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Realistbear

B S A : " Gross Mortgage Lending Falls 43% Yy In July"

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http://uk.biz.yahoo.com/01092009/325/bsa-g...ct-yy-july.html

Tuesday September 1, 10:40 AM

Reuters

BSA gross mortgage lending falls 43 pct yy in July

LONDON (Reuters) - Gross mortgage lending by British building societies stood at a seasonally-adjusted 1.775 billion pounds in July, down 43 percent on the year, the Building Societies Association said on Tuesday.

That compared with gross mortgage lending of a seasonally adjusted 1.772 billion pounds in June, the industry group said, adding it did not expect much improvement for the rest of the year.

"The BSA expects the mortgage market to remain similarly subdued over the remainder of 2009," said BSA Director General Adrian Coles. "This is primarily because of the difficulties all lenders face in raising funds for mortgage lending."

On a seasonally adjusted net basis, lending contracted by 585 million pounds in July, after falling by 493 million pounds in June.

So much for the EAs and their "green shoots."

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The only logical conclusion from that is that the recent house price rises have been on a minuscule volume of transactions. If the number of residential properties being traded was anything close to last year's figure and the price of each transaction has increased, then unless a significant amount of money is entering the market from sources other than mortgage lending (which has not been suggested or covered anywhere I've seen), the amount of mortgage lending would have had to rise, too.

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The only logical conclusion from that is that the recent house price rises have been on a minuscule volume of transactions. If the number of residential properties being traded was anything close to last year's figure and the price of each transaction has increased, then unless a significant amount of money is entering the market from sources other than mortgage lending (which has not been suggested or covered anywhere I've seen), the amount of mortgage lending would have had to rise, too.

Apologies for double post - system returned error message after first attempt.

Edited by The Ayatollah Bugheri

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The only logical conclusion from that is that the recent house price rises have been on a minuscule volume of transactions. If the number of residential properties being traded was anything close to last year's figure and the price of each transaction has increased, then unless a significant amount of money is entering the market from sources other than mortgage lending (which has not been suggested or covered anywhere I've seen), the amount of mortgage lending would have had to rise, too.

As in our mirror market:

http://www.dqnews.com/Articles/2009/News/C...RRCA090821.aspx

The median price paid for a home last month was $250,000, up 1.6 percent from $246,000 in June, and down 21.4 percent from $318,000 for July a year ago. The upturn in median the last three months is the result of a relative increase in sales of more expensive homes.

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Interestingly, both the number of transactions (HMRC +20% YoY) and approvals for house purchase (BoE +55% YoY, BBA +82% YoY) are up on last year.

The specific issue with the BSoc lending, i.e. BSA numbers rather than BBA, seems to be that they’ve not managed to increase lending at the same rate as the banks (BoE approvals breakdon, Banks +74% YoY, BSocs +10% YoY).

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Interestingly, both the number of transactions (HMRC +20% YoY) and approvals for house purchase (BoE +55% YoY, BBA +82% YoY) are up on last year.

The specific issue with the BSoc lending, i.e. BSA numbers rather than BBA, seems to be that they’ve not managed to increase lending at the same rate as the banks (BoE approvals breakdon, Banks +74% YoY, BSocs +10% YoY).

My take based on recent experience is that the BSoc are 'cream topping' with their limited cash funding base - offering very competitive deals for very low risk bowers (low LTV & income multiple). BSoc are therefore uncompetitive for anything remotely risky; hence the shift in volume to BBA members

IMO the BSoc sector has a deliberate strategy to shrink loan book and focus instead on loan quality

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Interestingly, both the number of transactions (HMRC +20% YoY) and approvals for house purchase (BoE +55% YoY, BBA +82% YoY) are up on last year.

The specific issue with the BSoc lending, i.e. BSA numbers rather than BBA, seems to be that they’ve not managed to increase lending at the same rate as the banks (BoE approvals breakdon, Banks +74% YoY, BSocs +10% YoY).

you mean building societies that have to earn their capital cant compete with bankers who A are bailed and B: get QE to bolster their balance sheets. plus a host of other advantages.

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you mean building societies that have to earn their capital cant compete with bankers who A are bailed and B: get QE to bolster their balance sheets. plus a host of other advantages.

Yes, I’d go along with that - the market share is clearly with banks and that's why a narrow focus on BSoc lending as a proxy for the overall market, i.e. as a green shoots meter, is potentially misleading.

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you mean building societies that have to earn their capital cant compete with bankers who A are bailed and B: get QE to bolster their balance sheets. plus a host of other advantages.

Yes, but I notice that the BSocs are getting restless.

The BSA is increasingly vocal in press releases and with court cases at the EU - the sector could yet turn out to be a thorn in the side of various government plans.

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