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karhu

Fresh Rise In Mortgage Approvals

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http://newsvote.bbc.co.uk/1/hi/business/4392042.stm

The number of new mortgages approved by lenders, but not yet lent, has risen to its highest level since June 2004.

Figures from the Bank of England show that lenders approved 107,000 new mortgage loans in September.

_40965808_housing_sep_gra203.gif

While the volume of activity in the housing market has revived after the sudden slump in the summer of 2004, house prices are still slowing down.

Do we have house prices decreasing on HIGH VOLUME? Anyone like to indicate the significance of this?

Edited by karhu

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Guest The_Oldie

Surely much of this is likely to be re-mortgaging, as many of the 2 - 3 year low rate mortgages come to an end.

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Does this include people swopping their existing mortgage? Or is it new mortgages to buy new properties?

Thanks,

Mr Joe

No idea.

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Yes there's more movement in the market stirring in London, but prices are staying where they are and asking prices are still not being met, read the story below. So for now the market is officially treading water... (as the economy contracts, US interest rates look set to continue upwards, unemployment increases etc....)

http://www.findaproperty.com/story.aspx?storyid=8263

Surge Of Sales In London

28 Oct 2005 News Item See also

Prices may still be on the slide but the London property market has awoken from its slumbers...

Hometrack's October survey of the London housing market reveals a further price fall of -0.1 per cent. House prices now stand at £260,700, down from £274,200 in July 2004, and down by more than four per cent over the past 12 months.

Out of the 33 London boroughs, only three have seen price rises, 27 have remained static and three have seen price falls.

The best performing areas were Ealing (0.2%), Westminster (0.1%) and Redbridge (0.1%). The worst performing areas were Hounslow (-1.1%), Brent (-0.4%) and Barnet (-0.1%).

Surge In Activity

There has, however, been a huge surge in transactions in the London market over the past month, with activity increasing by eight per cent (+18.2% over the past three months).

This can be directly attributed to an increase of 4.4 per cent in the number of buyers registered, significantly above the 1.2 per cent rise in properties listed. These figures suggest that the supply/demand balance is shifting, though for the moment at least, supply still exceeds demand.

Sales price as a percentage of asking price decreased again in October to 93.3 per cent (93.4 per cent last month), meaning buyers are negotiating discounts of 6.7 per cent.

Although higher than this year's low in January of 91.8 per cent, when buyers were negotiating discounts of 8.2 per cent, it is still considerably lower than the peak of 95.4 per cent in April 2004, when buyers were negotiating discounts of just 4.5 per cent.

The amount of time it takes to sell a property has decreased fractionally to 6.2 weeks, compared with 6.3 weeks in September's survey and six weeks in October 2004. Conversely, the number of viewings per sale has increased slightly to 14.1, compared with 14 in September's survey.

"A Significant Improvement"

John Wriglesworth, Hometrack's housing economist, comments: "This month the London market has seen a significant improvement in activity, due mainly to an increase in buyers. This suggests that buyer confidence is continuing to improve and this is effectively ruling out any prospects of a housing market crash.

"Despite gradual house price falls over the last sixteen months, properties in the capital still remain unaffordable for first-time buyers. A further rate cut is needed to help boost confidence for first-time buyers in London.

"While house prices are set to end the year four per cent down on 2004, strongly rising incomes and the expectation of large city bonuses at the end of the year should further boost demand in the capital in 2006."

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The BOE data is spread accross several excel documents and is seasonally adjusted. The data is on new purchases, looks like morgage approvals dropped before recovering slightly, it appears to match the average house price data which makes sence.

In the context of 2004 data this doesnt look like such a great rise, but it is rising unlike this time last year, what happened in nov/dec 2004?

BOE_House_Purchase.JPG

post-552-1130759994_thumb.jpg

Edited by moosetea

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As it is well known that there are very few FTB's these days and BTL is struggling would it be safe to assume that the mortgage applications are are being made by people looking to sell there current property and move to a new one?

If this is the case I am sure that these people may well be getting mortgages approved in the misguided belief that they will be able to sell their current property immediately and move on.

Personaly I believe that a large number of these approvals will be window shopping and never actually taken up.

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The BOE data is spread accross several excel documents and is seasonally adjusted. The data is on new purchases, looks like morgage approvals dropped before recovering slightly, it appears to match the average house price data which makes sence.

In the context of 2004 data this doesnt look like such a great rise, but it is rising unlike this time last year, what happened in nov/dec 2004?

Yes this looks like a minor rebound it has to be said - although look at the number of remortgages and "other" approvals - they still outnumber house purchases by a big margin. Could be led by the desire of some to buy while rates remain lowish before upturn. Or a mad dash for the exits by mr and mrs above average? who knows.

There was a big tick down in Nov-Dec last year - http://www.bankofengland.co.uk/statistics/...sep/taba5.4.xls - proof will be in what this increase does to average prices if it is converted into actual purchases and sales. I still see an impasse betwen seller's expectations and buyer's aspirations.

