Jump to content
House Price Crash Forum
Sign in to follow this  
BananaMan

Removal Of Funding For Lending

Recommended Posts

Im clutching at straws waiting for property just to fall even if its just a little.

So what is the timeframe we will see whether the removal of "funding for lending" has made a difference to prices?

Would February/March mortgage lending and prices be a sufficient indicator?

Share this post


Link to post
Share on other sites

Isn't help to buy stepping into the breach anyway?

I don't suppose the banks care what flavor of backstop they have- as long as taxpayer money is standing between them and the consequences.

Share this post


Link to post
Share on other sites

A watched pot never boils.

This is non-trivial and will bleed through in due course. The Funding for Lending collateral swap allowed UK private banks seeking to borrow in order to grow or sustain their bullsh!t mortgage books to present themselves to potential creditors as if they were the government, (for a modest fee, natch).

You see a lot of people disparaging any counter cyclical talk by the Bank of England with the important rule of thumb "watch what they do not what they say".

Exclusion of residential mortgage lending from forward looking FLS was a big "what they do". The fact that the media have made so little of it and the fact that it hasn't bitten immediately should not deceive anyone. Carney's Bank of England may not be hiking rates and decapitating zombie banks but removal of FLS as the Fed tightens will bite. IMO higher SVRs and higher savings rates on cash ISAs by the end of 2014 if the removal of FLS to fund banks' residential mortgage books is not offset by something else - i.e. Fed reversing policy on the taper and increasing monthly QE intervention...

Same as it ever was, the central banks hold the tools to end the divisive and destructive expansion of unsustainable credit, but won't use them for lack of political legitimacy, and the politicians know that the solution to all practical problems in the short term is the expansion of credit.

Share this post


Link to post
Share on other sites

NIESR is forecasting a weaker Q4 GDP print after last friday's poor PMI numbers, 0.7% vs 0.9% expected. That tells me the credit impulse from FLS/HtB has already peaked and that Osborne will need to increase the primary deficit this year to maintain his Potemkin facade. That's a big risk given how much the cost of debt has appreciated in the last six months and how much he still needs to borrow/roll over every month.

I think he's in trouble... and he knows it. :)

http://www.forextv.c...-forecast-niesr

LONDON (MNI) - Following weak industrial production and construction data out earlier Friday, the National Institute estimates fourth quarter UK GDP rose 0.7% on the quarter. This would be weaker than the Bank of England was expecting, with the BOE staff projection for fourth quarter growth in its November Quarterly Inflation Report at 0.9%.

The official data have been running weaker than the economic surveys, with the composite Purchasing Managers Index from Markit compatible with 1.0% fourth quarter quarterly growth, up from 0.8% in the third quarter. Friday's November industrial production data showed output flat on the month and up 2.5% on the year. Construction output in November fell 4.0% on the month to stand up 2.2% on the year. After the industrial production and construction data economists at JP Morgan lowered their forecast for the preliminary fourth quarter GDP estimate down to 0.8% on the quarter from 0.9%, adding that even that estimate would require relatively strong output growth across all sectors in December.

The evidence is mounting that the UK economic recovery may not have been running as hot at the tail end of last year as many previously believed.

Share this post


Link to post
Share on other sites

Thanks for your inputs.

But will rising interest rates on savings be the sign that they need to get money from elsewhere.

As they most certainly arent rising with any bank.

Share this post


Link to post
Share on other sites

well you could argue interest rate rise have started on current accounts.

naitonwide 5%

lloyds 3%

tsb 3%

santandare 3%

halifax £5 a month

all theses offers can be taken advantage of with few direct debits

Share this post


Link to post
Share on other sites

As they most certainly arent rising with any bank.

Agreed - I check rates on Easy Access online accounts several times a week. They have not budged since the announcement to end FLS for mortgage lending was made. However, as I understand it, it still has until the end of Jan to run?

Share this post


Link to post
Share on other sites

A watched pot never boils.

This is non-trivial and will bleed through in due course. The Funding for Lending collateral swap allowed UK private banks seeking to borrow in order to grow or sustain their bullsh!t mortgage books to present themselves to potential creditors as if they were the government, (for a modest fee, natch).

You see a lot of people disparaging any counter cyclical talk by the Bank of England with the important rule of thumb "watch what they do not what they say".

Exclusion of residential mortgage lending from forward looking FLS was a big "what they do". The fact that the media have made so little of it and the fact that it hasn't bitten immediately should not deceive anyone. Carney's Bank of England may not be hiking rates and decapitating zombie banks but removal of FLS as the Fed tightens will bite. IMO higher SVRs and higher savings rates on cash ISAs by the end of 2014 if the removal of FLS to fund banks' residential mortgage books is not offset by something else - i.e. Fed reversing policy on the taper and increasing monthly QE intervention...

