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HOLA441
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HOLA442
Is it reasonable to argue that in the FSR the Bank are underselling the extent to which the spreads between the swap rate and the rates on higher LTV fixes are contracting because of FLS, i.e. the operative market rate for the funding is not the swap rate because the FLS counterparty swap allows them to borrow with gilts as collateral, thus obtaining cheaper rates on the funding side.

The private banks can then offer lower rates to customers and still make good money.

Hence while competition between lenders matters, it is certainly not the whole story. FLS matters too. Presumably it's reasonable to anticipate rates of fixes tracking away from swap rates as FLS unwinds?

I wouldn't like to guess how much FLS is still influencing mortgage rates. On the face of it £57bn is a fairly small amount compared the size of the lenders' loan books, and RBS and HSBC haven't even got any drawings outstanding (HSBC didn't even participate IIRC).

What seemed to happen initially with FLS is that it changed lenders' marginal funding costs and this had a knock-on effect throughout the wholesale market, especially as it coincided with a lessening in fears over Greece and the solvency of European banks at the time. In due course these lower wholesale rates worked their way into retail deposit rates as lenders weren't so reliant on them.

I imagine that as FLS slowly unwinds over the next few years that it will inevitably put upward pressure on rates, but I don't know how material this will be compared to any changes in Bank Rate, gilt yields etc.

Bank funding costs are gradually rising - unsurprising as swap rates and gilt yields have been on the up since the beginning of the year - and those funding costs would rise even faster if savers were more proactive in seeking better returns.

The chart below is from the Q2 Credit Conditions Review. The blue bars show the responses to the Bank Liabilities Survey each quarter and the red diamond shows lenders' expectations for Q3 2015. The trend is obvious.

Despite this, mortgage rates continue to fall, particularly on higher LTVs (Nationwide cut mortgage rates yesterday for example, and TSB cut today). This suggests that lenders are currently prepared to take a hit on margin in order to maintain or increase lending volumes.

CreditConditionsReviewQ2_2015d.gif

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HOLA443
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HOLA444

Monday, 20 July 2015

HM Treasury: Whole of Government Accounts, 2013-14

UK Whole of Government assets increased by £39.8bn in 2013-14, but liabilities increased by £263.7bn. Two items primarily drove the increase in liabilities - a £130bn increase in the public sector pension liability and a £100bn increase in borrowing to fund the fiscal deficit.

WGA_2013-14a.gif

WGA_2013-14b.gif

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UK Financial Investments Ltd: Annual Report and Accounts 2014/15

UKFI was created in November 2008 as part of the UK’s response to the financial crisis. It is responsible for managing the Government’s shareholdings in The Royal Bank of Scotland Group plc (RBS) and Lloyds Banking Group plc (Lloyds).

UKFI is also responsible for managing the Government’s 100 per cent shareholding in and loans to UK Asset Resolution Ltd (UKAR). UKAR was formed in October 2010 to integrate the activities of NRAM (previously known as Northern Rock (Asset Management) plc) and Bradford & Bingley plc.

Edited by FreeTrader
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HOLA445

Tuesday, 21 July 2015

HMRC: UK Property Transactions, June 2015

There was a significant increase in the number of UK residential property transactions in June. Seasonally adjusted transactions (provisional at this stage) totalled 104,950, 4.7% up on May and 3.2% up on June last year.

Over the past few months transactions have been down year-on-year, but June has broken this trend.

The non-seasonally adjusted total of 114,780 is the second-highest monthly number since Nov 2007.

HMRCtrans0615.gif

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HOLA446

Friday, 24 July 2015

British Bankers' Association: June 2015 figures for the high street banks

Seasonally adjusted BBA mortgage approvals for house purchase totalled 44,488 in June 2015, 3.8% higher than May and 6.3% higher than June 2014.

BBAapprovals0615.gif

There was a sharp increase in the average approval value for house purchase, with June's figure of £176,200 representing a new series high:

BBAapprovalVal0615.gif

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HOLA447

Wednesday, 29 July 2015

Bank of England: Effective Interest Rates, June 2015

The average interest rate on new secured lending was still falling in June, and there was a sharp drop in the average rate on time deposits.

EffectiveRates0615.gif

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Bank of England: Money and Credit, June 2015

Seasonally adjusted mortgage approvals for house purchase totalled 66,852 in June, up 2.7% on May and 1.5% on June 2014. This was basically in line with market expectations, but not as high as the BBA figures released a few days ago suggested they might be (see previous post).

