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cashinmattress

Mortgage Lending Is Down 55% (year On Year) As Re-mortgaging Collapses To 1999 Levels

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With lenders simply sitting on their huge piles of 'tax payer gifted' bail out cash, in order to meet with capital adequacy ratios as opposed to lending, a severe over-correction now looks a distinct possibility...

And you were expecting them to do what, exactly?

Ex-Titanic Passenger 1 : It's bloody freezing out here, but at least we go to a lifeboat!

Ex-Titanic Passenger 2 : Yeah, cold isn't it? Let's set fire to the lifeboat to keep warm.

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Mortgage lending is down 55% (year on year) as re-mortgaging collapses to 1999 levels

Well it's hardly surprising that re-mortgaging has collapsed by 63% in a year, as house values plummet the ability to re-mortgage; based simply on the ever increasing value of property, has all but disappeared, except for those with considerable equity remaining in their home...

The fact that re-mortgaging is now at levels not seen since 1999 perhaps signals the bitter end to this recent hysterical mass phenomena. As UK householders built up considerable debt the 'putting it all on the house', as a method of wiping the slate clean, was an easy option offered up by lenders desperate for market share and eager to find an allocation for their continual over inflated money supply.

If the average price of a UK home falls below £150K (which seems probable given the latest Land Registry report) then with the average outstanding mortgage being circa £115K the vast majority of mortgagees will be unable to satisy the current 25% equity criteria most lenders require in order to transfer the debt onto their books.

Both gross and net mortgage lending has collapsed to levels not seen since 2001, raising the question; "could house prices actually fall back to this level, a level which would in effect wipe away the majority of house price growth experienced over the last decade?"

With lenders simply sitting on their huge piles of 'tax payer gifted' bail out cash, in order to meet with capital adequacy ratios as opposed to lending, a severe over-correction now looks a distinct possibility...

April figures for the main high street banks

The high street banks' net mortgage lending of £2.7bn has not been as low for some eight years and consequently, the trend edged lower.

Personal deposits rose for the third successive month but the savings trend in bank accounts remains subdued. Lending to financial companies decreased as recent short-term lending unwound and there was a net repayment from non-financial companies.

BBA statistics director, David Dooks, said of the latest data:

"The house purchase part of the mortgage market appears to have stabilised, with slightly more approvals coming through, although April's weak net mortgage lending reflects the lower number of approvals in previous months. Households' uncertain financial circumstances not surprisinglycontinue to dictate consumer behaviour, both in the housing market and in generating only low demand for new personal loans. Company borrowing also reflects the economic backdrop, with most non-financial sectors seeing net repayments, although short-term finance for other financialcompanies unwound in the month, suggesting that their financing needs may be easing."

Both gross and net mortgage lending reflected weak approvals in recent months to reach the lowest monthly figures since March 2001. The number and value of house purchase approvals increased slightly suggesting that this part of the market may have stabilised.

Average values of all approvals demonstrate the weakness of the housing market compared to a year ago, despite small increases in recent months. Numbers of re-mortgaging approvals have not been as low since December 1999. Loans for equity withdrawal and other purposes continued to decline.

Yep. And this is just one of the many financial truths (disasters) a lot of the people on this forum are in total denial of.

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And you were expecting them to do what, exactly?

Ex-Titanic Passenger 1 : It's bloody freezing out here, but at least we go to a lifeboat!

Ex-Titanic Passenger 2 : Yeah, cold isn't it? Let's set fire to the lifeboat to keep warm.

It doesn't matter what they do really, does it?

Ouroboros.png

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Mortgage lending is down 55% (year on year) as re-mortgaging collapses to 1999 levels

Yep. And this is just one of the many financial truths (disasters) a lot of the people on this forum are in total denial of.

all the people I know have decided to stay on SVR because:

a. they don't have enough equity to move to get the best deal - this would mean a revaluation of their house

b. they can't bear to lock into a fixed rate that would mean paying MORE per month

c. they will wait and see.....

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all the people I know have decided to stay on SVR because:

a. they don't have enough equity to move to get the best deal - this would mean a revaluation of their house

b. they can't bear to lock into a fixed rate that would mean paying MORE per month

c. they will wait and see.....

That's good old Maggie Thatcher and her casino capitalism for you.

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all the people I know have decided to stay on SVR because:

a. they don't have enough equity to move to get the best deal - this would mean a revaluation of their house

b. they can't bear to lock into a fixed rate that would mean paying MORE per month

c. they will wait and see.....

He he he wonder what there waiting to see , return of there lost equity ? better deals ? a miracle ?.........

No what there waiting for and going to see is further declines in house prices and higher rates on there SVR's :lol:

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He he he wonder what there waiting to see , return of there lost equity ? better deals ? a miracle ?.........

