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The Knimbies who say No

Boe Approvals And Lending March 2013

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BoE page:

http://www.bankofengland.co.uk/statistics/Pages/mc/2013/mar/default.aspx

http://www.bankofengland.co.uk/statistics/Pages/bankstats/2013/Mar13/default.aspx

Table G, Lending to individuals:

Outstanding (£Bn):

Dec 1,422.1

Jan 1,422.5

Feb 1,423.0

Mar 1,423.0

Not much doing there.

Secured lending table H. Showing a similar trend to the BBA figs, ie going underwater, but not quite there yet on a 12m growth rate basis. Repayments on a rising trend and lending static. Did someone say "Spring Bounce"...

Total(£Bn), y-o-y (%), Gross lending (£Bn), repayments (£Bn):

Dec 1,265.0 0.7% 12.5 12.0

Jan 1,264.9 0.6% 12.6 12.5

Feb 1,265.4 0.6% 12.7 12.6

Mar 1,265.4 0.5% 12.5 12.7

Mortgage approvals table I. The press are all over this (see Torygraph link below), crowing about approvals beating expectations, and being up y-o-y. True. Here's details from the table:

purchase#, remortgage#, other#

Dec12 55,415 28,224 14,666

Jan13 54,395 25,772 13,658

Feb13 51,947 27,586 12,749

Mar13 53,504 30,088 13,279

And the same numbers from this time last year:

Dec11 53,613 31,848 20,689

Jan12 57,954 31,565 19,564

Feb12 49,029 28,084 18,998

Mar12 49,860 29,511 18,528

MEW is on the same path as the dinosaurs, and remortgaging looks to be on a gentler downward trend. I'm not sure the above is much evidence of a significant loosening of credit conditions.

Telegraph spin:

http://www.telegraph.co.uk/finance/economics/10027205/Recovery-hopes-boosted-by-lending-figures.html

Not much can be said which has not been said before. Credit remains scarce. Plenty other figs at the links.

Edit link at top, added main page.

Edited by cheeznbreed

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BoE page:

http://www.bankofeng...13/default.aspx

Total(£Bn), y-o-y (%), Gross lending (£Bn), repayments (£Bn):

Dec 1,265.0 0.7% 12.5 12.0

Jan 1,264.9 0.6% 12.6 12.5

Feb 1,265.4 0.6% 12.7 12.6

Mar 1,265.4 0.5% 12.5 12.7

First time in while that repayments are higher than gross i.e. NET lending is negative (as predicted on last months thread on HPC!)

Mortgage approvals table I. The press are all over this (see Torygraph link below), crowing about approvals beating expectations, and being up y-o-y. True. Here's details from the table:

purchase#, remortgage#, other#

Dec12 55,415 28,224 14,666

Jan13 54,395 25,772 13,658

Feb13 51,947 27,586 12,749

Mar13 53,504 30,088 13,279

And the same numbers from this time last year:

Dec11 53,613 31,848 20,689

Jan12 57,954 31,565 19,564

Feb12 49,029 28,084 18,998

Mar12 49,860 29,511 18,528

MEW is on the same path as the dinosaurs, and remortgaging looks to be on a gentler downward trend. I'm not sure the above is much evidence of a significant loosening of credit conditions.

Telegraph spin:

http://www.telegraph...ng-figures.html

Not much can be said which has not been said before. Credit remains scarce. Plenty other figs at the links.

Approvals still lower than December.

Re-mortgaging trending downwards as the number who have enough equity etc to re-mortgage falls.

FLS improving the situation for those with large deposits or equity with better rates but not an increase in quantity.

Any "good" news in MSM is based more and more on scraps.

Edited by koala_bear

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Great stuff, c'n'b. With the economy flat, household debt still at bubble levels and real wages falling we shouldn't expect to see much demand for new lending at any price.

Let's see what contrivance the Acme Corp comes up with next.

.

Edited by zugzwang

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First time in while that repayments are higher than gross i.e. NET lending is negative (as predicted on last months thread on HPC!)

Approvals still lower than December.

Re-mortgaging trending downwards as the number who have enough equity etc to re-mortgage falls.

FLS improving the situation for those with large deposits or equity with better rates but not an increase in quantity.

Any "good" news in MSM is based more and more on scraps.

Yes, agree entirely. I suspect that if the trend continues to be negative we'll start to hear about it given this goes against the primary aim of the FLS. Doubtless people will argue it would have happened sooner without it, but how you'd ascertain that is anyone's guess. Much of a muchness in any case if it's demonstrably occuring. Roll on BBA figs next month...