MortApprovals0615.gif

Edited by FreeTrader
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HOLA448
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HOLA449

Wednesday, 29 July 2015

Bank of England: Effective Interest Rates, June 2015

The average interest rate on new secured lending was still falling in June, and there was a sharp drop in the average rate on time deposits.

EffectiveRates0615.gif

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Bank of England: Money and Credit, June 2015

Seasonally adjusted mortgage approvals for house purchase totalled 66,852 in June, up 2.7% on May and 1.5% on June 2014. This was basically in line with market expectations, but not as high as the BBA figures released a few days ago suggested they might be (see previous post).

MortApprovals0615.gif

Interesting how the number of mortgage approvals seems slowly rising while the land registry recently shows quite a reduction in volume.

The only conclusion I draw from this is that the volume reduction is largely due to cash buyers.

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HOLA4410

Interesting how the number of mortgage approvals seems slowly rising while the land registry recently shows quite a reduction in volume.

The only conclusion I draw from this is that the volume reduction is largely due to cash buyers.

The problem with the Land Reg volume numbers is that they're not timely and they're also incomplete (some transactions have yet to be registered and certain residential sales are excluded from the figures).

HMRC's statistics are far more valuable in my view. Below is the latest chart of HMRC reported transactions vs BoE approvals (the difference between the two plots is in theory cash transactions, although they may include purchases by foreigners financed with non-domestic loans).

TransactionsVsApprovals0615.gif

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HOLA4411

The problem with the Land Reg volume numbers is that they're not timely and they're also incomplete (some transactions have yet to be registered and certain residential sales are excluded from the figures).

HMRC's statistics are far more valuable in my view. Below is the latest chart of HMRC reported transactions vs BoE approvals (the difference between the two plots is in theory cash transactions, although they may include purchases by foreigners financed with non-domestic loans).

TransactionsVsApprovals0615.gif

Do all approvals result in a transaction?

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HOLA4414

Friday, 31 July 2015

ONS: Index of private housing rental prices: April to June 2015

  • Private rental prices paid by tenants in Great Britain rose by 2.5% in the 12 months to June 2015.
  • Private rental prices grew by 2.5% in England, 2.1% in Scotland and 0.8% in Wales in the 12 months to June 2015.
  • Rental prices increased in all the English regions over the year to June 2015, with rental prices increasing the most in London (3.8%).

IPHRP_Jun2015a.gif

IPHRP_Jun2015b.gif

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Council of Mortgage Lenders: Five things you need to know about mortgage rates

CML_MortgageRates_300715.gif

Also from the CML:

Jargon buster: how do swaps work?

Jargon buster: what's the yield curve?

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NHBC: New home registrations H1 2015

London is the only region with lower registrations than H1 last year.

NHBC_newhomes_H1_2015.gif

Edited by FreeTrader
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HOLA4415

The CML going to all that trouble to explain that mortgage rates are not anchored to the Bank of England policy rate. That's eye-catching. Presumably they are doing that for no reason whatsoever.

I seem to recall reading John Charcol suggesting that when there is lots of demand for secured lending banks raise the rates on the products they offer in order to discourage some people for applying for loans, and thus manage the demand. These falling fixed rates and talk of a mortgage rate war are then consistent with these comments in the Bank's Credit Condition Survey.

Lenders reported that demand for secured lending for house purchase fell significantly in Q1, for the third successive quarter (Chart 2). The fall in demand was significant in prime lending, where the net percentage balance was the lowest since 2008 Q3. Some lenders attributed the reduction in secured lending demand over recent quarters to a combination of changes in regulatory policy; concerns about housing affordability; and uncertainty about the outlook for the housing market

Source: BoE Credit Conditions Survey.

Now, if the banks took steps to choke off even what little demand for secured lending was present, wouldn't that be like throwing in the towel?

Also, there was something that happened in Q3 2008, but I can't for the life of me remember what it was...

I forget the details but it was something that needed to happen, but there had to be a massive policy response to forestall it. I'm sure it'll come back to me...

Edited by bland unsight
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HOLA4416
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HOLA4417

The CML going to all that trouble to explain that mortgage rates are not anchored to the Bank of England policy rate. That's eye-catching. Presumably they are doing that for no reason whatsoever.

. . .

Also, there was something that happened in Q3 2008, but I can't for the life of me remember what it was...

