Tuesday, Aug 25, 2009
Conspicuous by its absence here
You Tube: House lending on the rise again
The long awaited suckers rally I suppose..........a rally that has beaten expectations will lead to a fall beyond our wildest dreams.
Posted by titaniccaptain @ 01:04 PM (2421 views) Add Comment
36 Comments
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1. paul said...
But Net lending it at its lowest since 2000. The video 'forgot' to mention that one.
2. luckyjim said...
Paul,
The fact that people are taking advantage of low interest rates to pay off their debts isn't really news. the 77% increase in mortage approvals is the bigger story. It confirms that activity is increasing and that the recent rises are not simply down to cash buyers.
3. techieman said...
a major increase on this time last year.... yep and next year all Estate Agents will be millionhairs. Lets raise a glass to that!
4. peter_2008 said...
Interesting, so it is basically more people borrowing less money.
So they must need bigger equity/deposite.
So they must be cash/equity rich.
5. titaniccaptain said...
Correct Peter2008
You don't get mortgage approval without the cash to back it up for the deposit........The media have duped the "Cash Rich" into believing the crash is over....
Anyone who can save a cash deposit up for a house is earning way over the average wage.......so they will not reflect the majority of people in the country trying to get on the property ladder/snake.
And interest rates will remain high until 2013 by all reports in the media so that is going to pull a load of bears into bull land hoping to make a quick profit.....even though interest rates could quite easily soar.....i.e. if the IMF come knocking.
This crash has the potential to last a long time...was I wrong to believe it would play out much quicker?.....maybe not...... wait and see what this Autumn brings.......if prices start to slide again.....which they probably will, the confidence from FTBers and Bulls will be well and truly shattered.
Oh by the way ...
Our economy is ferked
Unemployment is rising (Which means more expenditure on benefits and less revenue from tax)
Public Sector is weighing us down and reaching the point of being unfundable in key sectors
6. growler said...
I wouldn't worry about any activity leading to a recovery and a fleet of new Minis zooming around viewings.
Money is the oil in the machine: Without it, the machine doesn't work properly and can seize or overheat.
Now that money is starting to move, the market will start to behave more rationally. Given the fact that supply of houses to the market will increase, money will be choosy...
Watch this one - I can see the RightMove trend resume with a storm.
A house in my area was on for 725, didn't sell in 6 months, stayed off market for 6 months and is now back on for 590. Another was on the market in late 2007 for 565 and has sold for 400. For those that don't know my area, this is South Bucks within minutes of Beaconsfield and Gerrards Cross: in the top 3 spots for the highest average house price in the UK.
7. andrew said...
I have to agree with growler, prices are very erratic at the moment. Last month I saw prices in my area of W London go up, now they have gone down again, I do a quick sample of properties on Rightmove. I can see a downward trend at the moment with the lower end properties slipping in price to try and attract a seller, the others are tending to follow this price slip.
An encouraging sign compared to last month's inexplicable monthly jump in prices.
8. timmy t said...
I agree that more liquidity is needed in order to restore a more normal level of trading before reliable trends in prices can be seen. My concern is that this government will do whatever it can to make sure the market doesn't crash before the next election, and at the moment that means printing money. So I wouldn't be surprised to see prices hold out for longer yet, and if they print enough cash between now and the election, then how much damage will have been done in the meantime, and how much will the eventual scale of the fall have been reduced at savers expense?
9. krustyatemyhamster said...
I'd be interested to know if there are any parents out there remortgaging a percentage of their house to give their kids a deposit (to avoid missing the titanic's last port of call). The sentiment of most people I speak to is that now isn't a good time to sell (as prices will soon pick up again).
10. titaniccaptain said...
@Timmy T
The BOE can "Print" as much money as they want.....if it doesn't result in inflation or the bank's lending criteria altering then it makes no difference.....by the way the BOE does the QE with no link to the government........apparently...........
The banks now have the ability to lend but not the desire.......the only lending that is going on in the mortgage market is to the cash rich getting sucked in for the last ride up.
11. mander said...
I have a feeling that next year these sort of news "hurry hurry the mortgage market is improving" will no longer have an effect on the market because there are 2 categories of buyers: first those who buy a house at any time and second depressed potential buyers. This type of news for my depressed category will make the mortgage market sound worse not improving.
12. timmy t said...
