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Dave Beans

The Housing Crisis Of Coalition Britain

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..On the frontpage of the Independent's sister paper "i"..

ipage1_481581s.jpg

http://www.independent.co.uk/news/business/comment/david-prosser-mortgage-approvals-and-the-double-dip-2116373.html

Mortgage lending grew at its slowest rate for 10 years last month and house purchase approvals fell to an 18-month low, exacerbating fears of a "double dip" back into recession.

Net lending grew by just £1.6bn in September – the feeblest rise since October 2000 and a far cry from both last September's £2.9bn and the £2.2bn six-monthly average, the British Bankers' Association (BBA) said yesterday.

Gross lending, which includes redemptions and repayments, came in at barely £8bn – 11 per cent lower than last year and only about half the 2008 level before the financial crisis.

The gloomy BBA figures echo last week's report from the Council of Mortgage Lenders and follows research from Markit yesterday, showing housing market sentiment "lurching downwards". Mortgage lending levels are not the only weak area, according to the BBA. The number of house purchase approvals also continued to dwindle, reflecting falling demand.

Last month saw 31,100 approvals, the fewest since March 2009 and 5,000 fewer than the six-monthly average. The average value of new mortgages dropped, albeit only fractionally, to £142,900.

Consumer borrowing patterns are also increasingly subdued, faced with growing uncertainty and government plans for £81bn of cuts, outlined in last week's spending review. Personal savings levels rose by 4.6 per cent last month, while demand for unsecured credit, particularly on personal loans, dropped by 7 per cent, taking it down by 1.6 per cent over the 12 months as a whole, the BBA said.

Broadly flat credit card lending reflected a similar pattern as £5.9bn of new spending in September was offset by £6.1bn of repayments.

"Subdued mortgage activity and little demand for unsecured credit are a reflection of household uncertainties ahead of the spending review," said the BBA's statistics director, David Dooks. "Demand for new mortgages remains low despite more properties on the market and falling house prices."

Business lending also continued to fall last month as both demand and credit availability for medium and smaller businesses weakened. Although total net lending shot up by £19bn, compared with August, lending to non-financial companies fell by £3.3bn. "Business borrowing continues to reflect weak demand combined with companies reducing gearing by repaying bank borrowing," Mr Dooks said.

The BBA report comes ahead of third-quarter GDP figures, due out today, which are expected to show a steep fall-off in growth after the bounce in the second quarter. The option of a second round of quantitative easing (QE) has already started to gain ground with the Bank of England, and both the Chancellor and the Bank's Governor, Mervyn King, have hinted at renewal of the scheme.

The confirmation of a slowdown in the housing market yesterday will add weight to the arguments , according to Howard Archer, at IHS Global Insight. "The BBA report is an unappetising set of data that can only reinforce concern that tight credit conditions continue to pose a significant obstacle to economic activity," he said. "The data will fuel belief that the Bank may have to pull the QE trigger before long."

http://www.independent.co.uk/news/business/comment/david-prosser-mortgage-approvals-and-the-double-dip-2116373.html

Outlook Ready for another housing market shock? Yesterday's mortgage figures from the British Bankers' Association provided more evidence that the trouble has started. Even those to whom the banks are willing to lend had been putting off decisions about borrowing ahead of the Comprehensive Spending Review. Chances are they are not going to feel confident enough to take the plunge any time soon, either. Prices are bound to fall, because the supply of buyers (especially first-time buyers) is simply drying up.

The Financial Services Authority's new super-safe rules on whom the banks can lend to are going to take thousands of people out of the market. According to the Council of Mortgage Lenders, which applied the rules to loans approved over the past few years, many of them would have been perfectly able to afford repayments during the worst of the last recession. One of the big problems with the FSA is that instead of trying to learn lessons from its past mistakes, it prefers to overreact massively, regardless of the consequences. The consequences, in this case, could easily be a crash.

Is this necessarily a bad thing? After all, it would make houses more affordable, and that might be welcomed by a generation which is going to emerge from higher education with mortgage-sized debts (if they can get in in the first place) and the pain of having to pay for the mistakes their parents made. Many of them will be retiring on index-linked, final-salary pension schemes that are now history in the private sector (and probably won't last long in the public sector). The trouble is, like it or not, the housing market has a huge impact on confidence. Retailing, for example, is heavily dependent on it, and retail is a huge part of the British economy. All this, and money being taken out of people's pockets by benefits cuts and VAT rises.