I forget the details but it was something that needed to happen, but there had to be a massive policy response to forestall it. I'm sure it'll come back to me...

Scouse mice bash?

:lol::lol::lol:

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HOLA4418

Wednesday, 5 August 2015

ONS: Housing Summary Measures Analysis

From the intro:

This report presents analysis of the 15 Housing Summary Measures which form part of the new ONS Housing Statistics Portal, which is the platform for a range of official statistics and analysis on housing. New analysis of housing statistics will be added to the Portal over time, using the latest available data. The Housing Summary Measures provide a broad overview of the availability and affordability of privately owned and social housing for local authorities in England and Wales, and also looks at the affordability of private rented housing.

The ONS Housing Statistics Portal: http://www.neighbourhood.statistics.gov.uk/HTMLDocs/IA9/atlas.html

atlasimage2_tcm77-412836.png

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HOLA4419

Thursday, 6 August 2015

DCLG: Land Use Change Statistics 2013-14

In 2013-14:

• 60 per cent of new residential addresses, including conversions to residential use, were created on previously developed land

• The average density of residential addresses surrounding a newly created residential address was 32 addresses per hectare. Average density was 37 addresses per hectare on previously developed land, and 26 addresses per hectare on non-previously developed land.

• 3 per cent of new residential addresses were created within the Green Belt and 8 per cent of land changing to residential use was within the designated Green Belt.

• 7 per cent of new residential addresses were created within areas of high flood risk.

• 43 per cent of land changing to a developed use was previously-developed.

LandUse2013-14.gif

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ONS: Internet Access – Households and Individuals 2015

• The internet was accessed every day, or almost every day, by 78% of adults (39.3 million) in Great Britain in 2015, compared with 35% (16.2 million) in 2006, when directly comparable records began.

InternetUsage2015a.gif

InternetUsage2015b.gif

InternetUsage2015c.gif

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HOLA4420
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HOLA4422

Monday, 10 August 2015

UK Parliament: Members of Parliament - Registered Property Interests July 2015

Not a statistical release, but I thought this may be of interest. The table below lists declarations in the latest Register of Members' Financial Interests under Category 6, 'Land and property'.

In this category MPs must register any land or property in the UK and elsewhere which:

1) has a value of more than £100,000; or forms part of a total property portfolio whose value exceeds £100,000; and/or

2) alone or together with other properties owned by the Member, provides rental income of more than £10,000 in a calendar year.

Members should not register any land or property which is used wholly for their own personal residential purposes, or those of their spouse, partner or dependent children.

The category field in the table denotes the interest declared:

0 = classification omitted
1 = property value over £100,000
2 = rental income over £10,000 p.a.
3 = property value over £100,000 AND rental income over £10,000 p.a.

MP_registered_interests_July2015.gif

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HOLA4423

Members should not register any land or property which is used wholly for their own personal residential purposes, or those of their spouse, partner or dependent children.

So apart from the other apparent fiddles they could quite easily have interests in a few other bits of land or property that they legitimately don't have to register.

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HOLA4424

Tuesday, 11 August 2015

Council of Mortgage Lenders: Mortgage Lending June 2015 and Q2 2015

The CML is reporting strong owner-occupier mortgage numbers for June 2015 in comparison to May, but year-on-year there was actually a slight fall in the volume of house purchase loans.

OO remortgaging activity was particularly high in June.

BTL continued to show strong activity in June, with the number of loans by volume up 24% on the previous year and up 40% by value.

CML_0615a.gif

CML_0615d.gif

CML_0615e.gif

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Bank of England: Quoted Household Interest Rates July 2015

The 2-year 75% LTV fixed mortgage rate ticked up slightly in July:

MortRates0715a.gif

95% LTV fixed mortgage rates are still falling:

MortRates0715b.gif

Instant access deposit rates remain at rock bottom levels, but 1-year and 2-year fixed term rates moved upwards slightly. The 2-year fixed rate is now 17 bps above May's low.

DepositRates0715.gif

Edited by FreeTrader
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HOLA4425

Monday, 10 August 2015

UK Parliament: Members of Parliament - Registered Property Interests July 2015

Not a statistical release, but I thought this may be of interest. The table below lists declarations in the latest Register of Members' Financial Interests under Category 6, 'Land and property'.

This is excellent. Thank you.

I wonder.... is there a way we could find out the addresses of these properties? If so, we could monitor if they are sold. Because remember, what what they do, not what they say.

If there was a concerted sell-off, then we'd know the time has come.

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