Bbc: Mortgage Lending At Nine-Year Low

[Pole]

Mortgage lending at nine-year low (BBC Link)

This is hpc in the making. From the above article (yet still not a word about overvalued properties):

Lending was just over a third of level seen in 2007, revealing the extent to which the UK property bubble has burst.

"December is always a quiet month but this was a quieter December than usual," said Paul Sabbato, a director of broker First 4 Bridging.

"There is no doubt that many people who may have been considering buying a couple of months ago have shelved their plans until there is more clarity on when, and by how much, rates will rise.

A report by the Chartered Institute of Housing estimated that 100,000 potential first-time buyers who had no financial help from their parents had failed to get on the property ladder last year.

[rantnrave]

"There is no doubt that many people who may have been considering buying a couple of months ago have shelved their plans until there is more clarity on when, and by how much, rates will rise.

This is a new one on me, given that IRs can only go up. What are these people reportedly thinking - I'll only buy when IRs hit 2%...?

[Tired of Waiting]

Mortgage lending at nine-year low (BBC Link)

This is hpc in the making. From the above article (yet still not a word about overvalued properties):

(...)

Lending was just over a third of level seen in 2007, revealing the extent to which the UK property bubble has burst.

This is not your usual BBC language, is it?!

Edited January 21, 2011 by Tired of Waiting

[Pole]

This is a new one on me, given that IRs can only go up. What are these people reportedly thinking - I'll only buy when IRs hit 2%...?

that's the BBC's talk for 'waiting for prices to drop'.

[sbn]

Did I just read this on the BBC?????

"Lending was just over a third of level seen in 2007, revealing the extent to which the UK property bubble has burst."

?????

WTF??

am I asleep?

[thecrashingisles]

This is a new one on me, given that IRs can only go up. What are these people reportedly thinking - I'll only buy when IRs hit 2%...?

Personally I see rates as critical. I won't buy until rates are high enough that the prudent have a competitive advantage over the profligate rather than the reverse.

[Tired of Waiting]

Did I just read this on the BBC?????

"Lending was just over a third of level seen in 2007, revealing the extent to which the UK property bubble has burst."

?????

WTF??

am I asleep?

+ 1

(We were typing at the same time. See my post above. )

[Pole]

+ 1

(We were typing at the same time. See my post above. )

return to this article in a couple of hours and I bet the 'bubble' sentence will be removed by a VI senior editor or someone...

edit: spelling of 'bubble'

Edited January 21, 2011 by Pole

[sbn]

return to this article in a couple of hours and I bet the 'bubble' sentence will be removed by a VI senior editor or someone...

edit: spelling of 'bubble'

Does this mean we have a mole in the bbc?

An HPC agent?

Either that - or the government has had a word

"Tell the sheeple the truth about HPC - or we might reconsider the tax on radio receiving equipment - just a small alteration like - you only have to pay if you watch BBC channels - the sheeple would like that..... everyone likes a relaxation of taxation. dont they?"

Edited January 21, 2011 by sbn

[Tired of Waiting]

Personally I see rates as critical. I won't buy until rates are high enough that the prudent have a competitive advantage over the profligate rather than the reverse.

Yep.

A small rate rise should bring large prices falls. It is better to wait.

But if someone believes the opposite (that large rate rises would just bring small prices falls ), then they should buy now, on a 5 or 10 years fixed rate mortgage.

[Bubble_Bobble]

Personally I see rates as critical. I won't buy until rates are high enough that the prudent have a competitive advantage over the profligate rather than the reverse.

Wise words. I feel exactly the same way.

[Tired of Waiting]

return to this article in a couple of hours and I bet the 'bubble' sentence will be removed by a VI senior editor or someone...

I think it may actually happen. We should save that page (Web Page, Complete), just for our collective records.

And it was not just the word bubble there, but also burst! "bubble has burst"

The only part I don't like is the "has", as if this is it, done, and from now onwards price will be "flat". In reality they should have written:

"The UK property bubble is bursting.

or even:

"The UK property bubble is starting to burst." And, ideally: "you ain't seen nothing yet! run for your lives!"

But I guess that would be too much to ask.

Edited January 21, 2011 by Tired of Waiting

[gf3]

Personally I see rates as critical. I won't buy until rates are high enough that the prudent have a competitive advantage over the profligate rather than the reverse.

I think there's a chance that you wont see interest rates increase until there is a rise in house prices. But I know that most people think I'm wrong with this call.

[Tired of Waiting]

I think there's a chance that you wont see interest rates increase until there is a rise in house prices. But I know that most people think I'm wrong with this call.

In their dreams, probably, inflation allowing. But it won't.

[Pent Up]

I think it may actually happen. We should save that page (Web Page, Complete), just for our collective records.

And it was not just the word bubble there, but also burst! "bubble has burst"

The only part I don't like is the "has", as if this is it, done, and from now onwards price will be "flat". In reality they should have written:

"The UK property bubble is bursting.

or even:

"The UK property bubble is starting to burst." And, ideally: "you ain't seen nothing yet! run for your lives!"

