Tuesday, Oct 21, 2008
Mortgage lending and prices are back to 2005 levels
Metro: New slump in mortgage lending
"A total of £17.7 billion was advanced during the month, 10% less than during August and 42% below the level for September last year, according to the Council of Mortgage Lenders. The figure was also the lowest since January 2005, and the weakest figure for the month of September since 2001." A quick look at Nationwide's 'house prices adjusted for inflation' shows that in absolute terms, prices are back to early 2006 levels, and adjusted for inflation, back to late 2004 levels. Which supports my theory that house price bubbles and credit bubbles are two sides of the same coin.
Posted by mark wadsworth @ 10:32 AM (1452 views) Add Comment
33 Comments
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1. little professor said...
HMRC figures have just been released too.
LONDON (Reuters) - The number of property transactions in Britain fell 53 percent on the year in September as the housing market slump intensified, official data showed on Tuesday. Revenue and Customs said there were a seasonally adjusted 59,000 property transactions in September, down from 60,000 in August and compared with 126,000 in the same month last year.
2. nooneo said...
This is just more evidence of the massive hole left intially by the mess that the US sub-prime and property bubble market mess has left in the internaional money markets. This has been multiplied by all the panic asset selling as banks and big bussiness attempts to stave of bankruptcy by liquidating their assets. MArk W is absolutely right in his assumptiuon that credit bubble facilitate asset bubble of all sorts including property. It's also the same reason why the price of oil went through the roof in the summer.
I also am surprised (particularly in the london stock market) how commentators apear to have vastly underestimated the way the banks, having trashed their own finances by buying into the totally over-the-top derivative market, have increased the nightmare by selling billions of pounds worth of shares, bonds and gilts in an attempt to get some cash in the kitty because they couldn't borrow on the international markets.
Why oh why has this mess been allowed to happen. I despise this blubbermint because, having relinquished responsiblity for IRs to the MPC and creating the dog wioth no teeth that is the FSA, they can spend the rest of their last parliament attempting to blame everyone else for this mess.
It's like blaming drug dealer for selling drugs, when the police force has taken an extended sabbatical ! The lunatics have taken control of the asylum.
3. planning4acrash said...
Just goes to show how crazy the recent boom was and how inane the public are for not recognising that this is a financial WMD for theft, consolidation and to put the capstone on the totalitarian world financial system.
4. mark wadsworth said...
Nooneo, hang about here!
The UK property bubble was far, far worse than the US one. We (i.e. the government) should try looking a bit closer to home.
5. mark wadsworth said...
Oops.
6. titaniccaptain said...
"The fall in net lending, which strips out redemptions and repayments, would be even more dramatic, at around only £40 billion, less than half the level of net lending of £108 billion in 2007, and below the CML's previous forecast of £55 billion for the year. It would also be the lowest level of net lending since 2000, when advances on this measure reached £40.7 billion"......................................WOW what will it be like in 12 months?
7. nooneo said...
mark wadsworth @ 4 said...
"The UK property bubble was far, far worse than the US one" - I totally agree. I was just saying that the trigger for our property crash was the freezing of the international money markets brought on by the US property crash. I firmly beeive that our crash would've happened anyway, give or take a year or so. But yes, our property bubble is by far a larger bubble. This is the lie that everyone is currently persisting with, that all the problems are related to the US market. Our market has only just started to go t!ts up. The sub-prime market in this country is vastly understimated and the ensuing crash will prove this.
The last 2 or 3 years of BTL property buying, coupled with the self certification fraud, the massive amount of interest only mortgages and the absolutely ridiculously ramped up property prices will result in the crash going to at least 50%.
Love the drawings by the way, but I have to admit that Mandy is far scarier in the flesh !
8. mark wadsworth said...
That's the thing about Mandy. On a human level, I find him rather appealing, with his Stan Laurel face, floppy hair and cuddly dogs/unassuming boyfriend etc.Not that I've ever met him.
9. mark said...
mark w: mandy hangs out at the Hook'd at The Arches if you fancy meeting him....lol
10. nooneo said...
mark wadsworth @ said...
"That's the thing about Mandy. On a human level, I find him rather appealing" - remember Adolf Hitler was an animal loving vegetarian !
If Ann Widdecombe famously said there was "something of the night" about Michael Howard, the description of Mandelson would possibly be illegal to put in print. I suppose his appearance is more honest than most politicians, he does actually make my skin crawl when I see him, whereas most potilicks (for they are parasites), I do beleive , have no shadows and their reflections cannot be seen in mirrors !
11. mark said...
does anyone know why british airways shares have shot up today? i cant find any news that would give a reason, only the shares are still cheap.
12. nooneo said...
mark....
I suspect that BA shares, like an awful lot of other shares, have fallen too far becasue of massive profit taking. Some of these share prices have fallen so far that the people with all the money are seriously thinking about hostile takeovers or just acquiring large chunks of businesses that are not, in the long term, seriously threatened with going under.
But then again Im no expert.
13. mark said...
yeh pretty much along the lines i thought..
14. matt_the_hat said...
Someone has taken your advice Mark and bought Barclays and BA (more fool them) ,-)
15. matt_the_hat said...
No sub prime here its those Americans
16. mark said...
matt good buy...i see they announced some good news today.. i just sold off the British airways that i bought and sold the other day and bought back, so that was a nice earner in just over a week...
17. mark said...
matt an interesting one is IFC INDIAN FILM COMPAN ORD NPV for a punt... very cheap at moment, slightly high risk, but worth a punt in my opinion; take you own risks and take advice first... not from me..lol
18. japanese uncle said...