Very interestingly, I looked on the BOE website statistical database for the late 80s story... I could not believe the (potential) match. The total QUARTERLY mortgage approvals for house purchases peaked (not surprisingly) in Jun 1988 (miras expiry among other factors) at 442,000 (ie 147,000 per month). This then drops away throughout 1988 and 1989 (see Jun 89 at 273,000) before picking up again briefly in Sep 1989 through Dec 1989 (306,000) into early 1990 before resuming what we now know to be the long downward fall off into the early 90s (1992 - 191,000).

No explanation for this 1989 upward blip after the top of the market had already passed (unless it was a regional lagging effect of some kind (my pet theory)).

Attached is my pdf of the spreadsheet.

Who said "its different this time"...perhaps not so.

What do people think?

001.PDF

001.PDF

Edited by Tempest

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Guest wrongmove

Do we have house prices decreasing on HIGH VOLUME? Anyone like to indicate the significance of this?

This volume is not high, but it is high enough to maintain positive house price inflation, i.e. house prices should rise in 3-6 months, based on these numbers. Approval have been an accurate leading indicator over the years. The low approvals of a few months ago have led to zero HPI now.

Also, prices are not falling, as such. Sure, some props in some areas have dropped, but the national trend in sideways.

Basically, approval over 100K are not bearish news, unfortunately. Based on this, prices are unlikely to drop much this winter, or next spring. They should in fact rise more quickly than now.

:(

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Guest Charlie The Tramp
This then drops away throughout 1988 and 1989 (see Jun 89 at 273,000) before picking up again briefly in Sep 1989 through Dec 1989 (306,000) into early 1990 before resuming what we now know to be the long downward fall off into the early 90s (1992 - 191,000).

Just as the recession in the UK started to bite hard.

The same pattern will again emerge as the coming global recession starts to bite with the indebted Nations bearing the brunt. :(

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Guest
Basically, approval over 100K are not bearish news, unfortunately. Based on this, prices are unlikely to drop much this winter, or next spring. They should in fact rise more quickly than now.

So, since the 'shape' of the approvals graph looks like it did last time around, did asking prices rise remain supported/rise a little last time?

This may test your theory that asking prices should rise more quickly now, but at the same time, history would be telling us that this may not turn out to mean much!

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This news must come as a cruise missile for any bears looking to buy in london. Some of the bears on this site recently have contributed this to rise by deciding to buy :)

Edited by mercsl

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Guest

... a flood of very expensive family homes becoming available that owners would never have even considered selling less than a couple of years ago.

So what does all this tell us?

To me, it says, that those not born yesterday have seen the writing on the wall and that those that are still buying are the ones born yesterday.

Hindsight's a great thing but so is experience...

It may not even be as sinister as that: Some of these people are going to have to retire and downsize at some stage!

You talk about 'experience' - I take it you got burned last time??? :unsure:

"Are there any figures for approvals that are then taken up ?"

Prolly not easily - cause how do they know you've decided not to buy?

Edited by megaflop

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I think even the bears among us would admit that when the Nationwide figures tomorrow show a 0.3% (or whatever) increase in prices the VIs/bulls will recover some of their ground lost recently. It will be trumpeted by them from all quarters too and we will have a fair shower of posts rubbing it in here. That is fine. Do not respond in kind. Be patient and respond if you must in a rational manner - that is our calling.

But, even so, the news: 1. Doesn't help FTB who couldn't afford to buy before; 2. Doesn't solve the consumer debt problem (makes it worse) and 3. is not enough IMO to change the direction of sentiment in certain regional pockets (eg parts of London and SE) that things are already headed down at some rate or other for some time. A decline from 20%+ HPI to 0% HPI needs more than this to kick start it (or solve its underlying structural deficiency).

Also, the alert media are now focussing not on HPI itself but on the wider economics eg unemployment, inflation, repossessions, unsustainable consumer debt levels, lamentable retailer trading prospects, manfacturing sentiment down etc etc.

One could argue that HPs are the last beacon of outright positivity which is why it must be clung to by VIs at all costs!

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Guest wrongmove

So, since the 'shape' of the approvals graph looks like it did last time around, did asking prices rise remain supported/rise a little last time?

This may test your theory that asking prices should rise more quickly now, but at the same time, history would be telling us that this may not turn out to mean much!

I have looked at Tempest's data - basically approvals crept above 100k/month for about 6 months (late 1989), and as we all know, HPI stayed negative. I agree that this may happen again. (I am a bear and an FTB, BTW - I just try not to apply my VI spin to every figure I see :) )

Also, the theory in not mine, but approvals have proved pretty reliable. If this uptick is a blip, we will know in another 2 or 3 months, when approvals drop down below the magic 90k level (less than 90k/month has historically led to falling prices 3-6 months later. The long run average is about 95k). But if they stay above 100k, I think we can forget about substantial drops early next year.

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I have looked at Tempest's data - basically approvals crept above 100k/month for about 6 months (late 1989), and as we all know, HPI stayed negative. I agree that this may happen again. (I am a bear and an FTB, BTW - I just try not to apply my VI spin to every figure I see :) )

Also, the theory in not mine, but approvals have proved pretty reliable. If this uptick is a blip, we will know in another 2 or 3 months, when approvals drop down below the magic 90k level (less than 90k/month has historically led to falling prices 3-6 months later. The long run average is about 95k). But if they stay above 100k, I think we can forget about substantial drops early next year.

