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SleepyHead

Homeowners Cautious Over Equity Withdrawal

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There was a £10.4bn injection of equity into UK homes, but the homeowners aren't spending it. The BBC portraying it as a disaster, and the BofE obviously had "injections of equity" as their whole economic plan.

Idiots!

"Homeowners are not yet relying on rising house prices to withdraw equity from their homes for other purchases, figures suggest.

Not yet? The beeb really think MEWing was all fine and dandy. Even 2008 hasn't woken them up.

http://www.bbc.co.uk/news/business-25547562

Edited by SleepyHead

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There was a £10.4bn injection of equity into UK homes, but the homeowners aren't spending it. The BBC portraying it as a disaster, and the BofE obviously had "injections of equity" as their whole economic plan.

Idiots!

"Homeowners are not yet relying on rising house prices to withdraw equity from their homes for other purchases, figures suggest.

Not yet? The beeb really think MEWing was all fine and dandy. Even 2008 hasn't woken them up.

http://www.bbc.co.uk...siness-25547562

My analysis of previous data in 2013 was that this gradual increase was largely down to an increase in the number of repayment mortgages as IO mortgages decline (MMR consequences with very few new IO mortgages, hence more repayment of capital).

Nothing too worrying or surprising in the figures in the BBC article, I'll have look at the BoE data at lunchtime.

If everyone was on repayment mortgages £4.5 to 5bn would be repaid every month so the rest coming from early redemption and probably re-mortgage isn't that massive.

A rise in mortage interest rates of 0.5% on all mortgages would take about £7bn a month out of the economy so the BBC should be "worrying" about IR rises as it will make a bigger difference to consumer spending...

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The BBC is run by the bankers, they want as many people deep in debt as possible then when they manufacture the next crisis (well under way) they can move in and take their assets which were secured on the money they produced from thin air.

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"People are far more cautious these days and fewer see their property as merely a cash machine that can be relentlessly drawn from with little regard to the consequences," said Ashley Brown, director of mortgage broker Moneysprite.

They did balance it out with this quote.

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No mention of banks being more cautious on MEWing for a holiday, car, credit card debt, BOMAD etc.

What i would like to see is the number remortgage applications for more than the outstanding balance VS the ones who actually got the extra cash, split yearly for the last 15 years.

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A rise in mortage interest rates of 0.5% on all mortgages would take about £7bn a month out of the economy so the BBC should be "worrying" about IR rises as it will make a bigger difference to consumer spending...

The 7bn would not be taken out, but transferred to someone else. Either banks in higher profits or perhaps some also to savers in the form of higher rates.

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The 7bn would not be taken out, but transferred to someone else. Either banks in higher profits or perhaps some also to savers in the form of higher rates.

Indeed lax wording on my part, though transfer to bank profits is a transfer from the many to the few...

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No mention of banks being more cautious on MEWing for a holiday, car, credit card debt, BOMAD etc.

What i would like to see is the number remortgage applications for more than the outstanding balance VS the ones who actually got the extra cash, split yearly for the last 15 years.

The BoE discontinued data on MEWing in Q2 2007 replaced in Q3 with HEW which has a different definition. [it is more likely to be negative]

The HEW data is quarterly this data is Q3 2013.

BoE notes:

OVERVIEW

The stock of housing equity is the proportion of housing wealth which does not have lending secured on it. In other words, the stock of housing equity equals the stock of housing wealth minus the stock of lending secured on housing. topbtn.gifThe stock of housing equity can change in three main ways:

1. Changes in the stock of secured lending when households take out or repay debt;

2. Changes in the stock of housing wealth, e.g. when new properties are built or improvements are made to existing properties,

3. Revaluations of the stock of housing wealth due to changes in house prices.

The balance of the first two ways of changing equity, i.e. excluding revaluations, in each period is classed as housing equity withdrawal (HEW).

When households, in aggregate, are withdrawing more equity than they are injecting, HEW is positive. When they are injecting more than they are withdrawing, HEW is negative.

For a more practical interpretation of these concepts, please refer to an article in the 2011 Q2 Quarterly Bulletin. The article explains that a move to housing equity injections is likely to reflect the weakness in withdrawals related to housing market turnover, with little sign that households in aggregate are making an active effort to pay down debt more quickly than in the past.hew_notes_clip_image001.gif

AVAILABILITY

Data are available quarterly from 1970 Q1, both not seasonally adjusted and seasonally adjusted. Publication of data will usually occur on the 4th working day following the release of National Accounts data from the Office for National Statistics or subject to the published schedule of releases.

These data are available on the Interactive Database.

topbtn.gif

SOURCES

HEW includes series published in the Bank’s <a href="http://www.bankofengland.co.uk/statistics/Pages/bankstats/current/default.aspx">Bankstats (Monetary and Financial Statistics) and statistics published by the Office for National Statistics available on their website www.statistics.gov.uk.

All data are subject to revision if and when new information becomes available. For more information on revisions practices see the Explanatory Note on revisions, available here. The data for net lending secured on dwellings (VTVG) will always be the data published at the time of the most recent publication of Table A5.3 in Bankstats (Monetary and Financial Statistics).

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The 7bn would not be taken out, but transferred to someone else. Either banks in higher profits or perhaps some also to savers in the form of higher rates.

Yes, this reminded me of the idiotic commentary from Crash Gordon at the election when he kept insisting that the government not taking 6bn in NI means 6bn has be "taken out of the economy". I mean I knew he wasnt nearly as competent as he thought he was, but when hearing this moronic comment I finally figured out how truly dangerous he is. (Not sure what took me so long but hey.)

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Indeed lax wording on my part, though transfer to bank profits is a transfer from the many to the few...

I thought when you paid back debt the money was destroyed?

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Associated... keep worrying about the over-indebted mostly enjoying very low mortgage rates, savers getting very little, as house prices keep going up and up.

(Reuters) - Britons were less inclined to use savings to pay down mortgage debt in the third quarter, data showed on Monday, adding to signs of improving consumer confidence as house prices rise and the job market recovers. Homeowners put 10.4 billion pounds of equity into their homes in the quarter, the Bank of England figures showed - more than two billion pounds less than in the previous quarter and the lowest since the fourth quarter of 2009.

Britons have paid down their mortgages on a net basis for the past four years, reversing the trend towards higher debt levels that dominated from late 1999 until the financial crisis.

Borrowing against the rising value of property was a key driver of the consumer boom of the last decade, and while the Bank of England may welcome a return of that "feelgood" factor, it will be wary of a recovery that is heavily reliant on household spending and cheap credit.

Reuters (today), in full: http://www.reuters.com/article/2013/12/30/us-britain-housing-debt-idUSBRE9BT0BW20131230?

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"Homeowners are not yet relying on rising house prices to withdraw equity from their homes for other purchases, figures suggest.

For sure that's one of the main reasons they've all gone into turbo hype about the UPness of the UK economy along with the "risingness of house prices".

It's a confidence trick to try to get people into more debt to, apart from buying property at crazy prices, get people to cram their homes with tat again. How many times can MEW debtors' homes be repeatedly filled up with tat.

On the one hand there's the BBC grumbling and considering the lack of increased mortgage debt (MEW) a disaster.

Then on the other hand there's organisations like Resolution hand wringing about the levels of mortgage debt and demanding that cheap credit be locked in the debt is so perilous.

Then there's the CEBR saying the UK's economy is going to overtake Germany's by 2030.

The whole thing is an utter farce - it's no way to run a country.

Edited by billybong

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