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Sancho Panza

The Return Of Mortgage Equity Withdrawal...or Not...

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Telegraph 23/7/13

'Borrowers appear to be taking advantage of lower mortgage rates to release money from the rising value of their homes, according to conveyancing data.

The money raised is being used to pay for home improvements or to clear other debts, research undertaken alongside suggests.

This latest LMS Remortgage Report, which provides a montly snapshot of the market, shows the average loan remortgaged is now almost £150,000, having risen steadily from £121,000 in early 2010.

The equity being "released" - which is a measure of the difference between the new sum being borrowed and the old loan being repaid - has also risen sharply. This now averages £22,600, up from £14,300 in early 2012.

The trend suggests existing property owners are more optimistic about the housing market and the wider economy. It is also a reflection of growing availability of low-rate mortgages for existing homeowners, analysts said.

The figures, from property services firm LMS, are derived from conveyancing data on thousands of monthly transactions. A separate survey by the firm, in which borrowers were asked why they were increasing their overall borrowing rather than simply switching loans, found one in five said the money was earmarked for spending on their home. Nine per cent said it was to pay down other debts.

Regular remortgaging was a significant feature of the pre-crisis housing market where borrowers were frequently switching lender and at the same time releasing equity to spend elsewhere. This had the effect of reducing the term of the average mortgage.

In 2008, for example, the average length of a mortgage was three years and one month.

But the onset of the crisis - which caused the market to shrink rapidly - means today the average mortgage lasts four years and ten months, according to LMS data for June.

Another factor at work is the popularity before the crisis of mortgages which had special rates - such as fixed or dicounted rates - for shorter, initial periods of, say, two years. Today mortgages where special rates apply for longer periods, such as five years, are more popular. '

BBC 5/5/13

Which? poll says many 'borrowing money for food'

'One in five UK households borrowed money or used savings to cover food costs in April, a Which? survey says.

It suggests the equivalent of five million households used credit cards, overdrafts or savings to buy food.

"It's true that millions are at what Which? describes as 'financial breaking point', yet retail spending is growing, as are house prices, while the number of people in work is at a record high."

He added that average real incomes in Britain had fallen to the same levels as a decade ago because salaries were not rising but the cost of living was.'

Guardian 25/2/13

'Eight million Britons have no savings, study reveals

Another 15 million 'making no effort' to save for the future according to research which also shows a rise in parental loans.'

Telegraph 26/5/13

'A pick-up in trading for the DIY and home retailers is much-needed after a spell of tumbling sales. In 2012, Kingfisher, the owner of B&Q, suffered a 5.2pc decline in like-for-like sales while Homebase suffered a 4.9pc drop. '

Edited by Sancho Panza

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Telegraph 23/7/13

'Borrowers appear to be taking advantage of lower mortgage rates to release money from the rising value of their homes, according to conveyancing data.

The money raised is being used to pay for home improvements or to clear other debts, research undertaken alongside suggests.

This latest LMS Remortgage Report, which provides a montly snapshot of the market, shows the average loan remortgaged is now almost £150,000, having risen steadily from £121,000 in early 2010.

The equity being "released" - which is a measure of the difference between the new sum being borrowed and the old loan being repaid - has also risen sharply. This now averages £22,600, up from £14,300 in early 2012.

Like it or not, the bubble is back (in a small way for now).

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how does MEW maintain the Housing price bubble?...meanwhile in other new, prices in 99% of the Country continue to fall.

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[deleted]

Regular remortgaging was a significant feature of the pre-crisis housing market where borrowers were frequently switching lender and at the same time releasing equity to spend elsewhere. This had the effect of reducing the term of the average mortgage.

[bIn 2008, for example, the average length of a mortgage was three years and one month.

But the onset of the crisis - which caused the market to shrink rapidly - means today the average mortgage lasts four years and ten months, according to LMS data for June.

[/b]

Can this be true? the average length of a mortgage was < 5 years? the AVERAGE? I cant believe remortaging was that common?

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Like it or not, the bubble is back (in a small way for now).

the overall trend is still down - over the next 20 years, in real terms

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Here are the BoE statistics for remortgage activity by volume and by number.

Whilst there has been an uptick,it's still way below 2007 levels.

I fear the report I quote in the OP may be utter boll***s.I apologise.I've been to the LMS website and the only press release I could find was one for May 2013 pertaining to remortgaging.It looks like they're using a selective dataset ie their own customers and drawing their own conclusions which the telegraph have used as a fluffer piece.

According to theBoE HEW is still running at a negative level ie mortgagors are still paying down capital.

At least it appears my cynicism was well founded.

Edited by Sancho Panza

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Can this be true? the average length of a mortgage was < 5 years? the AVERAGE? I cant believe remortaging was that common?

See the BoE data linked to above.

As for mortgage length,it would explain a portion of the drop in remo activity,but I'm not sure where one would find the relevant data and even if it's provided.The data quoted in the OP is from LMS's customer base and therefore maybe not that representative.

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Can this be true? the average length of a mortgage was < 5 years? the AVERAGE? I cant believe remortaging was that common?

Plausible when you consider the numbers on 2- and 3-year variable teaser rates.

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Plausible when you consider the numbers on 2- and 3-year variable teaser rates.

And also when you add in the average length of time before you move house (~7 years I believe it used to be)

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how does MEW maintain the Housing price bubble?...meanwhile in other new, prices in 99% of the Country continue to fall.

Earnings from the Ponzi economy are being reinvested rather than saved.

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  • 242 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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