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January's Fall In Lending Stifles Hope Of Lending Rise

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http://www.bbc.co.uk/news/business-12504255

UK mortgage lending fell by 13% in January compared with December to the lowest level for a year at £9.2bn, lenders say.

This was still 5% higher than the same month a year earlier, the Council of Mortgage Lenders (CML) said.

The mortgage market was likely to "remain constrained" in the coming months, the group said.

This reflected the "sluggish" state of the UK economy as a whole, as well as a lack of demand, it added.

First-time buyers

All the recently published data have shown a lack of any impetus of growth in the mortgage and housing markets, according to CML economist Peter Charles.

He said that the year-on-year rise in mortgage lending in January was distorted by the low levels a year ago - owing to the hangover from the end of the stamp duty holiday.

He offered little cheer for first-time buyers, saying that lenders were still being pushed towards less risky customers owing to lending restrictions. This made things difficult for those unable to offer a large deposit.

"There is little likelihood of any significant improvement in the mortgage market through the course of this year," he said.

"In consequence, it is difficult to see much improvement in opportunities for first-time buyers."

Earlier in the week, the CML released figures showing that many first-time buyers must save the equivalent of more than a year's salary to be able to afford a deposit for a home.

The typical deposit stood at £12,700 at the start of 2007, but rose to £31,500 by the second half of 2010.

The data was released when housing minister Grant Shapps summoned various parties to "frank and open" discussions on difficulties facing first-time buyers.

Up 5% YoY but remember January 2010 was dire, due to the snow and the end of the stamp duty holiday pulling sales forward into December 2009.

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http://uk.finance.yahoo.com/news/Home-buyers-pressure-amid-tele-1585008848.html;_ylt=AgdI7.qmWvz4acpXoUBjTIDSr7FG;_ylu=X3oDMTE5NDY1aGtzBHBvcwMxMARzZWMDeWZpVG9wU3RvcmllcwRzbGsDaG9tZWJ1eWVyc3Vu?x=0

Home buyers under pressure amid drop in lending
Myra Butterworth, 0:20, Saturday 19 February 2011
Home buyers are under increasing pressure amid fears of sooner than expected interest rate rises, experts warned today, as figures showed a significant drop in mortgage lending.
A
lack of affordable mortgages contributed to a fall in gross lending
to £9.2 billion in January, down 13 per cent on the previous month, according to the Council of Mortgage Lenders.
Being unable to remortgage has not been a problem for some home owners as they have automatically slipped onto their lender’s cheaper standard variable rate when their initial deal came to an end.
However, once interest rates begin to rise, these rates are widely expected to follow, squeezing hundreds of thousands of household budgets as their monthly mortgage payments increase.

Rates are going up regardless of Merv's vigilance which may leave him the option of keeping rates where they are. Why grease the wheels when the train is already half way off the track?

IMO Merv cannot and will not hike--the economy is already heading down and demand will begin to drop forcing prices to follow.

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Rates are going up regardless of Merv's vigilance which may leave him the option of keeping rates where they are. Why grease the wheels when the train is already half way off the track?

IMO Merv cannot and will not hike--the economy is already heading down and demand will begin to drop forcing prices to follow.

I agree, rate rises now would completely cook the UK. With unemployment notching up and people having less to spend due to inflation a rate rise now would put a wrecking ball through the housing market. Still it would ease inflation a little, but in doing so would FUBAR our export industries due Sterling strengthening. There is no easy way out and Merv knows it.

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I was talking to two ladies the other day, one works part time, her husband is a teacher, the other a single mother who's SMI payments have dropped.

Both are in mortgage arrears with the latter been given 3 months notice by the bank.

As more people joined the conversation I was amazed by the amount people were paying for their mortgages, only 2 of 5 people were paying less than £1000 pcm.

This is the SE.

Rate rises, even only small ones, are going to hurt.

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I was talking to two ladies the other day, one works part time, her husband is a teacher, the other a single mother who's SMI payments have dropped.

Both are in mortgage arrears with the latter been given 3 months notice by the bank.

As more people joined the conversation I was amazed by the amount people were paying for their mortgages, only 2 of 5 people were paying less than £1000 pcm.

This is the SE.

