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Boe Trends In Lending, April 2014

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Net business lending down. Mortgage lending up. Lenders spreads tightening against rising 2, 3 and 5 year swap rates. New buyer enquiries have fallen back sharply since the beginning of the year but still positive.

Looking at these figures it's not obvious how UK growth of ~3% can be maintained for the rest of 2014.

http://www.bankofengland.co.uk/publications/Documents/other/monetary/trendsapril14.pdf

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I have not read the report. One article I read on the report said companies maybe financing from retained profits. It is possible I guess but maybe optimistic. They may just return cash to shareholders for lack of investments all together. Think alot of co's are still hoarding cash.

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I have not read the report. One article I read on the report said companies maybe financing from retained profits. It is possible I guess but maybe optimistic. They may just return cash to shareholders for lack of investments all together. Think alot of co's are still hoarding cash.

Companies are also hoarding cash so they can continue to service their debts in the advent of a rate rise.

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The stage is set for a multiyear run of 8% p.a. rises in business investment...?

The uptick in gross lending has been followed by a similar pattern in repayments. I doubt the UK can live on £1.6 Bn/month net of new secured loans, around half the required increase to keep Osborne's debt:income fantasy alive.

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The stage is set for a multiyear run of 8% p.a. rises in business investment...?

The uptick in gross lending has been followed by a similar pattern in repayments. I doubt the UK can live on £1.6 Bn/month net of new secured loans, around half the required increase to keep Osborne's debt:income fantasy alive.

Only in Chote's imagination.

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Only in Chote's imagination.

Indeed, and given the anticipated run in bus. investement of 8.3% for 5 years, any initial shortfall has profound consequences for the end result. 8.3% for 5 years straight = 50% increase from initial level. Plenty of potential downside in that sort of forecast.

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Bba data out today. It is't great with lending to business -4.4% yoy. Mortgage approvals for Mar14 also weak touching 4mth low according to Reuters. Though year on year is plus 40%.

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Read this too today:


The Bank of England has admitted it does not know why key housing market indicators have been unexpectedly weak.

In its Monetary Policy Committee minutes for this month, it reported that there were signs of positive household spending growth.

“But against this, some housing market indicators had been weaker than expected. After several months of growth, loan approvals for house purchase [fell] by around 10% in February.

“It was not clear what had driven this fall.”

The MPC also noted that house price indices had slipped by 0.2% in March.

The latest lending figures, issued by the Council of Mortgage Lenders after the MPC meeting, show a 4% rise in mortgage lending on February.

Nevertheless, the CML says that mortgage lending for the first quarter of this year was a 10% fall on the last quarter of last year – although up 37% on the first quarter of 2013.

From here: http://www.propertyindustryeye.com/bank-england-puzzles-fall-house-purchase-approvals/

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The most straightforward explanation is that the credit impulse from HtB2 is wearing off. Changes in GDP correlate well with the rate of change in credit not the absolute stock. The MPC would understand this if they had a monetary economic model that included debt as a variable. Sadly, as neoclassicals, they do not.

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