The increase in repayments looks like being the main culprit of net negative lending, the same time last year average repayments were £1Bn per month lower in the BoE numbers:

Lending, Repayments (both £Bn)

Dec11 13.0 11.5

Jan12 12.7 11.7

Feb12 12.2 11.6

Mar12 12.7 11.6

A ~8% rise in repayments y-o-y looks difficult to counter with a similar lending performance, (and maybe the trend does not end here). I guess the increase in repayments is partly explained by many fixed rate deals ending and the owners having insufficient equity/imperfect credit rating to remortgage to a better deal, despite all the limbo-dancing on rates being done on the_duke_of_hazard's thread.

Great stuff, c'n'b. With the economy flat, household debt still at bubble levels and real wages falling we shouldn't expect to see much demand for new lending at any price.

Let's see what contrivance the Acme Corp comes up with next.

.

No bother zugwang, seems to be exactly as you describe it- demand on the floor despite unprecedented rates, rising repayments coming out of diminishing purchasing power. I'm sure the Chancellor will manage to find it within himself to loosen the pursestrings some more if this continues. 30% Help to Buy, then 40%, 50%....

Edited by cheeznbreed

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30% Help to Buy, then 40%, 50%....

Then comes 'Help to Lie', when the authorities turn a blind eye to whatever salary figures people want to put on their mortgage application forms. Or did we try that already?

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A ~8% rise in repayments y-o-y looks difficult to counter with a similar lending performance, (and maybe the trend does not end here). I guess the increase in repayments is partly explained by many fixed rate deals ending and the owners having insufficient equity/imperfect credit rating to remortgage to a better deal, despite all the limbo-dancing on rates being done on the_duke_of_hazard's thread.

I still haven't got my head fully around how the repayment rate could be rising that quickly and by that much (not just this month but also previous months), something feels a bit wrong somewhere. These are of course the whole market figures and different participants are doing very different things.

The big things I could thing of were are rate of MEW repayments relative to new MEWing being high but the total amount of MEW etc is not big enough on its own. Also is the Santander drastically reducing new lending while still collecting repayments from much bigger pool of historic loans (including those trapped as they can't re-mortgage)?

The credit card /unsecured lending data was also interesting, FLS being pumped in there a plenty from day 1 of the scheme - much quicker than the effect on mortgages or SME lending.

Are people using new credit card/ unsecured loans to generate cash flow to repay MEW etc so they can then re-mortgage on more favourable terms?

Edited by koala_bear

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Medium is the message...

Audience is the content...

But gee whiz, put these numbers in a graph format for the lazier of us.

If I went around making easily accesible charts with clearly understandable information, there would be no baked beans, tinfoil or shotgun shells left when I go to the shop later :P

nofanx.jpg

Besides, I thought everyone else here sees the matrix?

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I still haven't got my head fully around how the repayment rate could be rising that quickly and by that much (not just this month but also previous months), something feels a bit wrong somewhere. These are of course the whole market figures and different participants are doing very different things.

The big things I could thing of were are rate of MEW repayments relative to new MEWing being high but the total amount of MEW etc is not big enough on its own. Also is the Santander drastically reducing new lending while still collecting repayments from much bigger pool of historic loans (including those trapped as they can't re-mortgage)?

The credit card /unsecured lending data was also interesting, FLS being pumped in there a plenty from day 1 of the scheme - much quicker than the effect on mortgages or SME lending.

Are people using new credit card/ unsecured loans to generate cash flow to repay MEW etc so they can then re-mortgage on more favourable terms?

Hmm, I hadn't thought about a straightforward error or miscalculation. Perhaps it's a sign of a gradual shift from IO to repayment?

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If I went around making easily accesible charts with clearly understandable information, there would be no baked beans, tinfoil or shotgun shells left when I go to the shop later :P

nofanx.jpg

Besides, I thought everyone else here sees the matrix?

Graph... I see's a pair of hammocks.

Hammocks filled with me and those burds on Injin & CCC's avatars.

And beer.

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Hmm, I hadn't thought about a straightforward error or miscalculation. Perhaps it's a sign of a gradual shift from IO to repayment?

I don't think there is miscalculation or error just several big underlying changes that they might not be choosing to highlight (cue shortage of baked beans...)

We only get the data at a very aggregated level so we can't see what is going on in the detail.

IO to repayment shift will certainly make sense but for purchases given the current transaction levels it will take time for this to make a significant difference (i.e. cumulative change) in order for this to stack up there has to be a big change in the remortgaging market with people from IO to repayment particularly at the higher end for larger amounts.