Same as it ever was, the central banks hold the tools to end the divisive and destructive expansion of unsustainable credit, but won't use them for lack of political legitimacy, and the politicians know that the solution to all practical problems in the short term is the expansion of credit.

It's less important because there is more demand for MBS again.

Why should FLS for mortgages go? Well it has to be remembered that FLS was there to meet a crucial supply of credit and funding to the markets at a time when debt capital markets were still damaged from the Global Financial Crisis. It was necessary.

But it was always the plan that this would provide funding until markets recovered. And there is plenty of evidence that markets are well on the way to recovery as recent debut residential mortgage backed securities issues from Precise Mortgages and OneSavings Bank have shown.

The market needs to get back to core funding: securitisation, covered bonds and retail deposits.

It needs to be weaned off FLS and other forms of Government support and now is a good time.

http://www.mortgagestrategy.co.uk/blogs/regulation-blogs/tony-ward-why-now-is-a-good-time-to-wean-the-mortgage-market-off-fls/2003711.article

Andy Haldane on securitisation:

Bank of England head of financial stability Andrew Haldane has given his backing to securitisation, saying it does not need to be the “bogeyman” of the finance industry.

http://www.mortgagestrategy.co.uk/news-and-features/sectors/products/boe-director-says-rmbs-does-not-need-to-be-bogeyman-of-industry/2004287.article

Are UK RMBS ready to rocket?

In the UK, there were just 11 residential mortgage-backed transactions in 2009 but this doubled to 20 in 2010, 22 in 2011 and 26 in 2012.

Experts say the number of new issuances has fallen back to 11 for 2013 as a direct result of the Funding for Lending Scheme.

The FLS has given deposit lenders access to cheap funding which has meant there has been little incentive for some of the major lenders to securitise.

http://www.mortgagestrategy.co.uk/news-and-features/covers/are-uk-rmbs-ready-to-rocket/2003452.article

Share this post


Link to post
Share on other sites

well you could argue interest rate rise have started on current accounts.

naitonwide 5%

lloyds 3%

tsb 3%

santandare 3%

halifax £5 a month

all theses offers can be taken advantage of with few direct debits

I wouldn't pay much attention to these. They're just for small amounts. Just teaser rates to corner you for overdrafts and the like.

Share this post


Link to post
Share on other sites

So what is the timeframe we will see whether the removal of "funding for lending" has made a difference to prices?

Does removal of funding for lending really matters? FFL introduce 95% loan to value mortgages the banks were crying for.

Share this post


Link to post
Share on other sites

A watched pot never boils.

May be if you are a market watcher in the South East. Prices at about 2004 levels in most other location makes that water only tepid and in Northern Ireland someone forget to put the hob on and the water in the pot is frozen over.

Edited by crashmonitor

Share this post


Link to post
Share on other sites

May be if you are a market watcher in the South East. Prices at about 2004 levels in most other location makes that water only tepid and in Northern Ireland someone forget to put the hob on and the water in the pot is frozen over.

If you put your legs into freezer and your head into oven, in average you should feel good. But for some reason you don't :blink:.

Share this post


Link to post
Share on other sites

Doesn't appear to be having an affect yet.

Even though I'm a HPC'er, I'm having to move (for the wife & kids) and have just got a 5 year fix at N&P @2.84% (£295 fee).

They are very cautious though and the underwriting is assiduous.

Share this post


Link to post
Share on other sites

If you put your legs into freezer and your head into oven, in average you should feel good. But for some reason you don't :blink:.

Sounds like a standard-size kitchen in a newbuild...

Share this post


Link to post
Share on other sites

End of Help to Buy could crush housing boom, warn builders

The nascent recovery in housebuilding could be all but extinguished when the Government's Help to Buy scheme to support the market ends in 2016. The Construction Products Association called for clarity from the Government on the future of the initiative as its latest forecasts predicted a sharp slowdown in new housing to just 2 per cent in 2016 – when Help to Buy is due to finish – following double-digit growth this year and next. Growth in private housing work is set to slow rapidly after Help to Buy, according to the body’s economics director Noble Francis. Since April last year the Chancellor’s Budget centrepiece was government loans of up to 20 per cent on new builds, funded by a £3.5bn pot to underwrite an estimated 75,000 purchases. As of December, there were 18,000 reservations since April under the first stage of the scheme. “After 2015, without Help to Buy to support housing market demand, there are strong concerns about whether house building will continue to improve despite the clear need for new housing,” Dr Francis said. Private housing starts in Britain declined more than 7 per cent to to just 94,000 in 2012, 35 per cent below the average of the last 20 years. By 2017 the association’s forecasts suggest 153,000 private housing starts and 30,000 public starts – only three-quarters of the 240,000 homes needed to meet the number of households created each year, according to the Office for National Statistics. Dr Francis added: “2016 is a very big issue for the housing market. I think that for the housebuilders and the wider industry as well as mortgage lenders everybody would benefit if there was greater clarity for the medium term.”

