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IMupNorth

Cml Data - Just Another Indication Of No Hpc !

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August sees remortgaging boost to lending figures

20 September 2005

Gross mortgage lending rose by 9% to an estimated £27.5 billion in August, up from £25.2 billion in July, according to the Council of Mortgage Lenders. This was one of the highest figures on record, 4% higher than the £26.5 billion of August 2004, and the highest figure since July 2004.

There was an increase in all types of lending, although the most pronounced increase was in remortgaging. Remortgaging went up by 15% to £11.7 billion in August from £10.2 billion in July, reaching its highest level since October 2003. This probably reflects borrowers taking advantage of lower interest rates and remortgaging into cheaper deals, especially as a large number of people will have been coming to the end of their previous deals. But as a proportion of total business remortgaging rose only slightly, from 41% in July to 43% in August.

Lending for house purchase rose by 6% to £12.5 billion in August, up from £11.8 billion in July, but down slightly on the £12.8 billion recorded last August. Lending for house purchase accounted for 45% of lending, down from 47% in July and 48% last August. The number of loans for house purchase rose from 96,000 in July to an estimated 101,000 in August. However, this was still below the 110,000 in August last year. First-time buyers accounted for 30% of this total, very similar to the proportion throughout the past year (which has varied from 28%-32% on a monthly basis).

Further advances accounted for 8% of gross lending, broadly the same proportion as last month, but rose in terms of value by 11% from £1.9 billion to £2.1 billion. Further advances (typically used to finance home improvements) have been hovering around the £2 billion monthly level since March.

Affordability maintained a similar picture to previous months. Typical first-time buyers borrowed around 87% of their property value, representing 3.22 times their income. Typical movers borrowed 68% of their property value, representing 2.95 times their income. However, the pricing of both fixed and variable-rate products continued to fall, with the average fixed rate in August at 5.23% and the average variable rate at 5.61%. The pricing differential between fixed and variable rates prompted a further increase in the popularity of fixed-rate business, which accounted for 54% of all loans in August, the highest proportion ever since monthly records began in 1998.

Commenting on the figures, CML Director General Michael Coogan said:

"The doom-mongers' prophecies look to have been wrong, as lending has continued to strengthen over the summer. Although the market remains far from spectacular in terms of transaction numbers and house prices, the prospects of a significant market correction are receding.

"The fact that the housing market is holding up is likely to be welcome news for the MPC, as it struggles to reconcile the very different pictures emerging from different sectors of the economy. We continue to expect a moderate market for the foreseeable future."

*************

What with the RICS report, the Rightmove report, the Halifax etc etc - when you add them all up, it doesn't smack of a house price crash does it !! -

Only if you are a deluded mentalist bear who happens to worship some of the false Gods of HPC can you wring anything out of the recent news.

New mortgage lending both in value and numbers is practically back to where it was a year ago.

I'll say it again ..... SOFT LANDING ......... been saying this since February. Its here to stay for many months to come yet.

:D

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I would suspect that many ppl waited for rates to fall in order to get a better mortgage deal, so I see it a just a blip unless rates keep going down each month.

Even so the numbers would get less and less each time, until it implodes

Edited by Kam

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What we lack is a map showing distribution of where the deals are going on. There are plenty of accounts on the board of sharp falls in specific places, but these are anecdotal within the far wider overall picture. There are probably various far-flung places where house prices are still going up.

The report notes an increase in remortgaging. This is not house purchasing activity, but renegotiating of existing mortgages (although as a %age it only increased slightly). There was a reduction in the estimate for the total number of mortgage deals from last August (101,000 this year down from 110,000 last year).

It's hard to knock the conclusion that there is nothing too extravagant going on out there, just stability overall.

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Guest Time 2 raise Interest Rates

IMUP North

I think you'll find rightmove said yesterday the ave price fell £3,200 in the last

three months. ;)

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imupnorth - is this irony or do you seriously believe this?

Even in a crash it would be astonishing if mortgage lending did not continue to climb.

House price falls don't affect the value of existing debt! This is the nature of negative equity.

Mortgage lending can only go down due to redemptions e.g STR. These loans were taken generally out years ago so are by definition likely to be much lower than new loans. So even if new loans fell to an absolute trickle it would take a crash of monumental proportions to actually reduce net lending in the short term.

VIs spinning lines about increasing mortgage lending is just a huge red herring.

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I like the way that they compare to August 2004, as these figures were the first sign of the slow down, with a sharp drop (usually July/August figures are similar):

June 2004: 124,000 loans

July 2004: 130,000 loans

August 2004: 110,000 loans

Note the sharp fall between July and August? That was the peaking of the market. August figures were unusually low (they had been at around 137,000 loans a couple of years earlier)

August 2005: 101,000 loans

So to say only 10% down on August 2005 is to say even lower than the last August figures which themselves represented a sharp fall. In fact this is the worst August since monthly reporting began (although that was only in 2002)

And most of those were remortgages, not house purchases!

It doesn't bode well if this is the best they can come up with!!!

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I like the way that they compare to August 2004, as these figures were the first sign of the slow down, with a sharp drop (usually July/August figures are similar):

June 2004: 124,000 loans

July 2004: 130,000 loans

August 2004: 110,000 loans

Note the sharp fall between July and August?  That was the peaking of the market.  August figures were unusually low (they had been at around 137,000 loans a couple of years earlier)

August 2005: 101,000 loans

So to say only 10% down on August 2005 is to say even lower than the last August figures which themselves represented a sharp fall.  In fact this is the worst August since monthly reporting began (although that was only in 2002)

And most of those were remortgages, not house purchases!

It doesn't bode well if this is the best they can come up with!!!

well spotted

the VIs will come out with any statistics that support their case.

eg RICS claiming transactions were up 7.5% since feb this year. clearly a low base to make a comparison with.

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The large-breasted one is entitled to come up with his facts 'n' figures. But if August's figures of mortgage numbers is lower than an unusually low August last year, what exactly is his point?

At the moment all I can see in the papers is rising inflation, slowing consumer spending and people being laid off. Doesn't look good to me.

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Has anyone noticed this note:

Notes to Editors

1. This is the last month for which we will collect information on the mortgage market via the Survey of Mortgage Lenders. In future, lenders representing the majority of UK mortgage lending will voluntarily report details of their transactions to us based on their statutory reporting of Product Sales Data to the Financial Services Authority. The result should be the most representative source of information on the UK mortgage market.

Does this means they will only collect from the majority of the mortgage market, will they guess/estimate the shortfall? Anyone know any more about this?

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  • 301 Brexit, House prices and Summer 2020

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      • down 5% +
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