Thursday, Sep 30, 2010
More bear food.
BBC: Mortgages: Squeeze on home loans to continue
"Banks are not expecting it to become any easier for householders to get a mortgage in the coming months, a Bank of England survey has found. The economic outlook is expected to constrain the availability of home loans in the next three months..."
Posted by mark wadsworth @ 02:01 PM (1175 views) Add Comment
19 Comments
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1. jack c said...
MW the bear food is also spilling over into the red tops - "FEARS OVER HOUSING MARKET SLOWDOWN" The worst August for mortgage lending in a decade prompted further concerns that activity in the housing market is slowing down.........
full article www.dailystar.co.uk/property/view/154642/Fears-over-housing-market-slowdown/
2. mark wadsworth said...
Jack C, it's all good.
3. jack c said...
MW - this from todays moneymarketing
“Worries over inflation and future interest rates continue to bubble away at the back of borrowers’ minds and huge public cuts are very much on the agenda which will make life in Austerity Britain much tougher for many in the near future. Even estate agent surveys are showing falls in asking prices as reality slowly sinks in among even the most optimistic home sellers. Against this backdrop, house prices are going to fall further just as certainly as the autumn leaves will fall off the trees in the next couple of months.”
Full article www.moneymarketing.co.uk/mortgages/goodbye-to-the-golden-age/1019288.article
4. alan said...
I expected IRs to have risen by now. They haven't.
Rising rates (to give savers a better deal) will puncture the housing bubble. Can't see this happening anytime soon. The BoE's MPC have stopped talking about inflation now that its the time in the month to review the rate, once again.
5. mark wadsworth said...
Jack C, sure, but that's an obscure industry journal. One headline in The Sun or Mirror is worth a thousand times as much, and one in Daily Mailexpressgraph is worth a hundred times as much, and so on.
We hardly ever get headlines from The Sun or Mirror on this newsblog. Do they never mention it, or does nobody ever bother checking them? Perhaps the huddled masses don't know that house prices are fading away?
6. inbreda said...
alan - the stupid thing is that it is the older generation (the ones more likely to vote) that are losing the most as a result of low interest rates (excepting those older property tycoons). All that needs to happen is for the savers to organise, and the governments hand would be forced. The best example of how they have organised is saveoursavers.co.uk which quite frankly aint cutting the mustard. It is way too nice. All savers are losing probably 3% of their capital to inflation anyway - they should sign up to donate the equivalent to pay for a hit squad to assassinate the moron king (perhaps blair and brown and a few bankers too if we can get a bulk buy discount??). I find it so tough visiting SOS. They are barely managing to whinge let alone do anything of any consequence. Seriously though - they should be organising their own new bank, or targetting one of the worst offenders and removing all monies on the same day. Something. Anything. Maybe its arthritis or something...??
7. flashman said...
hello mark w: Sure it's all good but we should resist the urge to ride the emotional roller coaster of daily/weekly/monthly reports. Sometimes this site reminds me of a pantomime when everyone boos and cheers at the appropriate moment. There are several fundamentals that are against the property market (salary multiples and credit scarcity) and there are some fundamentals that are supportive (employment and interest rates). We cannot expect a proper house price crash until these supportive fundamentals are removed. Unemployment is significantly lower than it has been in past recessions and interest rates are at record lows. If/when these two supportive fundamentals turn negative, then we will get our house price crash (I’m sure most of you know that I regard unemployment as the more important of the two). In the meantime it's exhausting booing the bad reports and cheering the good reports.
8. mark wadsworth said...
Inbreda, indeed. Total annual transfer of wealth from savers to borrowers = £30 billion or so, ergo, the majority of savers are paying the Council Tax of borrowers twice over (or whatever the ratio is). But the elderly tend to be Home-Owner-Ists so they want high house prices AND high interest rates. As you say, if they were organised they could get their interest rates back to 5% overnight, but that would collapse house prices.
