Monday, Apr 19, 2010
"The property market will be subdued for some time, lenders say"
BBC: Mortgage lending jumps in March, lenders report
Mortgage lending jumped to £11.5bn in March, a 24% rise from February the Council of Mortgage Lenders (CML) said. The figure was also 3% up on March last year, when the market had reached its nadir in the wake of the credit crunch. Despite this rise, the CML said activity in the property market was still relatively subdued. It pointed out that total mortgage lending in the first three months of the year was still substantially lower than in the last three months of 2009.
Posted by jack c @ 10:52 AM (1706 views) Add Comment
18 Comments
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1. mark wadsworth said...
Crikey. £11.5 billion. Wasn't the average during the boom years 2005 - 2007 about £30 billion a month?
2. jack c said...
Mark, I do not have the figures to hand for the period you identified however below is a few more stats which backs up the point I think you are driving at:-
Gross lending rose by 24% last month rising from £9.3bn in February to £11.5bn in March, but the first three months of 2010 saw the lowest quarterly total for new business since 2000.
The Council of Mortgage Lenders, says March’s £11.5bn was a 3% rise from the £11.2 billion seen in March 2009 and the lender trade body says the figures are in line with the typical seasonal pattern of a rise in lending volumes in March.
However, gross lending for Q1 of 2010 was an estimated £29.5 bn, a 24% decline from Q4 of 2009 when gross lending totalled £38.9 billion.
This was also a 9% decline from £32.4bn in the first three months of 2009.
3. alan said...
Thats 29.4bn in the first 3 months of 2010.
In 2007, the lowest quarter was 83.8bn(says CML site)!
4. Redcellar said...
3% more money being lent compared with March 2009 seems a good news story for housing market. Wait though, wasn't there a more than 3% increase in house prices for the same months (2009 2010)? So this figure would be below what we should see for all this to make sense, or of course it is in fact a bad figure rather than a good one.
5. mark wadsworth said...
Jack, Alan, ta, so my memory served me correctly. I googled round a bit and £30 billion per month from 2005 to Q3 2007 looks 'about right'.
6. Mwmolloy said...
Its so hard to make sense of numbers when they are just "talked about"....I much rather look at graphs, pie charts etc. esp when the time line has a reasonable length to it. To me it seems clear that the headlines are trying to spin this positive, but that could be just my emotions (of a STR'er) influencing my outlook!
7. uncle tom said...
Overall, the market remains surreal, while the fundamentals don't go away..
..and in case anyone forgets what those fundamentals are, here they are again..:
1) Everyone needs a place to live, a place they can afford to live in.
2) There is no public money available to invest in large scale social housing.
3) If the rent charged on a property is economically viable, the tenant would be better off buying. Put another way, private lets are not a viable solution for those priced out, unless the tenant qualifies for housing benefit.
4) Part of the solution to the UK's budget deficit will almost certainly involve reducing the numbers who qualify for housing benefit; and, quite probably, drastically so.
5) Going forward, it is reasonable to estimate that over 80% of people leaving school today, will eventually need to earn a sufficient sum to be able to afford to buy, (or have sufficient family support to make that possible) even if they elect to rent instead.
6) The percentage of people leaving school who have such a prospect, is currently in the order of only 30-40%.
7) There is no magic solution, no clever way round the issue. House prices, relative to earnings, are unsustainably high.
8. uncle tom said...
Overall, the market remains surreal, while the fundamentals don't go away..
..and in case anyone forgets what those fundamentals are, here they are again..:
1) Everyone needs a place to live, a place they can afford to live in.
2) There is no public money available to invest in large scale social housing.
3) If the rent charged on a property is economically viable, the tenant would be better off buying. Put another way, private lets are not a viable solution for those priced out, unless the tenant qualifies for housing benefit.
4) Part of the solution to the UK's budget deficit will almost certainly involve reducing the numbers who qualify for housing benefit; and, quite probably, drastically so.
5) Going forward, it is reasonable to estimate that over 80% of people leaving school today, will eventually need to earn a sufficient sum to be able to afford to buy, (or have sufficient family support to make that possible) even if they elect to rent instead.
6) The percentage of people leaving school who have such a prospect, is currently in the order of only 30-40%.
7) There is no magic solution, no clever way round the issue. House prices, relative to earnings, are unsustainably high.
9. mark wadsworth said...
UT, good list, apart from this: "2) There is no public money available to invest in large scale social housing."
Sure, public money is tight, but if they took the £13 billion they waste on housing benefit for private landlords and geared up a bit (as local councils are now allowed to do), then bearing in mind councils can easily get rents of £100 per week, possibly twice that, and it only costs £40,000 to build a flat in a block, most councils could easily make this into a proper cash generating activity, i.e. after deducting interest of £2,000 and running costs of £1,000 per unit.
10. uncle tom said...
MW,
There's swings and roundabouts; but at the end of the day, there's no serious prospect of govt helping a greater percentage of the population with their housing needs.
11. rumble said...
"no clever way round the issue"
--Unfortunately, it seems there is always a "clever" fix. Either intentionally, to bulsh't, or unintentionally, in a failed attempt to process more information than is possible, from a system that has grown too complex for a single entity to manage. We're not in the 1700s anymore, government is outdated.
12. alan_540 said...
The tipping point will be the election and whoever wins will have to shrink the budget deficit. Less money available for government to prop up the market and higher taxes for wage earners add to that higher interest rates and we'll witness a steady decline in houseprices over a number of years. That's how I see things going, but the next 12 months should be very interesting.
13. cyril said...
@7 Mark Wadworth....the problem is that local councils can reclaim housing benefit costs from central government so they don't particularly care how much the bill is. If they build new council houses they have to use their own money so it cannot be economically justified. This is government's usual trick - to give councils 'freedom' to do things that don't stack up!
14. mark wadsworth said...
@ 11 Cyril, agreed on Housing Benefit, that's easily fixed. Just scrap it. Councils can work out their own system for subsidising low income tenants (like collecting a bit extra through PAYE, administratively that is a doddle).
As to the rest, until a couple of weeks ago, there was an insane system whereby council house rents and proceeds from council house sales were pooled nationally and then divvied up by Whitehall. There is now a serious proposal to reverse all of this and let each council fend for itself, by borrowing what it wants, building what it wants, selling what it wants and keeping the proceeds.
Making money in housing is a piece of cake - provided you are the people responsible for planning permission - so you can buy up land with no planning for pennies and then award yourself planning for free. If you can knock up a block of twelve flats for half a million, the interest and maintenance costs might be £30,000 a year, so if you can rent them out for more than £50 a week you're making a profit.
Broadly speaking, half the people on council house waiting lists have jobs, so if half pay £100 a week and half pay nothing, the council is still breaking even.
What's not to like?
15. cyril said...
@12 Mark... you're basically suggesting we go back to the 1960s but look what happened then...(not that I particularly disagree with you)
16. mark wadsworth said...
@ 13 Cyril, yes my whole housing policy is "Let's go back to what we doing between WW2 and 1963".
17. mark wadsworth said...
Only without the concrete tower blocks of course.
18. brickormortis said...
Hello everyone,
I feel it wise to add that interest rates are phenomenally low and as a result houses are reasonably affordable. The HPC train will not leave the station until interest rates rise and then, my friends, it will be the express! Until then, I, like the rest of you, will be banging my head on the wall wondering what on earth is wrong with this country and then, as my headache starts again, I will remember, greed, greed greed and brainwashing!