examples:
Telegraph: Financial crisis: Mortgage lending plunges 95 per cent as housing market 'decimated'
Guardian: Lack of loans pushes approvals figure down by 95%
3. mark wadsworth said...
Jake, agreed, other MSM fell for it as well. It's not just the BBC to be fair.
4. beartil2010 said...
The net lending figures are based on the inflow and outflow, and the growth in the market is expected due to the increase in interest on the loans outstanding, let alone the fact that libor and consequently mortgage rates have gone up.
If you have people paying down mortgage debt to the extent that net mortgage lending only increased 5%, in the current circumstances that is in effect a contraction of the total mortgage market. ie. NO new mortgages were created, in effect, which is exactly what we are all hoping to see. This kind of static figure, 5% increase annually, would indicate a stable market.
Unfortunately/fortunately (depending on viewpoint) this may well become a contraction next month, ie. negative lending growth, which is just another pointer that we are on the big slide now.
I took the figures to be accurate as 95% reduction in new mortgage capacity created.
5. Fair_deal said...
May be these were the same people who talked up the house prices thus deluding unsuspecting investors.
6. beartil2010 said...
The Guardian wording is a little bit over the top in places, but it does say clearly 'net mortgage lending fell to £143m in August. This was less than 5% of the £3bn of net lending in July and the lowest level since records began in April 1993'.
It also says (the important bit) 'The number of mortgages approved for house purchases tumbled 70% in the year to August'
So it looks to me like people are paying down as much as they can.
7. uncle tom said...
The gross lending figure does not tell you a great deal, as people who have come off a fix and renegotiate a new mortgage (without moving house) get included.
The nett figure is more interesting as a general barometer, although a stat that compared the total amount of declared income with the total amount of debt would (IMO) be the best use of the available data.
8. Still-waiting said...
@ Paul. Yeah, and geeky economists/mathematicians are so great. Structured Investment Vehicle anyone?
9. Luckyjim said...
JOURNALIST IN MISLEADING HEADLINE SHOCK
The detail is pretty clear when you read the article. As for calling them idiots - pot/kettle/black.
Paul, I made the same point yesterday. You cannot become an economist simply by reading 'The Economist'. Every fool has a view without having studied the subject. MW is a prime example - has picked up a bit of the lingo but hasn't got a clue what he is talking about.
10. mark wadsworth said...
Luckyjim. I have studied the subject. I do not use jargon and I know exactly what I am talking about.