TC - it's that little word "if" that causes me the concern. I'm no financial whizz, but house prices have a natural level, based on a number of variables of which availability of finance is one. If house prices are left to fall without gov intervention, then so many people will be wiped out that this economy will be fecked for years while it tries to crawl out of the negative equity that would prevail. I reckon the government thinks that printing cash to make current house prices the "right" level, whilst bad in many ways, is preferable to letting them crash.
Crash Gordon becomes Cash Gordon...
13. growler said...
Reading Krustys comments at 9... got me thinking...
If the reason people think now is not a good time to sell (as they think prices are low and will return), what would be their reason to sell if the prices were "better"?
Is it to lock in gains that they might have lost last year? Is it to "trade up"? I think the reason is the hope to lock in equity that was lost in 2007-2008 and bank some cash to help with debts. That will likely mean a trade-down?
So much for reasons to sell. What about buying?
My point is that somewhere, some new entrant needs to come into the market to allow people to move at all. The FTBs are not in a position to get cash anything like before, the type of house they are looking at has suffered the greatest price falls (due to over production of starter developments) and many applicants and buildign societies must be concerned about redundancy?
That means the wealthy with cash to splash in an investment might come in. But if the stock market is now so much a more interesting market, why bother with houses?
That leaves our basic market activity. Those with job moves - who are by definition in employment.
The rest of the activity boils down (as the report says) to a reduction in net lending.
I see no recovery for a long time. I can't see ftbs, investment up-traders or btl-eers back for some time. Why bother?
14. titaniccaptain said...
@ Timmy T
Correct many will be ferked and wiped out and the economy will fall for years for years...........
Natural level for house prices are reached when prudent and sustainable lending is in place...as for availability there are more unoccupied houses than those who need a house.
A combination of Keynesian policies and whacking up the interest rates will fend off any nasty inflation so don't worry about Gordon.....As I said the BOE does the "Printing"
"I'm no financial whizz".........don't worry I am the Arch Whizzless Ferkwit of Financialdom.
There are Four types of bloggers that come in different combinations.
1. The specialist who is so clever he can't see the wood for the trees.
2. The egotistical fool who knows very little but may be convincing through charisma or annoyance.
3. The quite learner who listens and learns but hardly ever comments but when he or she does look out.
4. The lucky chap who happens to get it mostly right.
I fall into category 2 and love it due to the fact I have no other choice....
15. 51ck-6-51x said...
Ah, we see here the inhomogeneity of the asset class.
Relatively low transactions and the idea that "my house/street/area is different" leading to potential sellers & buyers holding out but skewed to the sell side, leading to volatile and skewed market indicators.
as a few have already said, the pick up in transactions may give a better picture.
16. mark wadsworth said...
In programmes about the housing market, they love including a few cutaway aerial shots of housing estates, which always makes me realise how pathetic and deluded the whole thing is.
Sure, each house has a bricks and mortar value (let's say £80,000 for an average semi) but that leaves us with a £90,000 land value. So people are scrabbling and fighting and prepared to pay three or four times their income just for a couple of hundred square yards of nothing in particular.
If we had a genuine land shortgage, fair enough, but we don't, the land shortage is largely artificial - only ten or fifteen per cent of the UK is developed.
17. shipbuilder said...
Timmy T - my understanding is that since mortgage lending is generally a multiple of salary, there is no house price inflation without wage inflation first, no matter how much is printed. Think of how long it would take for wage inflation to feed through - most businesses have or are still cutting wages, as far as I can see. It ain't gonna happen.
18. bluebeach said...
Exactly Mark, we've all been duped and tricked for many years... a life time of debt and hardship for a few bricks and a dusty postage stamp of land.. roll up, roll up...any more tickets...
19. charlie brooker said...
A few short months ago its was difficult to hear yourself thinking above the defeaning roar of calls for better regulation.
The recent surge in positively spun news stories has done a great deal to make the sheeple forget - the rotten system still exists beneath.
Watching the markets rising is like watching lemmings rushing to scene of their own fatal accidents and such recklessness can only mean further crashes and crunches with accompanying bailouts can only be matter of time.
20. charlie brooker said...
It really is like watching junkies hooked on crack.
21. shipbuilder said...
The government maybe hope that QE will lead to looser lending criteria/higher multiples, but that depends on the willingness of the public to take on the loans in a volatile market - there will be some willingness, but 2007 levels forget it - the appetite isn't there and the ability to lend at boom levels is gone forever.
