Tuesday, Nov 24, 2009
Overall lending currently static and significantly below peak figures
FT: Lending and mortgage approvals up again in October
New mortgage lending and the number of house purchase approvals increased again in October, according to the latest figures from the British Bankers' Association (BBA).
Gross mortgage lending from the main high street banks in October was slightly greater than last month, reaching £9bn, however this was still 19.5 per cent less than it was a year ago.
Posted by jack c @ 10:51 AM (1028 views) Add Comment
14 Comments
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1. Brazil1982werethebest said...
I have bought three properties over the past six months at about 30% below c2007 prices. All Let out now. Bought with 60%+ cash.
Sorry, but I think that is it in terms of a bust, I see a few non-descript years but no bust. May be wrong!
2. montesquieu said...
'number of house purchase approvals rose steadily to 42,238 from 42,073'
That's a 0.3% rise ... since when was statistical noice a steady rise ...?
3. phdinbubbles said...
Steady rise my @rse. The rises seem to keep getting steadily smaller since the start of 2009 from where I'm looking.
4. jack c said...
The re-mortgage figures are interesting in so much as they continue to decline quite significantly - the reason behind this in my experience is that the rates on offer to move elsewhere coupled with very high set up fees (application fee etc..) do not make it financially worthwhile compared with staying on the existing lenders Std variable rate (SVR). For example Nationwide SVR is currently 2.5% whilst Halifax is currently 3.5% - the final nail in the coffin would (IMO) therefore be a rise in interest rates.
5. str 2007 said...
phd
Since I noted way back in Jan/Feb that there was a tick up in mortgage approvals on a similar post back then, I was slated as the figure had grown by a a thousand or 2 and was still down in the twenties.
What it was I had noted was a change in sentiment where people started to get drawn into the market as not only were prices 15-20% below peak, but the cost of buying was also significantly less.
According the graph you've psoted 'house purchase' approvals have been growing since last October.
I'm not sure a fall in MEW and Re-Mortgaging is relevant to HPC.
6. timmy t said...
str - I'd disagree with your final comment. I think a reduction in MEW will impact house prices, because less of it means less cash to spend in an economy which is reliant on retail. Less spending = more redundancies = more repo's = lower prices.
7. drk said...
What level of mortgage activity is considered a normal, healthy market? Presumably, the levels seen in the 2007 peak and 2008 trough were abnormal (too high and too low respectively.)
8. phdinbubbles said...
str2007
I nicked the graph from the BBA's website and it came with MEW and remortgaging attached - I posted it to give a better indication of how it compares to historic levels - the graph on this website goes further back in time (1993).
IMO the recent rises are driven by sentiment and low volumes rather than fundamentals - once things flatten out in terms of price & volumes things should get more interesting. Will all those hundreds of thousands that have delayed selling then start to accept they have to drop their wishful asking price? For prices to rise further would surely require a relaxing of lending criteria, or lower volumes (or increasing employment). How long can low sales volumes last? Today's prices are't realisable at normal volumes.
9. sybil13 said...
In reply to 'drk' "the earliest records – dating from April 1993 when the UK was recovering from the last recession – show mortgage approvals at 87,291, the Bank says.
Healthy activity is around 100,000 approvals month, according to Boulger, but he adds: "We may not see this for some time." It took until October 1996 for approvals to hit 100,000 after the last recession – almost four years after it had officially ended."
10. str 2007 said...
Timmy T
I know where you're coming from, but the lower MEW figures could also be read as people starting to be more responsible and protecting their position.
OK some high street shops may close, because of a cut back on frivilous spending, but I'm afraid shop workers were priced out f the equation along time ago.
PHD
The HPC mortgage approvals seem at first glance to incorporate the 3 way breakdown you posted.
You're saying I think, that an increase in volume will reduce prices (I have to assume average prices). Butsurely more people buying would indicate a better climate and an acceptance of current prices.
I think if you did buy early in the year then you caught a dip and are fairly safe.
I do expect a further decline in prices myself as I expect a rise in interest base and mortgage rates which will knoock home to people just how much they are paying for the building plot sitting under a £70-£100k house. Acually I think I might be being a bit optimistic there buy hey, we live in hope.
Hope I'm right as i had to endure another round of ''when are you getting a house then, you know you've missed the bottom don't you'' comments at the weekend.
11. phdinbubbles said...
str2007
The HPC graph is taken from the BoE's stats for approvals for house purchase.
"But surely more people buying would indicate a better climate and an acceptance of current prices."
To an extent - and I think that extent has been reached* My naive view is that you sell more things if they're cheaper. Obviously this contradicts the fact that prices have picked up as well as sales over recent months - but isn't that just a few people who were waiting to jump on-board, jumping on board and stretching themselves as they think the bottom's already been reached and they don't want to miss out?** My view is that the equilibrium position has probably been reached for current number of houses being sold each month*, so prices can't go up further without something changing.
*I'm usually reliably wrong
**Don't most of the population just want to buy a house at any time whatsoever regardless of economic conditions as they always see it as a safe bet? And how much is current sentiment informed by the last crash? - anyone that managed to hold on to their house through the last crash after buying in the late 80s saw the price spiral upwards in subsequent years - can't see that happening this time, but that's what most expect.
I think prices will continue falling for years, but in a rather bumpy manner. I can remember making a prediction of 50% real term drop by 2015-2017 on here quite a while ago - I'm still sticking with that, although it's going to take a while to proved wrong/right! Might take up watching paint dry instead by then.
12. house said...
@10, phdinbubbles
I think you are right, most people will forget about prices rising and consider a property a bad investment other than a place to live. This is what happen in the 1990's. Property was no longer in favour. This will take years and watching paint dry may not be a bad idea.
13. timmy t said...
phd@10 it's the phrase "Real-term drop" which concerns me. I think you are absolutely right, but have a nasty feeling that it will be the price of everything else doubling which will account for the relative drop...
14. phdinbubbles said...
@timmy t
Yep, that's the great unknown.
@house
Having compared the crash to watching paint dry, I still think the next 12 months will be interesting because of the recent bounce, i.e. with prices (in nominal terms) likely to correct more sharply downwards than they would have done otherwise, to get back on track (IMO) - there's hopefully another good leg down before inflation does the rest and that should help change sentiment back to houses being houses rather than an investment.