The increase in repayment rate in the last quarter is equivalent to reducing disposable income for every working age (18-65) person in UK by £280 per annum - that is sucking money out of the economy at a massive rate* (bigger than any tax hikes for the average person for years). Those who are actually doing the repayments instead of IO would be very much worse off in terms of spending power (10k+ per annum)?

* hence probably why they are hoping every one would look the other way - this also completely explains why the economy is flatlining. If it keeps increasing at a similar rate???

Get the BoE to make sure actual mortgage IRs remain low while everyone shifts to repayments so there isn't a sudden shock to the economy?

Or 1988 being the peak year for endowment (i.e. IO to the bank) mortgage borrowing so they are being repaid after 25 years? All very hard to tell with the publicly available data.

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Graph... I see's a pair of hammocks.

Hammocks filled with me and those burds on Injin & CCC's avatars.

And beer.

That's precisely what I was trying to say above. Hammock, birds and beer. It's a bit like declining net lending.

Lloyds Q1 statement may be of passing interest here:

http://www.lloydsbankinggroup.com/

Presentation here:

http://www.lloydsbankinggroup.com/media/pdfs/investors/2013/2013Apr30_LBG_Q1_IMS_Presentation.pdf

They've been shrinking UK mortgage exposure, see slide 4. £1.7Bn down in the retail loan book(includes unsecured I think) Q4 2012 vs Q1 2013. They mention they are supporting FTBs, and expect around 60,000 to be sold loans this year (13k Q1), some 25% of all FTB numbers expected.

Seems like UK mortgage lending is not a priority. I wonder why that might be..

Edited by cheeznbreed

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That's precisely what I was trying to say above. Hammock, birds and beer. It's a bit like declining net lending.

Lloyds Q1 statement may be of passing interest here:

http://www.lloydsbankinggroup.com/

Presentation here:

http://www.lloydsban...resentation.pdf

They've been shrinking UK mortgage exposure, see slide 4. £1.7Bn down in the retail loan book(includes unsecured I think) Q4 2012 vs Q1 2013. They mention they are supporting FTBs, and expect around 60,000 to be sold loans this year (13k Q1), some 25% of all FTB numbers expected.

Seems like UK mortgage lending is not a priority. I wonder why that might be..

Lloyds need to reduce UK mortgage market share in addition to the now deceased project verde deal to keep the European Commission happy on competition grounds. Their financial state helps justify this too before any one worries about the occurrence of an HPC!

The LBG report was going to be bed time reading anyway.

The recent FLS changes now weight SME lending as 20 times more important than mortgage or unsecured.

Edited by koala_bear

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I don't think there is miscalculation or error just several big underlying changes that they might not be choosing to highlight (cue shortage of baked beans...)

We only get the data at a very aggregated level so we can't see what is going on in the detail.

IO to repayment shift will certainly make sense but for purchases given the current transaction levels it will take time for this to make a significant difference (i.e. cumulative change) in order for this to stack up there has to be a big change in the remortgaging market with people from IO to repayment particularly at the higher end for larger amounts.

The increase in repayment rate in the last quarter is equivalent to reducing disposable income for every working age (18-65) person in UK by £280 per annum - that is sucking money out of the economy at a massive rate* (bigger than any tax hikes for the average person for years). Those who are actually doing the repayments instead of IO would be very much worse off in terms of spending power (10k+ per annum)?

* hence probably why they are hoping every one would look the other way - this also completely explains why the economy is flatlining. If it keeps increasing at a similar rate???

Get the BoE to make sure actual mortgage IRs remain low while everyone shifts to repayments so there isn't a sudden shock to the economy?

Or 1988 being the peak year for endowment (i.e. IO to the bank) mortgage borrowing so they are being repaid after 25 years? All very hard to tell with the publicly available data.

If I recall correctly there has been some anecdotal evidence of repayments jumping between IO and repayment, but probably not at the sort of level which would affect the figures to the degree seen.

Looking at the series high for repayments, it was over £23Bn nominal in April 2007 so on the face of it there is plenty of scope for the increase seen in the last year, barely back to half that level although declining real wages will make it feel like more. Page 2:

http://www.bankofengland.co.uk/statistics/Documents/mc/2013/mar/moneyandcredithighsandlows.pdf

As you say though, unless we get a bigger breakdown it is hard to identify whose pockets the extra is coming from.

