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Housing Equity Withdrawal Q/q -15.4B

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As per post title really.

Change in the total value of new home-secured loans that are not used for home purchases or improvements;

Homeowners no longer see their homes as cash machines?

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As per post title really.

Homeowners no longer see their homes as cash machines?

Interesting, HEW figures are distorted by low transaction volumes in the past but I wonder if this is not quite applicable in an environment of rising transaction numbers.

BoE page:

http://www.bankofengland.co.uk/statistics/Pages/hew/2013/Jun/default.aspx

These are only up to the end of June however, so maybe Q3 will be much different as HTB1 ramped up. Still though Q2 is the lowest figure on record by a margin. Which should please people who think that housing equity ought to be driven from the market...

Net lending figs (up to August) are not exactly showing much though, June being the highest so far this year:

http://www.bankofengland.co.uk/boeapps/iadb/fromshowcolumns.asp?Travel=NIxSSxSCxSUx&FromSeries=1&ToSeries=50&DAT=RNG&FD=1&FM=Jan&FY=1963&TD=2&TM=Oct&TY=2013&VFD=Y&html.x=19&html.y=20&CSVF=TT&C=ZD&C=28K&Filter=N

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Interesting, HEW figures are distorted by low transaction volumes in the past but I wonder if this is not quite applicable in an environment of rising transaction numbers.

BoE page:

http://www.bankofengland.co.uk/statistics/Pages/hew/2013/Jun/default.aspx

These are only up to the end of June however, so maybe Q3 will be much different as HTB1 ramped up. Still though Q2 is the lowest figure on record by a margin. Which should please people who think that housing equity ought to be driven from the market...

Net lending figs (up to August) are not exactly showing much though, June being the highest so far this year:

http://www.bankofengland.co.uk/boeapps/iadb/fromshowcolumns.asp?Travel=NIxSSxSCxSUx&FromSeries=1&ToSeries=50&DAT=RNG&FD=1&FM=Jan&FY=1963&TD=2&TM=Oct&TY=2013&VFD=Y&html.x=19&html.y=20&CSVF=TT&C=ZD&C=28K&Filter=N

It may explain the early launch of HTB 2 in an effort to drive credit growth via another channel.

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Isn't HEW effectively a net lending figure therefore if HEW is more negative either the level of repayments has increased or the amount of new lending has reduced...

If new HEW is done on repayment rather than IO basis then repayments will be higher so the net figure will be more negative as terms will be shorter than mortgages.

Are lenders being pickier about new lending and ammounts / purposes i.e. what type of extensions or refurbishments. No lending for cruises or cars (for cars see the on going HPC thread on vehicle finance).

As I have said before repayment mortgages will suck a lot more money out of the economy and reduce the growth as cash flow is constricted compared to IO.

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Isn't HEW effectively a net lending figure therefore if HEW is more negative either the level of repayments has increased or the amount of new lending has reduced...

If new HEW is done on repayment rather than IO basis then repayments will be higher so the net figure will be more negative as terms will be shorter than mortgages.

Are lenders being pickier about new lending and ammounts / purposes i.e. what type of extensions or refurbishments. No lending for cruises or cars (for cars see the on going HPC thread on vehicle finance).

As I have said before repayment mortgages will suck a lot more money out of the economy and reduce the growth as cash flow is constricted compared to IO.

Good point. GDP is a flow, credit is a stock. Pitchforking the IO cohort onto more expensive repayment mortgages may have a negative impact on growth despite the expansion of credit.

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Good point. GDP is a flow, credit is a stock. Pitchforking the IO cohort onto more expensive repayment mortgages may have a negative impact on growth despite the expansion of credit.

A significant amount of "extra" credit would be needed to generate growth for about a decade before an equilibrium is reached as the cumulative repayments balance out as there is less asset price inflation.

Hence the extra credit via new government schemes.

Switching all the IO to repayment would suck about £2bn a month out of the economy assuming there is no repayment vehicles at all. Given the FSA MMR data that difference would be around £750-800m / month.

Retail sales are about £30bn a month so you would expect a 3% hit there, though certain parts of retail would be badly hit.

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A significant amount of "extra" credit would be needed to generate growth for about a decade before an equilibrium is reached as the cumulative repayments balance out as there is less asset price inflation.

Hence the extra credit via new government schemes.

Switching all the IO to repayment would suck about £2bn a month out of the economy assuming there is no repayment vehicles at all. Given the FSA MMR data that difference would be around £750-800m / month.

Retail sales are about £30bn a month so you would expect a 3% hit there, though certain parts of retail would be badly hit.

You're assuming that most IO mortgagors could make the extra payments.

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Isn't HEW effectively a net lending figure therefore if HEW is more negative either the level of repayments has increased or the amount of new lending has reduced...

Yes it is.

A lot of borrowers couldn't MEW even if they wanted to.

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You're assuming that most IO mortgagors could make the extra payments.

A bit of number crunching to quantify the scale of squeeze, most wouldn't be able too.

FLS and HTB2 are about getting those that can to do so the problems is smaller to deal with (eventually).

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