But I guess that would be too much to ask.

For them the bubble burst in 2008 and from now on it's back to normal never ending HPI! Remember the stages of a bubble chart.

[red]

Mortgage lending at nine-year low (BBC Link)

This is hpc in the making. From the above article (yet still not a word about overvalued properties):

Lending was just over a third of level seen in 2007, revealing the extent to which the UK property bubble has burst.

"December is always a quiet month but this was a quieter December than usual," said Paul Sabbato, a director of broker First 4 Bridging.

"There is no doubt that many people who may have been considering buying a couple of months ago have shelved their plans until there is more clarity on when, and by how much, rates will rise.

A report by the Chartered Institute of Housing estimated that 100,000 potential first-time buyers who had no financial help from their parents had failed to get on the property ladder last year.

They still don't get it, do they?

First-time buyers have been among the hardest hit by constrained mortgage lending. ludicrously overpriced property.

...

It argued that the pendulum had swung to far towards the requirement for a large deposit. ludicrously overpriced property.

There. FIxed it for them.

[buzzardo]

Personally I see rates as critical. I won't buy until rates are high enough that the prudent have a competitive advantage over the profligate rather than the reverse.

+1

Never buy when rates are low, and prices are high.

If you can afford the mortgage when rates are high, you won't go too far wrong when they come down again.... just don't jump in too soon, and leave yourself with too high a mortgage, by buying at 2007 prices, AND a high rate on your mortgage.

Looks like this might just be the year when I stop getting earache from Mrs "Three Years in this Rented Dump" 'erself.

B

[Democorruptcy]

I think it may actually happen. We should save that page (Web Page, Complete), just for our collective records.

And it was not just the word bubble there, but also burst! "bubble has burst"

Captured:

[Ash4781]

Is that note about the hmrc sales update correct? It does seem similar to before as everyone rushed in for the stamp duty cut and now demand has stabilised at a low level. Inflation is Bearing down on future demand.

[Realistbear]

http://www.bloomberg.com/news/2011-01-21/u-k-mortgage-approvals-decline-to-21-month-low-as-housing-market-weakens.html

U.K. Mortgage Approvals Decline to 21-Month Low as Housing Market Weakens

By Scott Hamilton - Jan 21, 2011 9:30 AM GMT

U.K. mortgage approvals fell to the lowest level since March 2009 last month as the housing market weakened amid the prospect of the government’s fiscal squeeze..../

“Major U.K. lenders reported that housing market activity remained subdued, partly reflecting a

weakening of house prices

and potential

impacts on incomes

from fiscal consolidation,” the central bank said in a quarterly report.

.../

The Bank of England said the stock the loans to U.K. businesses fell in the three months through November, and net consumer credit turned negative at the end of the period.

The business loan activity says more. I would not be surprised if we go back into recession by the 2nd Q. There is no good news for house prices out there. None. Zip.

I could not be happier.

[numpty]

So can anyone think of a reason why house prices will rise this year...any reason. I like to play devils advocate in order never to be tripped up in a discussion and I really cannot think of one viable reason for a rise EXCEPT in prime London and I am talking of the very best bits which are effected by overseas buyers ie One Hyde Park.

[Realistbear]

http://www.bloomberg.com/news/2011-01-21/u-k-mortgage-approvals-decline-to-21-month-low-as-housing-market-weakens.html

U.K. mortgage approvals fell to the

lowest level since March 2009

last month as the housing market weakened amid the prospect of the government’s fiscal squeeze.

The number of home loans fell to 40,000 from 45,000 in November, the Bank of England said today in London, based on data from six banks. The

value of loans fell

to 8.9 billion pounds ($14.2 billion), with net lending dropping to 800 million pounds,

the lowest since records began in January 2009.

Recent data have shown a

mixed picture

of the U.K. housing market

as the prospect of the biggest government budget squeeze since World War II and tight lending conditions hurt demand. Mortgage approvals are at

less than half the level

seen at the peak of the market in 2007.

"Mixed picture???" It looks clear enough to me and it ain't good for sellers.

When things turn bad its always "subdued" or "mixed". When these words appear with more frequency the BIG ONE will already be underway.

[Tired of Waiting]

So can anyone think of a reason why house prices will rise this year...any reason. I like to play devils advocate in order never to be tripped up in a discussion and I really cannot think of one viable reason for a rise EXCEPT in prime London and I am talking of the very best bits which are effected by overseas buyers ie One Hyde Park.

You should like this then. We had this very curious "first post", in the "England - South East" section, West Sussex thread, pasted below. The poster says he/she would like to see lower prices, but did put a lot of effort picking and manufacturing only bull arguments. Anyway, if he/she really has a VI for falling prices then I am sure he/she would love to be counter-argued.