The Bank of England, which is opposed to any extension of the scheme, is monitoring Help to Buy and can make recommendations to halt it if it judges risks to financial stability are growing. The Bank has already stopped banks from using its Funding for Lending scheme to access cheap cash to fund mortgage loans.

56bicam1910.jpg

Share this post


Link to post
Share on other sites
The nascent recovery in housebuilding could be all but extinguished when the Government's Help to Buy scheme to support the market ends in 2016. The Construction Products Association called for clarity from the Government on the future of the initiative as its latest forecasts predicted a sharp slowdown in new housing to just 2 per cent in 2016 – when Help to Buy is due to finish

And so the inevitable lobbying to extend Help to Buy begins- complete with threats and predictions of disaster. Ironic that a Government so opposed to the idea of people being dependent on the state has created an entirely new constituency of dependents with it's Help to Buy scheme- a scheme that has already become an essential prop that can not be removed without undoing whatever value it supposedly created.

Share this post


Link to post
Share on other sites

End of Help to Buy could crush housing boom, warn builders

The nascent recovery in housebuilding could be all but extinguished when the Government's Help to Buy scheme to support the market ends in 2016. The Construction Products Association called for clarity from the Government on the future of the initiative as its latest forecasts predicted a sharp slowdown in new housing to just 2 per cent in 2016 – when Help to Buy is due to finish – following double-digit growth this year and next. Growth in private housing work is set to slow rapidly after Help to Buy, according to the body's economics director Noble Francis. Since April last year the Chancellor's Budget centrepiece was government loans of up to 20 per cent on new builds, funded by a £3.5bn pot to underwrite an estimated 75,000 purchases. As of December, there were 18,000 reservations since April under the first stage of the scheme. "After 2015, without Help to Buy to support housing market demand, there are strong concerns about whether house building will continue to improve despite the clear need for new housing," Dr Francis said. Private housing starts in Britain declined more than 7 per cent to to just 94,000 in 2012, 35 per cent below the average of the last 20 years. By 2017 the association's forecasts suggest 153,000 private housing starts and 30,000 public starts – only three-quarters of the 240,000 homes needed to meet the number of households created each year, according to the Office for National Statistics. Dr Francis added: "2016 is a very big issue for the housing market. I think that for the housebuilders and the wider industry as well as mortgage lenders everybody would benefit if there was greater clarity for the medium term."

The Bank of England, which is opposed to any extension of the scheme, is monitoring Help to Buy and can make recommendations to halt it if it judges risks to financial stability are growing. The Bank has already stopped banks from using its Funding for Lending scheme to access cheap cash to fund mortgage loans.

56bicam1910.jpg

But growth in private housing work is set to slow rapidly after Help to Buy, a..... Since April last year the Chancellor's Budget centrepiece was government loans of up to 20 per cent on new builds, funded by a £3.5bn pot to underwrite an estimated 75,000 purchases. As of December, there were 18,000 reservations since April under the first stage of the scheme. "After 2015, without Help to Buy to support housing market demand, there are strong concerns about whether house building will continue to improve despite the clear need for new housing," Dr Francis said.

I am not very bright but doesn't sound like things are exactly racing even with HTB 1 does it...? Perhaps what there is a "clear need for" therefore is housing across the board which is affordable , not new housing with a small "affordable" element. I just don't get the continuing mixed messages i.e. people need houses but people can't afford houses without help, but even with help people can't afford houses but if we don't try to help them to buy unaffordable houses then what will help after all it would be a disaster would it not if we don't keep supporting people to buy unaffordable housing (even at historically low interest rates) wouldn't it :o

Share this post


Link to post
Share on other sites

I am not very bright but doesn't sound like things are exactly racing even with HTB 1 does it...? Perhaps what there is a "clear need for" therefore is housing across the board which is affordable , not new housing with a small "affordable" element. I just don't get the continuing mixed messages i.e. people need houses but people can't afford houses without help, but even with help people can't afford houses but if we don't try to help them to buy unaffordable houses then what will help after all it would be a disaster would it not if we don't keep supporting people to buy unaffordable housing (even at historically low interest rates) wouldn't it :o

Doublespeak innit? Sadly, the sheeple fall for it.

Share this post


Link to post
Share on other sites

Doublespeak innit? Sadly, the sheeple fall for it.

I dont think the majority of sheeple do fall for it any more.

An entire generation know they cant afford to buy a house but a minority bite the bullet and grab the cash from scams like this in the hope interest rates will stay low for an eternity.

Share this post


Link to post
Share on other sites

I dont think the majority of sheeple do fall for it any more.

An entire generation know they cant afford to buy a house but a minority bite the bullet and grab the cash from scams like this in the hope interest rates will stay low for an eternity.

Absolutely. November's net lending figures were barely +ve. It willl need a couple more months to confirm the trend but it looks like HTB2 is a bust just like HtB1. I can't see Osborne going back for a 3rd tilt.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   204 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.