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Mortgage Lending Still Increasing

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http://news.bbc.co.uk/1/hi/business/8211204.stm

Mortgage lending continues to rise, according to the latest figures from the Council of Mortgage Lenders (CML).

Gross lending in July stood at £16bn, 26% higher than in June, though still more than a third lower than in July last year.

Mortgage lending, house sales and property prices have all picked up in the past few months after a dramatic slump caused by the banking crisis.

But the CML warned the housing market would slow down again later this year.

"The CML's July gross lending estimate of £16 billion is the highest level in nine months and consistent with the rise in house purchase approvals," said the CML's economist Paul Samter.

"We anticipate some seasonal slowing in lending volumes and housing transactions over the latter part of the year and the picture of a slow but more stable market to emerge," he added.

Less expensive loans?

Typically, would-be borrowers now have to put down an average deposit of 25% if they want to take out a mortgage.

The latest "Trends in Lending" report, from the Bank of England, said there had been little sign of this rationing of the home loan market easing up.

"In line with rising mortgage approvals, gross lending for house purchase has continued its recovery since the beginning of the year, but remortgaging activity remains very subdued," the Bank said in its August report.

"The major UK lenders reported that over the past month there had been no further increase in their appetite to lend at high loan-to-values (LTVs)," it added.

The Bank's report pointed out that 90% mortgages had become much more expensive, relative to 75% mortgages, than they were before the banking crisis started in 2007.

That was because of the increased risk of default associated with the larger LTV mortgages.

But the Bank said some lenders had indicated to it that if the risk of further house price falls eased off, they might make their 90% mortgages slightly less expensive compared to their 75% loans.

The recovery is clearly picking up pace.

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When transaction levels are up around 70K plus per month and we see a couple of months price rises on that, then I'll start considering buying. Until then, I think I'll just kick back through autumn and winter.

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Also from CML but missing from BBC

"this is the lowest July lending figure since 2001 and £11 billion lower than the July average over the previous seven years of £27 billion."

GLJuly2009.png

I wonder if net lending is still postive?

VMR.

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Here we go... I hear people telling me how the economy is picking up again and house prices will be heading higher for the next decade.

Even if they do, I'm heading abroad. Is it really worth hanging around to buy an overpriced slave box? :lol:

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Also from CML but missing from BBC

"this is the lowest July lending figure since 2001 and £11 billion lower than the July average over the previous seven years of £27 billion."

GLJuly2009.png

I wonder if net lending is still postive?

VMR.

Cheers all they needed to do was put a chart like that in. The BBC article is balanced but starts

"Mortgage lending continues to rise, according to the latest figures from the Council of Mortgage Lenders (CML). Mortgage lending, house sales and property prices have all picked up in the past few months after a dramatic slump caused by the banking crisis. "

and towards the end of the article

"But it warned against exaggerating the improvement.

It pointed out that lending in July was still at its lowest for that month since 2001 and far lower than the July average of £27bn recorded in the previous seven years. "

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When transaction levels are up around 70K plus per month and we see a couple of months price rises on that, then I'll start considering buying. Until then, I think I'll just kick back through autumn and winter.

Could be a while:

In April, lenders granted 43,200 mortgages, according to the Bank of England. This compares with 40,000 in March and surpasses expectations of a rise to 41,000. However, 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.

Rightmoves latest HPI:

Future price and transaction growth is now controlled by the bottleneck of mortgage availability. This is unlikely to change for years to come, with the Centre for Economics and Business Research (CEBR) forecasting that mortgage application levels will recover slowly and remain well below the levels seen in the early part of this decade as far ahead as 2013. Even in 2013 the CEBR state that numbers will still be 24% below 2006 levels. This may well reflect a paradigm shift in access to mortgage lending. While HSBC is the only major lender to have taken a more proactive stance and increased its market share, its reported average loan-to-value of circa 50% on new mortgage lending is a perfect illustration of the newera of both caution and cherry picking.

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Also from CML but missing from BBC

"this is the lowest July lending figure since 2001 and £11 billion lower than the July average over the previous seven years of £27 billion."

GLJuly2009.png

I wonder if net lending is still postive?

VMR.

Actually looking at that graph the increase over the last few months doesnt look all that impressive.

It looks likely to decrease over the next few months back to the 10,000 level.

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Roll up roll up. Come and pile in. Interest rates can stay low forever.

Exactly, whoopee-friggin-do.

What I don't understand is that even if interest rates stay artificially low for years it still doesn't address the problem that FTBs will still be servicing massive debts.

Am I missing something here?

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its 25% down to even get a mortgage.

I see a lack of FTBs.

They will come back when 25% down is 10K.

theres your 40K flat. your 80K average. your 120K large. your 180K supersize.

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All this activity is slightly concerning. I think the worst case scenario for me (hopefully) is that house prices stagnate for the next 2-3 years allowing me to hoard money to buy a house with a lower mortgage. Best case scenario house prices continue to crash allowing me to buy a house much cheaper.

Current standing:

Own one property

Looking for another

Will never buy again unless it is the one house to rule them all and I can afford it.

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All this activity is slightly concerning.

All this activity? By this you must be referring to:

this is the lowest July lending figure since 2001 and £11 billion lower than the July average over the previous seven years of £27 billion."

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From today’s Trends in Lending from the BoE

http://www.bankofengland.co.uk/publication...dsinlending.htm

Monthly approvals for house purchase up 6.4% MoM in July to 54.4k from 50.2k in June, UK lending panel data, SA. These are usually a good indication of the 'official' BoE approvals out at the end of the month.

Updated chart, with today’s July2009 figures

104i5jd.png

Edited by spline

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