No what there waiting for and going to see is further declines in house prices and higher rates on there SVR's :lol:

Quite a few people have said they will "wait and see" - basically couldn't bear to lock into fixed rate that would mean they were paying more than under their old deal with the SVR is broadly the same as what they were paying.

So waiting to see if fixed rates would be lower than the variable rates they are paying(!!!), otherwise would rather stick with SVR esp as they are either in negative equity or their small deposit has been eroded away.

When I said that interest rates would go up, and equity could get even more eroded away they said I was being too pessimistic, and no point in worrying about this (although to be fair all trying to overpay mortgage).

This is the reason IMO why the crash has stopped - the very low base rate is taking away any pain.

Another managed to lock into a good fixed rate deal with existing lender even though LTV wouldn't have qualified on valuation for this deal so couldn't go elsewhere (as LTV would be too low).

I know a lot of people who bought with 25%-30% deposits at peak having made money on previous property. If prices have falled by 25% then I guess they don't have negative equity but they don't have any equity left.

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Well explainend reply grizzly

more examples of the mindset of the herd , the've always got a denial or excuse card up their sleeve .........

and afraid there's nothing i can do ......except well ................................ laugh at them :lol:

the scary part is how many people this applies to..... mortgage deals only really last 2-3 years.

so everyone who bought at peak on 2 year deal is expiring, if they had 25% LTV well now they have 0%

even if they had 40% LTV now they have 15%!!!!

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This is the reason IMO why the crash has stopped - the very low base rate is taking away any pain.

Correct. So the sooner we see base rates back above 4%, the sooner this country will find it's true equilibrium.

(So far it's only car sales that appear to have hit true reality due to the almost total halt of MEW)

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total net mortgage lending for the first 4 months of the year has been just £587 million

in the first 4 months of 2007 it was £40 billion

what's happened to the promises of extra tens of billions which were made just a few months ago

Edited by newdman

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Quite a few people have said they will "wait and see" - basically couldn't bear to lock into fixed rate that would mean they were paying more than under their old deal with the SVR is broadly the same as what they were paying.

So waiting to see if fixed rates would be lower than the variable rates they are paying(!!!), otherwise would rather stick with SVR esp as they are either in negative equity or their small deposit has been eroded away.

When I said that interest rates would go up, and equity could get even more eroded away they said I was being too pessimistic, and no point in worrying about this (although to be fair all trying to overpay mortgage).

This is the reason IMO why the crash has stopped - the very low base rate is taking away any pain.

Another managed to lock into a good fixed rate deal with existing lender even though LTV wouldn't have qualified on valuation for this deal so couldn't go elsewhere (as LTV would be too low).

I know a lot of people who bought with 25%-30% deposits at peak having made money on previous property. If prices have falled by 25% then I guess they don't have negative equity but they don't have any equity left.

Well explainend reply grizzly

more examples of the mindset of the herd , the've always got a denial or excuse card up their sleeve .........

and afraid there's nothing i can do ......except well ................................ laugh at them :lol:

Edited by grey shark

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Quite a few people have said they will "wait and see" - basically couldn't bear to lock into fixed rate that would mean they were paying more than under their old deal with the SVR is broadly the same as what they were paying.

So waiting to see if fixed rates would be lower than the variable rates they are paying(!!!), otherwise would rather stick with SVR esp as they are either in negative equity or their small deposit has been eroded away.

When I said that interest rates would go up, and equity could get even more eroded away they said I was being too pessimistic, and no point in worrying about this (although to be fair all trying to overpay mortgage).

This is the reason IMO why the crash has stopped - the very low base rate is taking away any pain.

Another managed to lock into a good fixed rate deal with existing lender even though LTV wouldn't have qualified on valuation for this deal so couldn't go elsewhere (as LTV would be too low).

I know a lot of people who bought with 25%-30% deposits at peak having made money on previous property. If prices have falled by 25% then I guess they don't have negative equity but they don't have any equity left.

No more equity = no more insane consumer spending = reduced demand for pretty much everything = increased jobless = more defaults/repos = HP falls.

Also = less tax take (PAYE and VAT) = increased gov borrowing = demand for higher bond yields = higher interest rates = more defaults/repos = HP falls.

From a HPC point of view, its a done deal.

Now or next year there is no way out of this.

It just remains to be seen how much more of the economy the gov is prepared to sacrifice to sustain HPs/Banks.

The debts must be repaid or defaulted on. It really is that simple.

QE has failed; time to take the medicine.

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total net mortgage lending for the first 4 months of the year has been just �587 million

in the first 4 months of 2007 it was �40 billion

what's happened to the promises of extra tens of billions which were made just a few months ago

The purse had a hole in it that cannot be plugged.

It is why the BOE warned Darling not to stop the housing crash, they knew it could not be done.

Edited by Sybil13

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