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Sancho Panza

Uk Mortgage Approvals Turn Around, Jump 8 Percent In June

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Reuters 29/7/14

'(Reuters) - British mortgage approvals rose for the first time in five months in June, suggesting lenders were getting back into their stride after the introduction of more stringent tests for borrowers earlier this year.

The Bank of England, which is keeping a close eye on Britain's fast-recovering housing market, said mortgage approvals jumped 8 percent from May to 67,196 last month.

Analysts had forecast a smaller rise in approvals to 62,600.

Economists said the hefty increase countered some signs in recent surveys of a slowing of the housing recovery.

"The appreciable rise in mortgage approvals fuels uncertainty as to whether the recent loss of momentum in housing market activity is likely to be lasting or just a temporary development," said Howard Archer at IHS Global Insight.

As well as the introduction in April of tougher checks on whether borrowers can afford their mortgages, the BoE last month announced measures to prevent a build-up of risky home loans.

Monthly mortgage approvals are still short of the 90,000 level seen before the 2008 financial crisis, and below a recent peak of just over 76,000 in January.

But house prices have risen rapidly in recent months amid a shortage of new home-building.

BoE Governor Mark Carney has said that housing is the biggest domestic threat to Britain's economic recovery given the risk of borrowers taking on too much debt. He says controls on bank lending will be the first line of defence against a housing bubble, rather than an increase in record-low interest ratesicon1.png.

Stress tests for British banks later this year may also cool the enthusiasm of lenders to offer mortgages.

The BoE said on Tuesday that mortgage lending in June rose by 2.1 billion pounds, easing off a bit from May's growth.

The Bank has been trying to cool the mortgage market since January when it refocused its Funding for Lending Scheme away from mortgage lending and dedicated it entirely to businesses.

The BoE said lending to non-financial businesses slumped by 3.4 billion pounds in June, its biggest fall since November last year, compared with an increase of 2.3 billion pounds in May.

But lending to small businesses alone edged up by 235 million pounds, something economists said could herald an end to a financing drought for many small firms.

"Overall there are some things to like in this release," said David Tinsley, an economist at BNP Paribas. "It suggests that the housing market’s recent decline in activity may be flattening off, while the Gordian knot of falling credit is no longer tightening around the neck of small business."

Unsecuredicon1.png lending to consumers rose by 418 million pounds, about half the increase forecast in the Reuters poll and the lowest increase since January 2013.

The BoE's preferred gauge of money supply, M4 excluding intermediate other financial corporations (OFCs), rose 0.5 percent in June, taking the annual growth rate to 3.9 percent.

Samuel Tombs, an economist at consultancy Capital Economics, noted the three-month annualised rate of another measure - excluding intermediate OFCs and the effects of securitisations - hit its strongest pace in over five years, jumping 4.6 percent.

"But the overall broad money supply measures are still quite subdued and if anything they support the idea that interest rates will rise only gradually," he said. '

Hat tip to Shaun Richards blog where I read the stat.

Edited by Sancho Panza

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"fast-recovering housing market, said mortgage approvals jumped 8 percent from May to 67,196 last month." ????

Fast recovery....but I thought prices were going up !!!

"The Bank has been trying to cool the mortgage market since January when it refocused by talking a load of nonsense and doing nothing "

Edited by TheCountOfNowhere

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maybe its that the mortgage seekers started the ball rolling by being temporarily locked out due to mmr

cash buyers and investrors followed once they saw prices falling

mortgagees are getting approvals again but its too late

the sands have shifted

the smart money talks

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Sign up here, you too could pay mortgage interest on this crumbling pile of 100 year old bricks.

Aspirational Britain 100 years ago..

Pissed off now!

It's because it takes almost that long just to get planning permission!

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indeed

tis merely a dead cat bounce

It's piss poor. Lower still than the absolute low in 1995. Usual VI rubbish talking it up.

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It's piss poor. Lower still than the absolute low in 1995. Usual VI rubbish talking it up.

It's worth bearing in mind as well that the housing stock is significantly greater today than it was in 1995.

If mortgage approvals are adjusted to account for changes in the tradable residential housing stock then the June 1995 low of 68K approvals is equivalent to roughly 85K approvals today.

And yet we have VIs such as esurv's Richard Sexton saying that "lending has returned to healthy sustainable volumes" (from the BBC article jasonpistol linked to).

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I guess the first question that should be asked is: Where is the money coming from?

FFL has been redirected so is this securitization products kicking in as investors chase yield?

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The Bank of England, which is keeping a close eye on Britain's fast-recovering housing market, said mortgage approvals jumped 8 percent from May to 67,196 last month.

Does BoE data cover regions BBA doesn't. Or does it pull in data from other non bank/building society mortgage lending sources.

