Thursday, May 14, 2009
More BBC Mis-Reporting
BBC NEWS: 'Sharp rise' in mortgage lending
"The number of loans handed out for house purchases in the UK rose sharply in March, lenders say.
Some 31,000 mortgages were granted by lenders, up 29% on February but still 33% down compared with March 2008, the Council of Mortgage Lenders (CML) said.
The increase was in line with data showing more applications for home loans had been approved by lenders.
But the CML warned the position was still tough for those unable to put down a significant deposit."
Posted by wdbeast @ 09:50 AM (1901 views) Add Comment
27 Comments
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1. Fun 4 Now said...
mmm....I wonder if they worked for BT.......
2. jack c said...
More factual info (note the re-mortgage figure) from todays mortgagestrategy:-
Mortgage costs for home owners and buyers with large deposits are at their lowest for five years, shows the latest data from the Council of Mortgage Lenders. The latest lending survey from the CML shows that the average monthly interest payment for first-time buyers with large deposits equates to 15.1% of their income, the lowest level since June 2004.
On average first-time buyers borrowed 3 x income at 75% LTV, and accounted for 40% of loans in March.
But the actual number of first-time buyers recorded for March remains low at 12,500, compared with 17,800 at the same time last year.
Interest payments for home movers have also hit a five-year low, with payments making up 11.4% of a home owner’s income.
Remortgages accounted for 40,000 loans in March and house purchases accounted for 31,000.
Bob Pannell, head of research at CML, says: “Because the flow of lending is still constrained, there is a sharp dividing line in the housing and mortgage markets between those who can raise a substantial deposit and those who can't.
“For those who can, the burden of debt payments is low and mortgage interest is consuming proportionately less income than for a number of years.”
He says this is good news for the moment but consumers should be mindful rates will eventually have to rise.
Pannell adds: “For those without substantial deposits, entering the market is still both difficult and uncertain.
“While there are some signs of demand increasing, house prices remain weak and lending criteria inevitably remains inherently conservative as lenders necessarily seek to rebuild their capital position.”
3. str 2007 said...
Thanks for that extra info Jack
It's a difficult balancing act now as to whether to hold off or jump in.
The speed I'm seeing houses sell at the moment suggests prices will start to creap up soon.
Just what the MP's want.
The big question is when will the rates go up and by how much.
Interestingly fixed rates are no lower now than back in 2005. Just under 5% is the best I've seen and I think that's only for 5 years not 10 years.
Unless you know differently Jack.
I'm sure this thing isn't done yet, but general public are along way from being fed up with buying houses.
4. wiltshire said...
Amongst the mass of home buyers/potential home buyers there will be those who consider the issue from a long term perspective and there will be those who react to current market conditions (in this country, in this day and age I would imagine the latter far outweigh the former). At the moment those reacting to the current market conditions are probably seeing low interest rates as the key reason why now is the moment to buy, "there's never been a better time etc".
Maybe they're right, maybe not. I'm seeing properties selling quite quickly around here (Wiltshire), especially those with character, but with all the other fundamentals heading south it's going to be a miracle of biblical proportions if this housing market can pick up from here.
5. 51ck-6-51x said...
Thanks jack c
-- comparing interest payment on debt to those of 2004 shows we have some way to go yet, the levels in 2000 were manageable, we should probably retrace to around then ( without wage inflation effects ), furthermore rates in 2004 were around 4% not 0.5%. Anyone who has sat out of the market for the last 12 months will count as a FTB also.
str2007
-- I still think the effect of increased repossessions (esp BTL) and job insecurity is going to damp the market for a while. Don't get sucked into the VI hype to readily - but you are right to be thinking about it I reckon (since you STR in 04).
6. Screamifyouwanttogofaster said...
So mortgage lending went up in March, but prices came down again in April (and probably March too), at much the same rate as in previous months. I wonder why we assume that in the housing market more transaction volume always means higher prices? That's not true in most markets. It will be interesting if new mortgage lending per month carries on growing while prices carry on falling. What would commentators blame the price falls on then?
7. jack c said...
Morning str2007
IMO best not to jump in at this juncture as residential prices will almost certainly fall further - with rising unemployment any recent upturn will in my experience be short lived. Government intervention/support for the housing market (whatever people choose to call it) will only have a short term influence - ultimately it is a market and will find it's own level (lower IMO)
If you are looking for a settled family home and are prepared to (dare I say it) take a "long term" view then you might now want to look at the long term fixed rates which are this week now on the rise due to wholesale funding costs
8. uncle tom said...
str 2007,
You will sorely regret jumping in now.
What we are seeing is a textbook false dawn - rather more than a dead cat bounce, but NOT the return of rising house prices.
The number of people who have been priced back into the market is nowhere near enough - even with today's announced increase in activity, the number of mortgages being given is still only a third of the normal number.
There is a widespread perception that house prices will rebound again; a perception that is preventing vendors from recognising the true value of their asset.
In a few months time, the consequences of QE will start to come home to roost, and the BOE will be forced to raise interest rates. The nation will then smell the coffee, and this little burst of irrational optimism will be well and truly snuffed out.
9. mark wadsworth said...
STR2007, keep the faith!!!