I agree with you! I just had to check to give myself some comfort that this can happen (and has happened) within an overall gradual downswing. But I am seriously worried about this data - it may turn down again or it may hover indefinitely.

My only comfort is that to believe we will have a material upturn in HPI goes against my experience on the ground (certainly in my neck of the SE and stories I hear from friends in other pcokets of the country) and the wider economy.

Worst case I can see HPI at 1-3% for 6 months yet...

But am hoping something comes along - nothing has happened to make the underpinnings of the market any healthier - quite the reverse in fact.

Edited by Tempest

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Guest Riser

The approvals data had spikes in it during the last crash we souldn't read too much into short term figures. This market turned June 2004, all we are seeing now is sellers and ignorant buyers hanging on to the hope of a SIPPS revival and the myth ever increasing house prices, even looks like they have got our own Dr B spooked.

[Edit] Now Gif picked up wrong file :huh:

Edited by Riser

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93housecrash.bmp ( 350.35k ) Number of downloads: 0 [Riser]

Save it as a GIF or PNG either of which are web standards. Bitmap (BMP) is a Windows specific format which is not appropriate for use on the Web (it's also uncompressed which wastes people's time and HPC's bandwidth).

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93housecrash.bmp ( 350.35k ) Number of downloads: 0 [Riser]

Save it as a GIF or PNG either of which are web standards. Bitmap (BMP) is a Windows specific format which is not appropriate for use on the Web (it's also uncompressed which wastes people's time and HPC's bandwidth).

93housecrash_1_.PNG

post-1584-1130773516_thumb.jpg

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I agree with you! I just had to check to give myself some comfort that this can happen (and has happened) within an overall gradual downswing. But I am seriously worried about this data - it may turn down again or it may hover indefinitely.

My only comfort is that to believe we will have a material upturn in HPI goes against my experience on the ground (certainly in my neck of the SE and stories I hear from friends in other pcokets of the country) and the wider economy.

Worst case I can see HPI at 1-3% for 6 months yet...

But am hoping something comes along - nothing has happened to make the underpinnings of the market any healthier - quite the reverse in fact.

You have to take the long view. Could your parents afford the home they live in now if they had to buy it now? Or put another way, could you afford your parents home at the price it is now (assuming no HPI) when you reach their age. This is the crucial question - because it highlights the complete absurdity of the belief that prices can stay where they are.

The cannot 'hover indefinitely'. Sooner or later older people will want to downsize and younger people will want/need to buy up. Unless, of course, young people live in flats forever and old people stay in their 500k houses until they die. Maybe that's how it will work. Property will become completely unsaleable as no-one will be able to afford the prices and it will only ever change hands on death.

Hold on, markets don't work like that.

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You have to take the long view. Could your parents afford the home they live in now if they had to buy it now? Or put another way, could you afford your parents home at the price it is now (assuming no HPI) when you reach their age. This is the crucial question - because it highlights the complete absurdity of the belief that prices can stay where they are.

The cannot 'hover indefinitely'. Sooner or later older people will want to downsize and younger people will want/need to buy up. Unless, of course, young people live in flats forever and old people stay in their 500k houses until they die. Maybe that's how it will work. Property will become completely unsaleable as no-one will be able to afford the prices and it will only ever change hands on death.

Hold on, markets don't work like that.

I am with you - everything else I see tells me you are right and my views will be validated. But approvals data means something. Lets hope it is the trailing edge of the plateau. I think it exceptionally unlikely that approvals will not drop again and prices with them (but just to be ruthlessly honest we can't say what the mix will be between nominal and real drops - ie its question of timing).

There will be people downsizing now and who do not mind paying current prices for a 2/3 bedder from the proceeds of their 4/5 bedder after the last several years HPI. But they will run out (or at leastslow to the rate at which FTBs join).

All I am saying is, despite thinking I am right, I think we could be watching the decline for longer than we think. But I really think this winter will be the turning point and we bears will al be happier in March when reality has bitten.

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But I really think this winter will be the turning point and we bears will al be happier in March when reality has bitten.

Your sentiments were echoed this time last year on HPC

:ph34r:

I'll say again, my freind is sales director at Kinleigh Folkard and Hayward in London (over 50 outlets I think) and he says sales are 20% up on this time last year (sorry no graphs DrB, but graphs are old news anyway).

My freind is known as 'stat - Man' for good reason so I have no reason to doubt him.

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Your sentiments were echoed this time last year on HPC

:ph34r:

I'll say again, my freind is sales director at Kinleigh Folkard and Hayward in London (over 50 outlets I think) and he says sales are 20% up on this time last year (sorry no graphs DrB, but graphs are old news anyway).

My freind is known as 'stat - Man' for good reason so I have no reason to doubt him.

Could he be lying? Its not in his interest to say the market is shyte is it?

just a suggestion

TB

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  • 301 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% +
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      • Even
      • up 2.5%
      • up 5%



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