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Mortgage Approvals Fall In September - B B A

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The British Bankers' Association released lending statistics for September this morning.

https://www.bba.org.uk/news/statistics/september-2014-figures-for-the-high-street-banks/#.VEi9NBa6jL9

Seasonally-adjusted mortgage approvals for house purchase totalled 39,271, over 2,000 lower than in August (-5.1%) and down 10% on September last year. Economists were expecting the number of approvals to be flat on last month.

This is despite a 'mortgage price war' at present, with lenders seeking to gain market share via lower rates.

BBAapprovals_0914.gif


Earlier this week HMRC published residential transactions stats for September, which show the downward trend in house sales continuing.

HMRCtrans0914.gif


Lenders said recently that they expect mortgage activity to pick up in Q4 - we'll have to wait and see.

Also, there are signs of growing calls from mortgage brokers to relax lending criteria in order to increase mortgage activity - this article for example.

Perhaps it's time for another BoE/Treasury scheme to boost the housing market?

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In a gross simplification, that BBA Mortgage Chart corresponds with house price rises above 40k approvals a month, stagnant prices between 30k to 40k a month and falling prices sub 30k a month

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The movement in their numbers in the past would suggest that the decline in sales/marks/canny investors will be prolonged.

Is this a leading indicator that prices have topped out and we'll have a nice soft landing. :P

Interestingly, look at the drop in 2004-05 - when HPI almost fell to 0% YoY!

For those of us who remember - that was a false dawn for HPC.

Now, how will these charts look in a few months I wonder?

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The British Bankers' Association released lending statistics for September this morning.

https://www.bba.org.uk/news/statistics/september-2014-figures-for-the-high-street-banks/#.VEi9NBa6jL9

Seasonally-adjusted mortgage approvals for house purchase totalled 39,271, over 2,000 lower than in August (-5.1%) and down 10% on September last year. Economists were expecting the number of approvals to be flat on last month.

This is despite a 'mortgage price war' at present, with lenders seeking to gain market share via lower rates.

BBAapprovals_0914.gif

Earlier this week HMRC published residential transactions stats for September, which show the downward trend in house sales continuing.

I keep an eye on this weekly using google trends for website category Mortgage, it correlates to approvals, but is less amplified. A small change in people searching for mortgages on the web = large change in actual approvals data, which makes sense whilst we still have high street money changes and bent agencies located in estate agents.

23t6261.png

[Chart up to 23rd October 2014] - You can see that October is about the same, not increasing like the last 3 years this means a subdued spring season is on the table much like the declines seen in 2009-2012 where the spring bounce failed to materialise.

Interestingly the forecast button shows next year to be crap, however this cannot take into account further government intervention. If the government do not interfere further then the lending trend is certainly down, which also ties in with the bank layoff announcement.

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The movement in their numbers in the past would suggest that the decline in sales/marks/canny investors will be prolonged.

Is this a leading indicator that prices have topped out and we'll have a nice soft landing. :P

Interestingly, look at the drop in 2004-05 - when HPI almost fell to 0% YoY!

For those of us who remember - that was a false dawn for HPC.

Now, how will these charts look in a few months I wonder?

I was still at uni then, so don't remember.

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Some bloke on 'The Keiser Report' just now saying he expects to see London property drop by 90%.

He pointed out that in 1990 London property dropped by about 40%.

90%? Hmm...

What was the standard deviation from the mean in the 1990s?

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OP saying down 10% and BBC are saying up 7% from same month last year.

*edit* Ah right I see the error, its 10% less number of loans but 7% higher amounts. BBC always looking on the bright side ;)

Makes sense.

Edited by Lifes a game

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OP saying down 10% and BBC are saying up 7% from same month last year.

*edit* Ah right I see the error, its 10% less number of loans but 7% higher amounts. BBC always looking on the bright side ;)

Makes sense.

Here's a BBC article:

http://www.bbc.co.uk/news/business-29738071

Edit, you've untangled the volume/amount figure confusion yourself.

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OP saying down 10% and BBC are saying up 7% from same month last year.

*edit* Ah right I see the error, its 10% less number of loans but 7% higher amounts. BBC always looking on the bright side ;)

Makes sense.

That's a bit misleading.

The +7% relates to gross mortgage lending during September. This is actual loans completed, not approvals, so it's somewhat backward-looking data.

Approvals are more forward-looking, and in value terms seasonally adjusted mortgage approvals for house purchase totalled £6.417bn in Sept against £6.799bn in Sept 2013, a drop of 5.6% year-on-year.

This is the first year-on-year drop in approvals value for house purchase since March 2013.

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A long time since I have seen posts of M4 money (and adjusted M4). How are they looking ?

