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The Knimbies who say No

B B A Figs April 2013

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Spreadsheets and commentary here:

http://www.bba.org.uk/statistics/article/april-2013-figures-for-the-high-street-banks/high-street-banking/

April 2013 figures for the high street banks

24/05/2013

Personal deposits rose by 5.5% over the year to April

BBA statistics director, David Dooks said:

“New household borrowing totalled over £16 billion in April. This monthly level has been fairly constant recently and with various Government schemes, including the recent extension to Funding for Lending, banks are offering competitive rates and products.

“Low consumer confidence is depressing demand for new borrowing and consumers are continuing to save, with deposits rising by 5.5% over the year to April.”

The graph shows not much has changed- the savings rate has moderated somewhat, but I presume this is to be expected as the cash pile grows, especially when combined with declining real earnings.

stats240513.jpg

Mortgages

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Net secured lending growth still the same annualised -0.1% as last month. On a nsa basis, you have to include every month back to Dec 2011 to get a positive sum in the net lending figures

The nsa monthly net lending figures for 2012 so far, all negative:

Jan 2013 -£57

Feb 2013 -£982

Mar 2013 -£1,152

Apr 2013 -£1,072

It bears repeating that since BBA records began in Spetember 1997, 188 months have passed since then and only 7 show a negative net lending figure in the nsa figures: Feb 2012, Apr 2012 and Dec2012-Apr 2013 inclusive. The last three months are by far the largest of the 7 negative figures.

The April 2013 gross loan sum advanced figure nsa is up over 10% y-o-y, and beats 2011 too, but after that you have to look back to 2000 to find a lower figure:

Apr 2013 £7,311

Apr 2012 £6,414

Apr 2000 £5,822

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Approval numbers for house purchase are up considerably year on year, matching the bigger number for funds advanced:

Apr 2013 37,837

Apr 2012 32,840

And this puts the year total to date above both 2009 and 2011, making it the third lowest year on record. I wonder how many of the new approvals will be hoping to use 'Help to Buy' for a newbuild property. Perhaps we'll see articles talking of a sales boom in newbuild during the summer. It would be a strange sight indeed when viewed against a generally tanking lending environment. I wonder how long it will be before the media starts to pick up on the overall net lending story, it seems like it is being missed.

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Remortgaging approval numbers are also up on the last two years:

Apr 2013 21,004

Apr 2012 20,179

Apr 2011 19,341

The yearly remortgage approvals total is still running a bit above the lowest year on record, 1998, as mentioned last month.

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Personal Loans&Credit cards

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Broadly stable this month in both, although some evidence in a willingness to push out personal loans as advances for the first four months of the year are the highest since 2009. It ought to be noted that 2009-2013 are the lowest on record though, and well down on any other year on record so it is changes from a small base.

Last month's thread here:

http://www.housepricecrash.co.uk/forum/index.php?showtopic=189857&st=0&p=909310438&hl=+bba%20+figs&fromsearch=1entry909310438

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Unless I'm much mistaken, Ms Daley is the first person in the mainstream media to note the decrease in net lending. I must say I don't follow her posts much in general, but here you go FWIW:

http://www.telegraph.co.uk/comment/columnists/janetdaley/10084693/More-people-renting-houses-rather-than-owning-them-would-be-better-for-our-economy.html

More people renting houses rather than owning them would be better for our economy

In April, mortgage lending fell for the fourth month in a row. It seems that the British are so determined to get on top of their personal debt that repayments have exceeded borrowing for eight of the past 12 months.

Since the British Bankers’ Association began keeping records (which admittedly began only in 1997), such a prolonged period of negative net lending has been quite unprecedented. This – by the standards of official received opinion – is Bad News.

To anyone who is not (a) a politician, (B) a banker, or © an economic “expert”, that judgment may seem rather odd. In fact, to anyone who is (a) a working householder (B) a taxpayer or © a common sense human being, it may seem like a sign that much of the population of the country is admirably responsible. But then real people live by a rather different logic from the class that governs national economic policy.

The two factors which contribute to this pattern – the unwillingness of financial institutions to offer mortgages that are out of proportion to applicants’ earnings, and the reluctance of people to enter a housing market that will require such a disproportionate mortgage – are both species of sanity.

Flying in the face of this eminent good sense is the Government’s Help-to-Buy scheme, which “experts” are relying on to restore the insanity that has, until recently, constituted the British housing market: that is, mortgage lending on an Alice-in-Wonderland scale which will prop up grossly inflated property prices, thus drawing millions of ordinary working people into unsustainable debt.

Let’s chant the following sentences all together, shall we? Property prices in this country are too high: they are completely out of sync with ordinary earnings. Many, many people – especially the young, and possibly the old – should not be pressured into owning their own homes: for them, renting would be a far better option. And furthermore, just to compound the heresy, a reduction in home ownership might be better for the economy.

The first of these propositions is the easiest to maintain. Within living memory – which is to say, when my husband and I bought our first house – the understanding was that your mortgage should be two and a half (or, at most, three) times your annual income. House prices reflected this assumption because sellers had no option but to comply with it: you could not sell a house for a price that exceeded any possible mortgage offer. Then came easy credit – and you know the rest.