Maybe I'm extrapolating too far from the data. Maybe the market will pick up because people who have been putting off moving, for example, won't be able to do so for ever. Maybe. All the same, my feeling that Britain will avoid a "double-dip" downturn isn't anything like as strong as it once was.

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Clearly it is all the Evil Tories fault, in the same way that the balanced budget in 1998 was down to the Labour government.

FFS!

The scary part is that as long as more than 50% of voters believe your two "statements" to be true, Labour will be back in power after the next election.

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It's been in crisis for the past decade. Now here comes the remedy. Bring it on.

One suspects that the half hearted sops thrown to those in favour of a proper market solution to this crisis, is not the answer. That will only come with a state default.

Given the pathetic attempts to cut the deficit seen last week, state default really doesnt appear to be too far away.

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I read that.

As I gave a quick glance to the "I", the new condensed version of the "Indie", my eyes caught the headlines and this article Mortgage Approvals and the Double Dip , where David Prosser tries to understand the staggeringly-bad BBA mortgage approval figures for September 2010

The analysis is just usual drivel: Double dip, Government cuts, Regulation, blah blah blah. However, there is a glimmer of hope that reality is finally dawning on the Media (except the BBC embargo on bad news, we can't have that, Sir).

When referring to falling house prices, the autor reflects, "Is this necessarily a bad thing? After all, it would make houses more affordable, and that might be welcomed by a generation which is going to emerge from higher education with mortgage-sized debts (if they can get in in the first place) and the pain of having to pay for the mistakes their parents made. Many of them will be retiring on index-linked, final-salary pension schemes that are now history in the private sector (and probably won't last long in the public sector). "

Thank goodness for that!

Naturally, the article reverts to form with a very unnecessary clarification that the housing market has a huge impact on confidence, as it affects Retailing and it's an important part of the British Economy. There it is, the National Spirit, in all its glory. Please people, keep drowning in debt to keep houses unaffordable. That's what I read from it.

Anyways, it's a small sign. Let's see what the Nationwide and Land Registry figures bring us this Thursday.

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snip

Naturally, the article reverts to form with a very unnecessary clarification that the housing market has a huge impact on confidence, as it affects Retailing and it's an important part of the British Economy. snip

course, never let it be said that the general economy would benefit if people had any money left in their pockets after housing costs.

lowering rates is designed to get lending costs down and allow people more to spend...instead, bankers just lend even more to make up their loss...

buying when rates are at their low point is therefore a mugs game...or the endgame.

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One suspects that the half hearted sops thrown to those in favour of a proper market solution to this crisis, is not the answer. That will only come with a state default.

Given the pathetic attempts to cut the deficit seen last week, state default really doesnt appear to be too far away.

I think they went as far as they could, both fiscally and politically. Only time will tell.

State default is not the answer, and would mean far too much pain for far too many people. Accepting / allowing gradual deflation of debt (whilst maintaining gentle inflation) is probably the safest way out (banks need to take the hit on defaults, not the state). Doesn't make me happy to reach that conclusion (I'd rather people took the consequences of their actions), but I'm a realist.

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Funny that when Labour were in, it was a slowdown, now it's the coalition, it's "fears of a crash".

Its also amazing that BBC "reporters" (I use the term loosely) have recovered their critical faculties. A few months ago they would have been fobbed off with "the right thing to do."

You would also think the coalition has been in power for thirteen years.

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It's been in crisis for the past decade. Now here comes the remedy. Bring it on.

It's been a crisis for the last 30 years. Hidden initally by selling off the famility silver followed by the one time bonanza of north sea oil and then, when those two were used up, a boom in debt.

Game over

Time's up

Time to find out how poor we really are

Edited by tallguy

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One suspects that the half hearted sops thrown to those in favour of a proper market solution to this crisis, is not the answer. That will only come with a state default.

Given the pathetic attempts to cut the deficit seen last week, state default really doesnt appear to be too far away.

Do the tories want this outcome, so they can say they were right, and really get structural change?

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I wonder how far underwater the journalists who write this kind of stuff are / going to be?

How long before is it going to be before it is realised we need an economy that is not just based on debt and consumption backstopped by 10% yearly HPI, sustainable?

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It's been a crisis for the last 30 years. Hidden initally by selling off the famility silver followed by the one time bonanza of north sea oil and then, when those two were used up, a boom in debt.

Game over

Time's up

Time to find out how poor we really are

Yep

;)

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I just never understand the mentality I remember leaving a company over cuts, the other directors truly believed that growth was around the corner and the answer was a larger overdraft and "trading out" of the issue.

Future income is conjecture, present expenses are fact.

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  • 150 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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