Rate rises, even only small ones, are going to hurt.

I agree. I know people who have got bigger mortgages because the repayments are low so they can afford to borrow more.

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I was talking to two ladies the other day, one works part time, her husband is a teacher, the other a single mother who's SMI payments have dropped.

Both are in mortgage arrears with the latter been given 3 months notice by the bank.

As more people joined the conversation I was amazed by the amount people were paying for their mortgages, only 2 of 5 people were paying less than £1000 pcm.

This is the SE.

Rate rises, even only small ones, are going to hurt.

How many were IO?

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I agree, rate rises now would completely cook the UK. With unemployment notching up and people having less to spend due to inflation a rate rise now would put a wrecking ball through the housing market. Still it would ease inflation a little, but in doing so would FUBAR our export industries due Sterling strengthening. There is no easy way out and Merv knows it.

You say a rise in rates would lower inflation, people may have a slightly higher mortgage payment but their living costs would fall. If house prices fell that would also lower the main living cost. Savers would have more income to spend.

Some businesses would like interest rate rises others wouldn't. Those that wouldn't would benefit from the increased spending power of the above.

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I agree, rate rises now would completely cook the UK.

I don't agree.

There is a complete disconnect between the base rate and "new" mortgages (and business loans) which are set at a rate demanded by external factors.

Raising the base rate would IMHO have no effect at all on the rates that are being charges to new borrowers.

What it would do is send the correct message to the markets that the BOE realise that their unsustainable zero interest rate policy is coming to an end and would, if anything cause external inertest rates, over time, to fall.

tim

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I was talking to two ladies the other day, one works part time, her husband is a teacher, the other a single mother who's SMI payments have dropped.

Both are in mortgage arrears with the latter been given 3 months notice by the bank.

As more people joined the conversation I was amazed by the amount people were paying for their mortgages, only 2 of 5 people were paying less than £1000 pcm.

This is the SE.

Rate rises, even only small ones, are going to hurt.

The more scarry scenario is; will these people ever be able to sell their houses at the prices at which they bought them given the rationing of mortgage finance? I think it is now impossible to accurately judge the value of a property, we cannot ever assume that mortgage lending will return to the levels which it has been during the past seven years. Experts seem to think that house prices need to fall by 40% before we just begin to get the fundamentals of the market in sync. Those who bought during the past seven years with a small deposit or little equity will pay an enormous price, in fact they will be ruined. More victims of our glorious bankers.

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As a (FT)buyer I feel no pressure at all by a drop in lending, why would I? Circumstances over the past three years have meant that to even be in the game at all, you need a big deposit to mitigate the banks risk. If I can't borrow (and I presume that is the pressure I am meant to be under) then I'll do something else with my stake. If they won't lend to me, with what I have stashed and with my really quite average expectations, then I'd be amazed to know who exactly they will lend to. I do want to put down some roots, buy a gaff to my taste, make it my own home, get the debt paid off a quick as possible - but the country is heading down the pan, so if I can't participate here, it's no great loss to leave and go participate elsewhere.

Less lending means less buyers, which means less completions, which means reduced prices for those sellers who want to get one of those completions.

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http://www.mortgagestrategy.co.uk/latest-news/januarys-fall-stifles-hopes-of-lending-rise/1026512.article

Oh dear - restricted lending wonder what that will do for the spring bounce?

There won't be one? Spring bounce cancelled.

I believe that mortgages will be in short supply for quite some time.

Listen to what Robert Preston has to say in this video:

http://www.bbc.co.uk/journalism/blog/2011/01/video-the-economy-business-and.shtml

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IMO Merv cannot and will not hike--the economy is already heading down and demand will begin to drop forcing prices to follow.

Doesn't matter if Merv hikes or not - rates for new mortgages are steadily rising which will have the same effect.

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I like their poll on the left hand side 'what should be done to help first time buyers'. Surprisingly, I couldn't find an option I could vote on. :lol:

I agree - I have sent them a "comment":

*** SNIP

Suggestion for your 'Poll - What needs to be done to help first-time buyers?' on the left - add "Let house prices fall to reasonable levels" ... as it is I cannot click any of your current options.

*** END OF SNIP

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  • 285 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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