Flash, I can resist anything except temptation :-) To be fair, the only index I really pay attention to is Nationwide.
9. timmy t said...
Hi flashman - unfortunately I think you are right. The other thing that has kept prices up is sentiment. The employment situation is worse than the data would have people believe, with so many in part-time jobs now hence not unemployed. It will be interesting to see the effects of public cuts on sentiment as much as on the actual unemployment number. I've given up hoping for an IR rise though - at least the base rate. Only possibility here is that mortgage rates go up to offset some of the losses from those that go bad. Those on trackers are on a winner I reckon.
10. flashman said...
Hi timmy. I almost put sentiment in my list of supportive fundamentals (because what you say is so obviously true). I decided not to because sentiment would sour in a nano second if unemployment and interest rates seriously ticked up, so in a way, they are effectively one and the same thing. Regarding giving up on interest rate rises...one thing I've learned with things like interest rates and currencies is to not give up on anything. Interest rate moves are a bit like tsunamis. It’s all peaceful and nothing is forecast and then bang. They will soar at some stage but it'll almost certainly not be because of something we are thinking about now and it will almost certainly be nothing to do with the BOE.
11. timmy t said...
Flash - yes, sentiment is fundamental only as an adjective - not a noun!
So come on - give us your insight on IR's. What is going to kick off the hike?
12. flashman said...
timmy: Christ, now you are asking. Oh well, in for a penny...these are the two scenarios that I think most likely (in no particular order):
1. In the event of a sustained recovery, the developing world will increasingly compete with us for food and commodities. Inflation will follow and the central banks will try to cool demand by increasing interest rates.
2. A country or some important corporations will default on their debt and the bond market will snap out of its torpor and act like a disturbed hornets nest.
It's quite possible that both of these scenarios will occur at the same time. It's also possible that neither will occur and interest rates will soar anyway because of something I can't foresee.
13. timmy t said...
Thanks Flash... 1 will take too long, I'll go with 2 please.
14. drewster said...
MarkW,
"does nobody ever bother checking them?"
I run a quick Google News search most days. I generally notice that all the tabloids (except the Daily Mail) lag behind other news sources by a day or two. Since it's always based on the same press release or underlying story, there's no point posting twice.
It's about rolling news. The BBC and Reuters have 24/7 news teams. The Telegraph and Guardian sometimes seem to have 24/7 opinion & comment teams. The tabloids only seem to have daytime staff and they don't rush to put things online (again excepting the Mail).
15. mark wadsworth said...
Drewster, thanks, but imagine you lived on Planet Sun or Planet Mirror, what overall impression would you get about house prices?
Or would you have none whatosever, in the same way that a typical FT reader wouldn't have a clue about whether Chantelle and Preston are going to rekindle their relationship etc.
16. alan_540 said...
As a Sun reader on and off, I can speak with some authority on this ;)
Generally increases are emphasized and decreases mostly ignored or made little of, and stats quoted selectively to paint a rosier picture. I think Mark is more on the money - if you skim over the paper you take very little away from it other than who's bonking who and the latest football results. Glad Murdoch decided to put the boot into Brown though.
17. drewster said...
MarkW,
Good question, and I like your analogy. I honestly don't know the answer. I expect such people get their information from other sources - friends, family, people they chat to in the hairdressers - rather than from traditional news outlets. I've mentioned before, my personal "shoe-shine boy" moment came in mid-2007 when a hairdresser advised me to invest in property.
18. hpwatcher said...
All that needs to happen is for the savers to organise, and the governments hand would be forced.
Not going to happen, forget government. The only way to win, is to nominate a particular bank, then ALL savers remove their money in protest on the same day
The banks are profiteering from the savings of their customers and paying contemptible rates of interest, they should be forced to start paying the going rate.
19. Crunchy said...
12. flashman
I think you are right on both senarios, but I think food inflation will emerge from scarcity for some reason or another.
Bonds are doomed. Rate hikes will be useless, causing more damage than good.