22. waitingfor hpc said...
the article is talking about stats for July?? Just driving around I see lots of houses for sale andd not selling. I think the DCB has been and gone, by XMAS we will see the stats for now.
23. timmy t said...
Shipbuilder - I take your point, and agree that salaries will stagnate at best for a few years, but the multiple would be able to increase if the availability of new funds was pumped up. My concern is that the government will at best allow, and at worst encourage this to happen.
24. shipbuilder said...
Timmy T - I was thinking that as well - see my post at 21. As far as I'm aware the government's QE programme is miniscule in comparison to the money lent to sustain boom prices, they just can't do it. This is a bull trap caused by the cash-rich who think they see the bottom - when they are gone AND QE stops, we are on our way down again.
25. drk said...
krusty@9
All I am hearing from EA's is; Parents' are helping with deposit and/or mortgage. As recently as yesterday told by an EA, 1 couple living with one set of parents were offering 250k on ex-council house with both sets of parents contributing to deposit and helping with mortgage payments. Beginning to believe there are a whole lot of wealthy people out there, especially in the SE. I am not sure the sentiment is going to turn negative for a long while yet and who knows where prices will be by then. Can get a 3% 2 year tracker from NatWest with 20% deposit, 200k mortgage, IO payment is ~£400/mth. Same house to rent is £900/mth. Numbers are looking grim now!!
26. timmy t said...
Shipbuilder - I hope you are right. As a matter of interest, if there was a 50% drop from peak, does anyone know how much "value" would have been wiped out? i.e. what is the value of the UK housing stock?
27. growler said...
@25.
Interesting. A £250k house rents for £900 in your area. In my area, a £400k house rents for this....
Like everything else, what landlords ask for and what they will take is FAR different. My previous rented places (a £450k terrace) was advertised in 2007 for 1695, I paid 1400 then and now it let for less than 1200.
28. 51ck-6-51x said...
drk said, "Can get a 3% 2 year tracker from NatWest with 20% deposit, 200k mortgage, IO payment is ~£400/mth. Same house to rent is £900/mth"
- what is the rate of a 75% LTV BTL tracker? Can't be much more, and with a yield like that it sounds like it's time to put your money where your mouth is ( or have you already? )!
29. drk said...
@27
3 bed (1 double + 2singles) Victorian semi in Horsham (and one of the cheaper ones!)
666@28
Nope, still renting but want to buy (putting down routes and all that!) Quality of housing in Horsham is sh**e so cannot find anything, getting bloody frustrated.
30. 51ck-6-51x said...
drk - I meant BTL ;p
31. drk said...
@30
not interested! was accidental landlord on a flat in West London few years back, too much aggro. But I can begin to see why some are piling in.
32. Dbc Reed said...
@Mark Wadsworth Have you read FT story in July "Residential land price rises spur confidence"?
Apparently land prices have fallen 50% since 2007;all the excitement is about a 2% rise outside London
( inside London and its another, downwards, matter.)So why are n't the developers all rushing to build houses
on all this cheap land? Funny that,yok,yok) .
Time to impose LVT though?
33. drk said...
@29 D'oh, roots not routes!
34. 51ck-6-51x said...
drk - yeah, never experienced it, but I think I'd only ever want to be a landlord as my job, not on the side. There have got to be better businesses I could run though [ in terms of both enjoyment and the bottom line ].
35. tenyearstogetmymoneyback said...
growler @ 13 wrote various comments which could apply equally to the 1990s.
If the reason people think now is not a good time to sell (as they think prices are low and will return), what would be their reason to sell if the prices were "better"?
Guess where my user name came from. It is VERY difficult to accept that you have lost most of your equity. Instead I just stayed put from 1989 to 1999 despite hating the house I was in.
So much for reasons to sell. What about buying?
My point is that somewhere, some new entrant needs to come into the market to allow people to move at all. The FTBs are not in a position to get cash anything like before, the type of house they are looking at has suffered the greatest price falls (due to over production of starter developments) and many applicants and buildign societies must be concerned about redundancy?
Thats something that is different this time. By 1995 the FTBs were skipping flats and going straight for the three bed semis. At less than three times salary they could afford to.
That means the wealthy with cash to splash in an investment might come in. But if the stock market is now so much a more interesting market, why bother with houses?
As in the late 1990s. Then all the "smart" money was in Technology shares. I am convinced we have to have a bubble elsewhere before we can have another housing bubble.
36. dgj said...
I don't believe the hype well not just yet!