I agree with the other poster that there doesn't appear to be much business volume in mortgages. And with presumably higher regulatory costs both in admin on Mmr and capital cost and a "mortgage price war" on competition are margins collapsing ? There is a risk banks abandon high streets though I suppose there maybe political intervention. I walked into a branch yesterday and the headcount had been halved with more automation.

Edited by Ash4781

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Isn't that a line from Star Trek?

Approvals, and aggregate lending, are just going to slide from here, in my opinion. Dep Gov will have to wait for mortgage lending to go up (more important to him than house prices it seems), for it requires a HPC. I do not believe they plan any relaxing of criteria, and certainly not when prices begin to slide. Banks don't tend to like carefree lending on falling asset values.

US is finding mortgage rates which slid recently, didn't pull in lots of new applications. Applications were already at 14 year lows according to one highly credible source. Also mortgage criteria tight. Plenty of those who... it is surprising for some people.... wouldn't buy on 0% deals because house prices so so high in low-mid-prime areas.

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23t6261.png

[Chart up to 23rd October 2014]

I have been thinking about this again. Comparing my data to the mortgage approvals data I should think that we are in for quite a 'shock' drop in seasona adjust terms.

Looking at the search volume chart and comparing this to the mortgage approvals data I would say that if lending does not hold up over the next two months then we are back to around the 30k mark again.

The only thing that's going to save this is the government issuing the chavs loans to buy their landlords property at an over-inflated price (you heard it hear first, must be in receipt of a benefit to apply - working people not welcome etc.)

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I have been thinking about this again. Comparing my data to the mortgage approvals data I should think that we are in for quite a 'shock' drop in seasona adjust terms.

Looking at the search volume chart and comparing this to the mortgage approvals data I would say that if lending does not hold up over the next two months then we are back to around the 30k mark again.

The only thing that's going to save this is the government issuing the chavs loans to buy their landlords property at an over-inflated price (you heard it hear first, must be in receipt of a benefit to apply - working people not welcome etc.)

Are these figures affected over the years as more and more people use the internet?

Edited by oldsport

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Well, if it did (or anything like), you wouldn't want to be holding sterling.

The adjustment could be in the currency rather than nominal values as many of the purchasers have been from overseas.

I bet some homeowners were claiming it would be just a sterling HPC in the complacency into the late 80s crash. The fact you are open-minded to such an upto 90% possibility, is highly amusing.

Many of the purchasers have been (past-tense) from overseas - already in the sterling housing market, at painfully high prices..

How much money remains out there for overseas buyers to mop up cheap houses? House in London goes on market and he's not using an EA to 'sell' it in order to save the final commission. A HPCer says Daily Mail got wider readership overseas (agreed) and that good idea, as so many wealthy people £15m loose change. There are also lots of £10+ homes on the market to choose from.

I am not so sure the flow of such weathy buyers really exists (and wealth tends to be cautious - with exception of the new world yield huge risk takers) - but so many are under an illusion buyers at these prices always pushing and falling over themselves to buy, almost unlimited reserves full of wealth/money/credit. Certainly flow of buyers can stop if prices go into a notable slide. Of course US financial organisations packed with money for opportunities yes.

'But we believe the Imperial Army has great reserves of fuel,' Napoerea said, looking very unhappy.

'Even if they have,' he told the high-priest, 'Commanders will move more cautiously knowing supplies have been interrupted; they're careful guys. But I bet they never did have the supplies you thought; they probably think you have bigger supplies than you do, and with the advance they've had to fund recently... believe me; they may panic a little if the raid comes off the way I hope it will.'

-Use of Weapons

Barry Sternlicht Warns "Everyone Is Holding Cash Because They Know When It Ends It's Gonna Get Ugly"

5 November 2013

[..]The outspoken CEO of the $29 billion fund, noted "all my friends who are money managers.. are much closer to the sell button than they ever were before," adding that "everyone's holding cash," since if they start to get nervous "volatility will come back instantly." Simply put, he concludes, "you know when this ends, it's gonna get ugly."

[..]Further to Sternlicht's point that "you're gonna hold cash",

A new survey of family offices by Citi finds that the wealthy are cash heavy—meaning they may fall short of the investment returns they're expecting. Wealthy families have about 39 percent of their assets in cash, according to a recent poll of more than 50 large family office representatives from 20 countries conducted by Citi Private Bank.

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The Bank of England has published lending data for September this morning, giving a wider view of the mortgage market than the BBA numbers.

The data tell a similar story - seasonally-adjusted mortgage approvals declined from 64,054 in Aug to 61,267 in Sep, a drop of 4.4%. The consensus forecast was 62,000.

Year-on-year the decline is 8.7%.

This is the lowest mortgage approvals number since July 2013.

Approvals for remortgaging and other secured lending also declined.

MortApprovals_0914.gif

http://www.bankofengland.co.uk/statistics/Pages/mc/2014/sep.aspx

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