There is a widespread belief that it is the shortage of available housing that makes British property so expensive. This may be partly true but the sudden ridiculous increase in house values that occurred over the past couple of decades did not coincide with a drastic fall in the number of houses, or even a dramatic increase in population: it came as a direct consequence of easy mortgage credit. People were throwing Monopoly money at a single commodity and the prices went through the roof.

But we know all this, you say. Let’s move on. Nothing to see here. So let me take my argument further. It is not a good thing that the health of the British economy is so dependent on property prices – meaning they must always go up, never down.

Nor is it a good thing that everybody should be encouraged on to the property ladder from the cradle. Owning your own home, particularly at the child-rearing stage of life, is generally beneficial: it can – assuming that you are not trapped in too high a mortgage – provide stability and security.

But being locked into (mortgaged) property-ownership before you have undertaken the responsibilities of adult life, or even decided what you want your life to be like, is absurd. It is a trap which makes people less adaptable, less able to grasp unexpected opportunities, and less free to make the sort of adventurous decisions that ought to characterise the early years of grown-up existence. It is so very much harder to sell a home and extricate yourself from a mortgage than it is to escape from a rental agreement.

Much is said in favour of the independence which property-owning brings, but it is easy to forget the loss of social and economic mobility that goes with it.

However, it is not just individuals who are sacrificed to this idealised view of home-ownership. Having so much private household wealth tied up in property means that the population tends not to invest in anything else. Instead of buying shares as Americans do, or investing in entrepreneurial ventures as many Europeans do, the British sink their capital into their houses. A great many of them trust the value of their property to rise with such unquestioning faith that they rely on it to provide a pension, either by outright sale or increasingly now through equity release.

The chronic “under-investment” which has been the curse of British economic life for as long as anyone can recall, is at least partly a result of this reliance on property as the provider of financial security. If fewer people had a home which they saw as the only asset they needed, there might be far more private cash flowing into British businesses either directly or through pension funds and investment accounts of all kinds. Again, money that is not tied up in a static property is more mobile, more flexible and more versatile.

What the Government needs to do if it really wants to help is not subsidise high property prices by underwriting ever more mortgage debt. Instead, it should do everything in its power to facilitate the private rental market. The decision this week to scale back the proposed regulations that would have required all landlords, in every sector of the market, to act as border police checking the immigration status of their tenants, is seriously good news.

The post-war slum landlord scandals gave rise to an understandable political drive toward over-regulating private rented accommodation, and so the commonplace 19th century practice of “taking a house” or a set of rooms on a rental arrangement had virtually disappeared by the 1960s. It was private ownership or the council estate. (And council tenancies, modelled on the ideal condition of home ownership, became permanent and immovable, too.)

But if what you want is a more dynamic economy which can adapt robustly to changing circumstances, then you need people and money to be able to move. Locking them both up in houses does not facilitate this. And in bad economic times, the problem is exacerbated: in Britain a recession is always marked by the property market becoming sluggish (often to the point of being moribund). So it becomes more difficult than ever for people and money to be liberated.

Of course, governments face an intractable political dilemma. How do you explain to a nation of property-owners that it would really be better for everybody if the price of their precious asset could be allowed to fall to a natural level?

That, I admit, would take rather a lot of explaining.

Janet Daley is a columnist on the Sunday Telegraph

I'm not sure she really understands the problem. But good to have more 'prices must fall' opinion going out there.

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Unless I'm much mistaken, Ms Daley is the first person in the mainstream media to note the decrease in net lending. I must say I don't follow her posts much in general, but here you go FWIW:

http://www.telegraph...ur-economy.html

I'm not sure she really understands the problem. But good to have more 'prices must fall' opinion going out there.

No, I'm not sure she really understands the problem. The wealth Daley imagines will be liberated from the housing market is an illusion. UK mortgagors have less equity in their homes than at any time since the 60s. When prices finally correct millions of them will be wiped out entirely.

But, hey, hearing someone complain about the lack of affordability in the Torygraph has to be better than Cowie's willful misrepresentations.

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No, I'm not sure she really understands the problem. The wealth Daley imagines will be liberated from the housing market is an illusion. UK mortgagors have less equity in their homes than at any time since the 60s. When prices finally correct millions of them will be wiped out entirely.

But, hey, hearing someone complain about the lack of affordability in the Torygraph has to be better than Cowie's willful misrepresentations.

Yeah, this part of the article is where she departs from reality imo:

What the Government needs to do if it really wants to help is not subsidise high property prices by underwriting ever more mortgage debt. Instead, it should do everything in its power to facilitate the private rental market. The decision this week to scale back the proposed regulations that would have required all landlords, in every sector of the market, to act as border police checking the immigration status of their tenants, is seriously good news.

Seems to have escaped her attention that the private rental market has been pushed on favourable terms for many years already, with people able(for example) to seemingly hole up illegals in garages and other unsuitable structures with impunity, some of which have been photographed and appeared in the national press many times.

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You guys are missing her bigger point. The money supply comes from bank lending. Of that lending amost 92% goes initially into property, only the remainder goes to businesses, according to the Money reform party.

She's saying all that money going into a static asset is waste, and needs to be used for productive investment. She is of course right. Dunno about the second part of her argument though; encouraging private rental - already been done but with high house prices leading to high rents leading to less disposable income :wacko:

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  • 243 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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