Hello all - first posting here so please be gentle with me! Like probably most of the people who visit your forum & post regularly, I would love to see property prices crash to mid 90s levels - nothing would make me happier. Im currently renting in Horsham, west sussex & would dearly love to get back on the property ladder, but at prices I remember from the 90s!

Sadly I dont think this will happen. The comments Ive been reading here & elsewhere are exactly the same as I see posted every year for the past decade - prices arent decreasing by the amounts we would love to see - I dont even see it reducing this year - heres why I think prices will stay the same.

Rental market is booming - last year my landlord wanted to increase by 15% the rent. we negotiated, but I know I was fortunate - there are so few rental properties available that he could have got what he was asking for. This year after speaking to some agents, I know a similar increase will be expected. the demand is still so high & there are so few properties available.

If you are a "buy-to-letter", who owns properties that have very low mortgage rates & the rent you receive is covering your mortgage, then why are you going to sell? Higher interest rates may force a rethink, but generally people now accept that whatever the property value is today, over time property has proven time and time again to be a reliable investment. As a result, if you owned a 2nd house that you rented, you probably would be more prepared to take a hit (unless you had hundreds of properties I guess!)

Over the past 10 years, we have seen significant migration to the UK - particularly in the south & around london. I dont see that changing anytime soon. I also dont see any significant building developments happening - they tried to build more homes in Southwater just outside Horsham but the NIMBY brigade won the day and plans were scuppered...if you were a homeowner would you really want to agree to mass developement of housing thereby potentially reducing the value of our investment, or making your life more unpleasant due to more people/traffic etc etc.

Part buy/part rent schemes are pretty much non-existant and with the problems with public finances, they arent going to see any increases in what they get anytime soon. Only 'key workers' really get access to affordable housing. Non-key workers get ignored becuase they aren't civil servants - irrespective of the fact that civil servants pay has now caught up with private sector pay & civil servants still have access to ridiculous pensions, that the same people who are forgotten have to pay for! Those non-key workers,still need to have somewhere to live & cannot afford a mortgage, nor do they qualify for part owned schemes. So they need to rent but there is now very little council housing available for rent ....you can see the dilemma...

I read a posting earlier about property prices in Worthing & surrounding area & the author of the posting was looking forward to property in those areas dropping rapidly in price, when the owners passed away due to old age and their children sold the properties. But I dont see a mass flux of properties on the market, when you consider that the population is living longer...so when people in Worthing pass away, their property will be snapped up by new pensioners looking forward to retiring by the seaside!

London is getting more and more expensive & as a result more people are realising that you can get more bang for your buck by commuting an extra 30 or 60 minutes - thereby continuing to fuel the demand for property in the sussex area (& Im sure other areas of the country in similar locations). Commuting life is becoming slightly more bearable with the advent of laptops, cell phones, ipads etc

We all saw significant price reductions in 2008, but there was a specific reason for that & the banks have now been propped up with taxpayers money - as a result I see no reason why property prices should decrease...

People have mentioned that prices have dropped by 5% here and there in January on those properties that were put up for sale in November/December because they simply arent selling. Well theres a reason for that - snow! Some people ineviatably have to move at a given time - such as relocating due to jobs, & those people will take the hit but that doesnt mean that everyone who owns 2+ properties are also going to jump on the selling bandwagon and put their properties up for sale does it?

Finally the banks...banks are no longer prepared to take risks - they darent! As a result they only lend to good risks, or those which have large deposits. Weve seen families investing in their children's 1st property - those are even less likely ever to be repossessed. As a parent, you would never let your children lose their home if you were affluent and could help in anyway (particularly as your pension might be tied into it!) As a child you would do even more not to default, because you would not want to make your parents lose out financially. Banks are lending less & they are charging more for the good risks. As a result, there should be less repossessions - banks are lending "more responsibly". Even if they are higher, we will never see the numbers of the early 90s.

So there you go - my thoughts as to why why I simply dont see property prices crashing - demand continues to outstrip supply. But, as ever I am always eager to hear from others - I dream that one day I can buy a 4 bed detached in Horsham for £200k, but I truly believe that is unrealistic

[mattyfc]

+1

Never buy when rates are low, and prices are high.

Agree with this. One of the reasons lending is much lower is people have twigged prices are only going one way. No financial sense in buying if you think house prices will go down. That and banks not lending as recklessly, requiring 20%+ deposit before giving a decent rate.

This probably implies prices will continue to fall over the next few years until the risk premium associated with buying is outweighed by the lower cost vs renting.

Just as greed drove up the market, fear of buying a fast depreciating asset will floor it. Looks like prices will have to drop another 20%+ nominal over the next 3-5 years few years to reach reach equilibrium.

[MrPin]

Just as greed drove up the market, fear of buying a fast depreciating asset will floor it. Looks like prices will have to drop another 20%+ nominal over the next 3-5 years few years to reach reach equilibrium.

Greed and fear mattyfc indeed!

Also RB is right, a minor rise is exagerrated, but any dip is underplayed!

Was always thus!