UK mortgage lending plummets as stricter rules bite

By Anna White | Telegraph – Wed, Jul 23, 2014

The number of mortgage approvals for house purchases edged up marginally in June, but has dropped sharply since the start of the year because of stricter lending policies and a fall in demand.

While approvals rose 3.3pc from May, and 14pc year-on-year to 43,265, they are down from a highs of 48,550 in January, according to the latest figures from the British Bankers' Association (BBA).

More dramatically, the annual growth rate of mortgage approvals has been plummeting since the start of the year, when major lenders started to introduce more stringent borrowing requirements in preparation for April's Mortgage Market Review (MMR). In January the number of approvals were rising 57pc year-on-year. This dropped to 24pc in April, before sliding to 13pc in May and 14pc in June, as shown in the graph below.

mort-1_2983959c.jpg

As the BBA do not release the number of mortgage applications, or the rejection rate, it is difficult to see whether the fall in approval rates is solely down to stricter lending rules, or is heightened by drop in demand as consumers contemplate interest rates expected in November.

in full http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/10985066/UK-mortgage-lending-falls-in-six-months-as-stricter-rules-bite.html

Update: Just realised BBA probably doesn't have any Building Society members, thus that data not in above..

Edited by Venger

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It's piss poor. Lower still than the absolute low in 1995. Usual VI rubbish talking it up.

Given all the noise about MMR,it's worth noting a MoM increase.It'll be interesting to see if it manages to translate into higher transaction volumes down the line,given that MMR has the potential to upset chains through it's impact on individual borrowers.

It'll also be interesting to assess the impact of MMR on a geographical level and we won't know that clearly for a month or two yet.

I guess the first question that should be asked is: Where is the money coming from?

FFL has been redirected so is this securitization products kicking in as investors chase yield?

There's been a couple of lower months for approvals,so the credit is likely available.No credit extended,no bonuses.

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Given all the noise about MMR,it's worth noting a MoM increase.It'll be interesting to see if it manages to translate into higher transaction volumes down the line,given that MMR has the potential to upset chains through it's impact on individual borrowers.

It'll also be interesting to assess the impact of MMR on a geographical level and we won't know that clearly for a month or two yet.

There's been a couple of lower months for approvals,so the credit is likely available.No credit extended,no bonuses.

Two sides to the lending equation; requiring willing lenders, and borrowers who are comfortable with risk of taking the debt; the ones still left on MSE mortgage forums doing their best to please on applications, and jumping through hoops for the lenders.

Who gets these bonuses? Higher-ups? For US banks have shed a load of mortgage advisors recently, and UK banks doing more rounds of cuts. Maybe there is going to be a freeze on bonuses, in the future, then they can come back in a limited form after a big HPC, and writing huge volumes of mortgages on lower house prices, for year on year for a decade and more to come, instead of at stagnant and ponzi-stimulus to try and hold up tranasctions at 1995 levels. (London cash buyers paying silly price certainly don't earn the banks much money - crash and lend - eventually - imo, for bank profits.)

Demand... look at the US....

Cavuto: Mortgage Rates Tumbling, So Why Aren’t You Buying?

By Neil Cavuto

Cavuto

Published July 25, 2014

…Even bankers who are lending tell me they aren’t seeing a lot of customers lining up. “Caution is the word,” said one. “They just seem very tentative, even skeptical.”

http://www.foxbusiness.com/2014/07/25/cavuto-mortgage-rates-tumbling-so-why-arent-buying/

Edited by Venger

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The Bank has been trying to cool the mortgage market since January when it refocused its Funding for Lending Scheme away from mortgage lending and dedicated it entirely to businesses

So probably a good bet that money has been sunk into BTL then, its a businesses innit.

Edited by onlyme2

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Two sides to the lending equation; requiring willing lenders, and borrowers who are comfortable with risk of taking the debt; the ones still left on MSE mortgage forums doing their best to please on applications, and jumping through hoops for the lenders.

Who gets these bonuses? Higher-ups? For US banks have shed a load of mortgage advisors recently, and UK banks doing more rounds of cuts. Maybe there is going to be a freeze on bonuses, in the future, then they can come back in a limited form after a big HPC, and writing huge volumes of mortgages on lower house prices, for year on year for a decade and more to come, instead of at stagnant and ponzi-stimulus to try and hold up tranasctions at 1995 levels. (London cash buyers paying silly price certainly don't earn the banks much money - crash and lend - eventually - imo, for bank profits.)

Demand... look at the US....

The US is pretty much on a par with the UK at this point. An echo bubble in prices in the more affluent metro areas but transaction volumes way down across the country generally with the trend softening again in the last couple of months.

No evidence of a second wind recovery here.

NA-CC063_HOUSIN_G_20140724112403.jpg

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