One may wish to say prices are back to 1992 level. Unfortunately however the house price depression is associated with the full-scale collapse of the financial/credit system this time around, as even the slowest thinking can see sparkling clear by now. Thus HPC is most likely to far overshoot the 1992 level, maybe 1980 level, God knows.
19. techieman said...
mark im a little confused, i have no probs with you making the money on the barclays shares but ... with respect... the values you are punting arent going to have the boyz running for cover. I was reading yr posts and 6% on £20k? Im just a bit confused and didnt see how that gives you anything worth talking of... are you able to short? Do you trade futures or options? Day traders that can only buy have a tough time....if you can make money long term on that basis in a bear market then fair play but.... Me? Am looking for a final swing low in this market. Have had 2 but was looking for more rangey choppy stuff at the moment.
20. titaniccaptain said...
Introducing Japanese uncle..................the MEGA BEAR............Im with you JU
21. matt_the_hat said...
18. japanese uncle
In real terms YES in nominal terms the worst is over phew
22. matt_the_hat said...
Mr techieman - where can a poor-per like myself trade futures and can you see prices before you sign up to an account
23. shipbuilder said...
So mortgage lending returns to more or less 'normal levels' i.e. when banks did not require funds from the money markets to lend.
This is exactly how things need to continue.
As soon as we all get over this mass delusion that things must be better than last year or the world will end, we can all get on with our lives.
24. techieman said...
Mark as a follow on i asked you if you were just buying for a few days to sell again , and i think you said you were holding rather than jobbing it, which i cautioned and suggested you covered with out the money puts... just in case. Now it looks like you are jobbing! Never a jobber and a holder be (is that lender and borrower?). Well in all honesty good luck to you and anyone else here that wants o punt - i would just be careful thats all. Re individual shares i dont trade em but i did say this BARC 240 level has good resistance (and it seems to want to range back and forth there). I would be very surprised for it to breach 310, before a new FTSE low which would prob take the banks with it.. After that swing low...I would be looking for a more meaningful rally.
25. mark said...
techieman : how long does it take to earn 1200quid in a normal job? 6% on 20k = 1200 quid, = 21200 to reinvest , now i am buying and selling and buying and selling so 6% 1 day, then buy after they have dropped then 4% next day and so on, it is so up and down at moment it is easy to make money and reinvest and make more, over a few weeks it quickly adds up.
BA made 20% on the past 2 weeks, but with drops and gains it was easy to make more..
don't forget i am playing with around with several different shares at once.
just you don't sleep at night and you start to look very grey quickly...lol
it is a hobby that boosts my income whilst i have nothing else to do, after all watching houseprices go down is not exactly exciting, it is like watching paint dry after several coats..
26. techieman said...
Matt - yes you can trade futures with IG for a small size....and yes you can see the prices. www.igindex.co.uk. But as you know i have been cautious for a while and have been trading options rather than outright futures. The difference as you probably know is that options have defined risks, although they are wasting assets. Re the safety of the money in an account - cant really say but i do know someone who took out £3m and they hardly blinked.. [incidentially he did that by buying ALOT against the first swing low of this bear and by going long. Luckily for him (because i know he always punts to the long side) he decided to retire!!! :-). And hes a bit aghast now when i speak to him about it. And no he definetly wasnt cautious and had his b*lls on the line.
As for this blog in general i think Jap Unc is right .... although is he and Un Tom ever wrong?
27. mark said...
techieman: i was going to keep them for a while but like a banker got greedy and saw a chance to make money just hope it continues to work as it is nerve racking when they do drop, but then hey that is half the fun, but then i am tied longer term then..
28. techieman said...
mark fair play.... i was just saying that you might need a backstop... that was all. Im not having a go re small size. I think you can work out my minimum sizes... from my postings. Its not really to brag i just think you need to be able to trade long and short. In a bear market by definition you are trading against the prevailing trend. I wish you good luck but range trading works.....until it doesnt :-).
29. mark said...
thanks techieman, it can be worrying some days, but then again leaving money in the bank isnt much safer..lol
30. matt_the_hat said...
Sorry techieman I meant options - why do you say they are a wasted asset - is it to do with the premium you have to pay
31. techieman said...
Matt : Wasting assets. Basically if you buy an option it has 2 components that contribute to the value. The intrinsic and time value. The intrinsic is the amount "in excess of" the strike price. eg if a call the intrinsic value is the amount by which the call option strike price exceeds the price of the underlying share/index/ whatever. For a put the intrinsic value is the amount by which the put option strike is below the underlying.
The time value basically depends on volatility - the more volatile the market the more expensive the time value. The time value erodes or wastes as the option approaches expiration. So if you have an out of the money option - i.e. for a call the strike is more than the market - the price is all time value. If the underlying stands still the option expires worthless - i.e. the time value erodes or wastes. Sorry for not coming back sooner - was out to lunch!
For futures the prices trade with a delta of 1 - obviously! but the risks are not defined - even if you have a stop that may gap through, but of course with options the time value is the cost against the futures.
32. techieman said...
matt re IG i think you need to set up an account before you can see the prices but you can just deposit a few quid, - although i dont know what the minimum is, i know its pretty small £100?
33. techieman said...
must have been a good lunch - got me calls and puts mixed up!! Call strike say March 250 - if price is 300 then call has intrinsic of 50. For a put March 250 (right to sell) then price would have to be below to be in the money and have intrinsic! Apologies! - Funny i never get confused when i buy em!