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HAMISH_MCTAVISH

Mortage Approvals And Lending For Purchase Up In May

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I think it does: I work for a bank and I'm pretty sure that the figures we report for 'New lending' is exactly that - new contracts i.e. a new customer (and therefore a new contract) or an existing customer taking on an additional mortgage (a new contract but existing customer).

"Swithching lender on the same house is counted as remortgaging, whether its the same lender or a different one"

...Not in the eyes of the lender - If we get a new application from a new customer wanting to switch their mortgage to us from a different lender it is treated exactly the same way as if they were buying a new house: Any payments that the customer has made to date on an existing mortgage - we will not see - it has gone to the original lender.

Interesting to hear an 'insider's' perspective. It sounds as though even the modest increase in approvals for house purchase numbers may be misleadingly high.

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I'm waiting, McTavish.

Tell all the boys and girls, using the BoE numbers, why you don't think the average loan value has dropped over 30% YoY.

Show your working out if you can, but for this exercise if you are in the company of a numerate adult, maybe you could ask them to help you.

Given that prices are lower than last year...... And deposits are higher than last year...... Is there a reason why loans should not be smaller than last year. :blink:

When did I state the average loan value was the same as last year? Oh thats right, I didn't.... :rolleyes:

The only thing worth considering is whether or not the current volume and value of loans can sustain prices at a similar level to today, give or take a little. Given the reduced volume of transactions and new properties coming onto the market, and given Splines excellent work on approvals and their relationship to price neutrality, the answer would seem to be yes. Prices will no doubt still fluctuate somewhat, but further large falls are looking increasingly unlikely. Large rises are equally unlikely in the short term, but then I've never claimed they were...... ;)

Edited by HAMISH_MCTAVISH

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Guest DissipatedYouthIsValuable
Given that prices are lower than last year...... And deposits are higher than last year...... Is there a reason why loans should not be smaller than last year. :blink:

When did I state the average loan value was the same as last year? Oh thats right, I didn't.... :rolleyes:

The only thing worth considering is whether or not the current volume and value of loans can sustain prices at a similar level to today, give or take a little. Given the reduced volume of transactions and new properties coming onto the market, and given Splines excellent work on approvals and their relationship to price neutrality, the answer would seem to be yes. Prices will no doubt still fluctuate somewhat, but further large falls are looking increasingly unlikely. Large rises are equally unlikely in the short term, but then I've never claimed they were...... ;)

So a larger deposit is needed because we are now in a state of price equilibrium?

Given the reduced volume of transactions and new properties coming onto the market, and given Splines excellent work on approvals and their relationship to price neutrality, the answer would seem to be yes.

Any chance you could discuss this a little further? Some of us haven't seen Spline's fine work on the relationship of transaction volume to price neutrality, and it might be interesting for you to explain it to us.

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I think it does: I work for a bank and I'm pretty sure that the figures we report for 'New lending' is exactly that - new contracts i.e. a new customer (and therefore a new contract) or an existing customer taking on an additional mortgage (a new contract but existing customer).

"Swithching lender on the same house is counted as remortgaging, whether its the same lender or a different one"

...Not in the eyes of the lender - If we get a new application from a new customer wanting to switch their mortgage to us from a different lender it is treated exactly the same way as if they were buying a new house: Any payments that the customer has made to date on an existing mortgage - we will not see - it has gone to the original lender.

Well I am still not convinced, since the phrase "New Lending for House Purchases" is pretty plain English as far as I can see.

Maybe I will have a look see on the BoE site to get a definitive answer.

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Gross lending is irrelevant to house prices....

Lending for purchase now higher than it was in August 2008.

Mortgage approvals now higher than they were in May 2008.

Both showing strong and sustained growth for many months now.

Nobody is claiming prices will be back to 2007 levels any time soon. But the prospect of further large falls is growing increasingly remote.

Hi Hamish can you answer my Q here thanks:

HPC Link

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Mortgage approvals by major UK lenders picked up to 45,000 in May, from 42,100 in April, the Bank of Englands Trends in Lending report showed. This is a gain of roughly 6% month on month, and is also an increase year on year versus May 2008 for the first time in the crash.

The report also showed that new lending for house purchases (as opposed to remortgages) increased for the 5th month in a row, and are now higher than any time since (and including) August 2008.

There can now be no doubt that the spring bounce is significant, substantial, and is underpinned by a marked return of buyers to the market, and an increase in the availability of mortgages and funding.

