The Longer It Goes On....

[jpidding]

http://www.thisismoney.co.uk/mortgages/art..._page_id=8&ct=5

According to the above, mortgage lending GROWTH is reducing. Surely in a totally stable environment with no HP increase, net lending should be static, with new purchases and mortages being offset by those further up paying off their debts???

Obviously MEW is very healthy still.....supporting lifestyles that people have got used to over the last few years.

Best case for the UK as a whole is a static house price index, but more realistic is some falls nationally.

My thinking and analysis goes something like this:

Net mortgage lending INCREASED £7.5bn in June. With a population of 56 million, that's £134 for every man, woman & child. Given that your avergage family is four, that means £536 for a family.

So, lets recap.....the average family increased their mortgage debt by over £500 in June....£6k+ a year, but house prices are not rising.

Forgive me for being oldfashioned, but shouldn't the average family be reducing their debt with their mortgage payments?

It is no longer about house prices....it's about debt to capital ratios and it's shifting one way very fast!

Even if wage inflation is at 4%, on an average income of say £25k, that only raises another £1k a year (gross). But mortages are getting bigger to the tune of £6k a year.

This logic completely knocks the soft landing/wages catching up theory out of the water....the longer it goes on this way.....the worse it will get!

Comments??? Can anyone see a flaw in my reasoning???

James.

[CrashIsUnderWay]

You are totally correct - there are only 2 ways out of this mess.

1: Swift massive wage rises

2: Swift massive price falls.

Anyone care to bet on option 1????