We have been saying for years that prices would crash, we were right, they were wrong. We all knew that there would be intermittent bounces, this is just one of them, that is being hyped to the rafters, grit your teeth, ignore it for at least another year. Maybe by late 2010 the largest part of the falls will be over? Three years is the absolute minimum period to get over a house price boom that was twelve years in the making.
10. denzil said...
It very likely I'm being dumb but which bit is, "More BBC Mis-Reporting"?
11. techieman said...
str 2007 - you will be aware that a few of us here have been predicting i.e. WARNING ot a move back up for some time now. At the end of the day though each individual is responsible for their own actions.
As i said on the stock market a few days ago - the move back up will take as long as it is to declare the bear market over (which therefore on that basis MAY not be over yet). At that time the bear re-instates. While the stock market is more apt to these moves (because it is liquid) this may very well happen in UK Residental. A decent move back up to suck in the bears.... Whether you believe this is just a counter trend move against a prevailing bull, which is coming to an end or are suckinable is really your call.
12. Bulldog66 said...
You will sorely regret not buying now,
The recovery will be slow now is the time to buy.
13. str 2007 said...
Well thanks all.
I must admit I think I do on the whole prefer to stay liquid.
The one point that concerns me is a poor year this year for me £ wise will greatly curtail my borrowing power when I actually need it next year.
BTW how closely are interest rates related to the Government selling Gilts to raise money ?
I was under the impression that if China for example decided we were 'printing' too much money and decided not to buy our Government Gilts as they'd be paid back with a weaker currency then that would automatically result in a higher Gilt return needing to be offered and hence higher interest rates.
Not sure if I've got that ar5e about face or not. Or if indeed there is a direct link between the government borrowing money and our base rates.
Just trying to second guess 'when' rates could get forced up.
14. george monsoon said...
Uncle Tom said "There is a widespread perception that house prices will rebound again; a perception that is preventing vendors from recognising the true value of their asset."
3 out of the 7 estate agents in my local town have now gone out of business.
15. crunchy said...
We are not talking about a stock here. This is life. If it is affordable, peace of mind wins!
16. Lukeskywalker said...
I think that chunks of demand that are in a position to buy break away from the rest of the FTBs and a glut goes through. The fundamentals return (i.e. expensive houses, consumer debt, deposits, job losses) and it sags again, not to mention that greed will mean that people will relist with agencies with prices they previously wanted and couldn't get but think they can now and the whole thing starts again - no buyers, time on market, Christmas, job losses, BTL fire sales, repos... then another load will break away and buy next spring.
17. wdbeast said...
denzil@8 said
It very likely I'm being dumb but which bit is, "More BBC Mis-Reporting"?
I was refering to the headline 'Sharp rise' in mortgage lending
When you read the article, mortgage lending is in fact 33% down on last year, although as always it showed an increase on February.
Maybe mis-reporting is a bit strong, perhaps misleading would be more accurate.
18. hpwatcher said...
Of course this is an effect of the QE billions, and is highly artificial.
The general trend HAS to be down.
19. mark wadsworth said...
@ STR, printing money or QE or borrowing too much money inevitably leads to inflation and higher interest rates, it's as simple as that.
Nobody knows for sure what deflation would be in the absence of all this, and how much extra inflation it creates and how the two will net off, but in relative terms that's what happens.
20. str 2007 said...
mw
My point was are base rates controlled by our government (ie if QE leads to inflation despite the 2% inflation target they won't put up base rates because they want inflation.)
Or, if investors stopped buying Guilts (which as far as I'm aware is how the government is borrowing all the money it has committed to) then would interest rates have to go up to attract buyers of gilts.
The point being, are the government in control of interest rates or the countries that are lending us our deficit ?
If it's under the control of the government then they won't get put up.
If they are effectively under the control of the people lending us our money then they could be going up soon and quite sharply.
21. str 2007 said...
Crunchy
I can always rely on you for a wise word or 2.
22. mark wadsworth said...
STR, "If they are effectively under the control of the people lending us our money then they could be going up soon and quite sharply."
Interest rates are NOT under the direct control of the government, they can only influence them indirectly by *ahem* not running up deficits, keeping the currency stable, not borrowing or printing money like mad */ahem*.
Then there's the interest rate see-saw problem, if the govt pushes down short term rates it lifts long term rates and vice versa.
So to sum up, interest rates will be going up, but I have no idea whether it will be short term or long term rates that go up more, and by how much, it might only be return to 5% - 10% sort of normality.
23. crunchy said...
17. str 2007
Your welcome!
Devilish wisdom. Heavenly results!
24. Bigguy said...
str 07
from what I gather I am in a similar position as your good self, albiet I have not str but have a decent deposit. For domestic reasons rather than market reasons we are looking at buying. Would like to wait longer but as Crunchy says there comes a point where peace of mind plays a factor. The place we're interested in had 3 or 4 people interested, with other offers as well as ours within a week of being on the market. Seems half decent property is still moving.
Crunchy - like you I think in any market there are winnners and losers - therefore one should be able to offset any loss in property with gains elsewhere. Am interested in your thoughts on this.
Thanks
BG
25. str 2007 said...
mw
If banks maintain their current margins then 5% base rate would be enough to obliterate the housing market.
The question is timing.
26. amjidk said...
Beware of jumping in now, please see Nadeem Walayats analysis, i think pretty well sums up the current situation
http://www.marketoracle.co.uk/Article10654.html
27. str 2007 said...
cheers amjidk