Edit, this is from October 2012, might be spin of course:

http://www.thisismoney.co.uk/money/mortgageshome/article-2212138/Interest-mortgage-borrowers-forced-expensive-repayment-plans.html

This agony aunt seems to think not:

http://www.guardian.co.uk/money/2013/feb/13/forced-off-interest-only-mortgage-on-to-repayment

Lloyds need to reduce UK mortgage market share in addition to the now deceased project verde deal to keep the European Commission happy on competition grounds. Their financial state helps justify this too before any one worries about the occurrence of an HPC!

The LBG report was going to be bed time reading anyway.

The recent FLS changes now weight SME lending as 20 times more important than mortgage or unsecured.

Good points.

Edited by cheeznbreed

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If I recall correctly there has been some anecdotal evidence of repayments jumping between IO and repayment, but probably not at the sort of level which would affect the figures to the degree seen.

Looking at the series high for repayments, it was over £23Bn nominal in April 2007 so on the face of it there is plenty of scope for the increase seen in the last year, barely back to half that level although declining real wages will make it feel like more. Page 2:

http://www.bankofeng...ighsandlows.pdf

As you say though, unless we get a bigger breakdown it is hard to identify whose pockets the extra is coming from.

Edit, this is from October 2012, might be spin of course:

http://www.thisismon...ment-plans.html

This agony aunt seems to think not:

http://www.guardian....on-to-repayment

Good points.

Have had a look at the detailed data from the building societies association (they don't publicise it but they have much more detailed info for both the mutual and the banks (BBA data). [www.bsa.org.uk/keystats/mortgage.htm]

So where has this ~£700m extra repayments come from in the last 3 months?

Virtually no change in building society data from December to March, so not there.

Looking at the all lenders data (inc BBA banks but not specialist/other lenders).

Regular (monthly) repayments up £321m

Repayments on redemption down £65m

Other lump sum up £105m

This only explains about half the ~£700m gap.

Given BoE - BBA - BSA = £1.1bn a month repayments, it must be coming in from the other / specialist category (this would include CML lenders not also BBA or BSA members for example BoI that has come up in other threads today).

As an aside approximate mortgage repayment shares:

Regular payments: 30%

Redemption: 60%

Other lump sum: 10%

For a market with low transaction numbers that redemption figure seems high? Or is it just an indication of the massive level of IO?

Edit to add:

The rest of the gap (~50%) appears to be coming from a reduction in outstanding balances with specialist lenders. Given they are only 15% of the outstanding balances (BBA=69% Mutuals=16%) this is a big change.

Does anyone have any idea which BBA member flogged ~£28bn of mortgages to a specialist lender in August 2010?

Edited by koala_bear

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I still haven't got my head fully around how the repayment rate could be rising that quickly and by that much (not just this month but also previous months), something feels a bit wrong somewhere.

May be it is because short mortgage deals after 2 - 3 years are coming to end and SVR is increasing the monthly repayments by 4% - 5% about base rate.

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May be it is because short mortgage deals after 2 - 3 years are coming to end and SVR is increasing the monthly repayments by 4% - 5% about base rate.

I did wonder about that but subsequently I checked their definition of "Repayment" - it is principle only and not interest so it can't be that.

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Have had a look at the detailed data from the building societies association (they don't publicise it but they have much more detailed info for both the mutual and the banks (BBA data). [www.bsa.org.uk/keystats/mortgage.htm]

So where has this ~£700m extra repayments come from in the last 3 months?

Virtually no change in building society data from December to March, so not there.

Looking at the all lenders data (inc BBA banks but not specialist/other lenders).

Regular (monthly) repayments up £321m

Repayments on redemption down £65m

Other lump sum up £105m

This only explains about half the ~£700m gap.

Given BoE - BBA - BSA = £1.1bn a month repayments, it must be coming in from the other / specialist category (this would include CML lenders not also BBA or BSA members for example BoI that has come up in other threads today).

As an aside approximate mortgage repayment shares:

Regular payments: 30%

Redemption: 60%

Other lump sum: 10%

For a market with low transaction numbers that redemption figure seems high? Or is it just an indication of the massive level of IO?

Edit to add:

The rest of the gap (~50%) appears to be coming from a reduction in outstanding balances with specialist lenders. Given they are only 15% of the outstanding balances (BBA=69% Mutuals=16%) this is a big change.

Does anyone have any idea which BBA member flogged ~£28bn of mortgages to a specialist lender in August 2010?

Very interesting, thanks for taking the time.

I had not previously appreciated the role of redemptions in the repayments calculation, as obvious as it seems.

Not sure I've got much to contribute at present, I'll have to have a think.

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  • 244 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?


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