The market fightback continues........ :lol:

It will still need another 30-40,000 to get back to "normal" levels though. That's another 12 months at this rate.

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kq_may2009.png

You'll find a full explanation on the site.

I'm still not convinced by that graph. As approvals rise so will the Q0 line, until you plod back to the usual 70-80,000 required for 0% HPI. That then corresponds to Spline's other graph, showing approvals and HPI.

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I'm still not convinced by that graph. As approvals rise so will the Q0 line, until you plod back to the usual 70-80,000 required for 0% HPI. That then corresponds to Spline's other graph, showing approvals and HPI.

And yet prices are indeed stable or rising, within a very close margin for error of where that graph predicted they would.

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Not wanting to state the obvious but that graph is just showing the usual fluctuations of approval numbers. Mortgage approvals are never at a constant level (flat) - the chances of a 'flat' change are very low.

Look at the top left 'plateau' - there are the same fluctuations there as there are at the bottom 'now' level.

What this graph is a good indication of is the vastly reduced number of mortgage approvals.

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I'm a fan of Spline's work but I think his 'predictor' is a little bit out at the moment. For example, if you look at this graph, it was predicting an annual fall in prices of 40% - even I'm not that bearish!

I think the low volumes have created so much noise that it's difficult to extrapolate anything from them at the moment

kyoy_may2009.png

post-5424-1245414380_thumb.png

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And yet prices are indeed stable or rising, within a very close margin for error of where that graph predicted they would.

Well, either we are entering a new dawn of approx 45k approvals for HPI 0%+, or the "stabilisation" of the last couple of months is a blip (due mainly to a lack of supply and a spring bounce ? - who knows)

Historically, you need 80k before prices start rising. Why should it be any different in the future ?

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The market fightback continues........ :lol:

Surely you mean "the retard fightback continues". When the market "fights" back, it will turn bulls into bullocks.

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More desperate grasping at straws. How much do you think rising unemployment, rising interest rates and the prospect of further wage deflation will affect your precious HPI eh, MACTARNISHED?

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I wonder if these approvals include people like me, who maintain an 'approval in principal' from their bank. At HSBC they fall over themselves to issue me an approval with no problem but only for 3 months at a time. I have no interest in buying until developers in manchester get a grip and stop trying to flog crappy 1 bed studio flats for 120k, but I'll be ready when reality finally hits them in the face like a sledgehammer.

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But the CML said it was not expecting a significant recovery in sales in the next few months.

CML know deep down that the sh*t is going to hit the fan come Autumn.

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CML know deep down that the sh*t is going to hit the fan come Autumn.

Well, yes, in September we reach the end of the stamp duty holiday. Same as in the crash of the early 1990's, this will trigger the crash proper.

We can expect prices to fall by around 15%-20% between then and March 2010.

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David Prosser:The Housing Market Is Still in Trouble See News Blog for link:

... let's assume for a moment that prices have fallen so far that economic fears are now discounted – where are all the buyers going to come from? There may well be people out there who want to buy property. Their ranks may even be swelling. Unfortunately, however, the mortgage finance isn't there for many of them.

The report on lending trends published by the Bank of England on Thursday made that abundantly clear. Just to remind you, it warned there has been almost no increase in the number of mortgages available at higher loans-to-value, and that the cost of home loans is increasing.

No wonder that the Council of Mortgage Lenders' figures show that mortgage lending actually fell back in May compared to the previous month. That reflects lower remortgaging activity, but also the fact that what increases we have seen in mortgage approvals for home purchases recently have been exceptionally modest.

Home loan providers are increasingly risk-averse, which is understandable given their realistic fears about bad debt. Whatever political pressure is brought to bear on lenders, including those with the taxpayer on their share registers, the supply of mortgage finance isn't likely to ease any time soon.

For that reason, it is hard to see any sustained recovery in the housing market for some time yet. The worst of the falls may be over, though plenty of analysts would not even be that optimistic, and we may see the odd month of house price rises (there have already been several, according to Nationwide and Halifax), but the storm has not yet passed over.

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From Telegraph:

By Harry Wallop, Consumer Affairs Correspondent

Published: 11:33PM BST 11 May 2008

There are 1.03 million properties up for sale in Britain – a 15 per cent increase on a year ago. There are 25 million homes in Britain.

And from BBC:

Fresh figures from HM Revenue & Customs (HMRC) show that the number of properties sold in the UK during April was 58,000 - just the same as in March.

So the actual percentage of properties sold in the UK is 17%

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