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Mortgage Approvals Up

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Guest wrongmove

UK Nov net mortgage lending up by 8.7 bln stg, highest since July 2004 - BoE

"...Meanwhile, the number of approvals for house purchases -- which are often seen as a good indicator of future demand in the property sector -- stood at 115,000 in November, the highest since May 2004. In October, approvals totalled 113,000...."

This is approvals for home purchase, after the property survey is completed. (Does not include MEW or remortgaging)

A figure over 90k has historically led to positive HPI 6-9 months later. A figure this high usually means HPI of around 10% or so, 6-9 months later.

Alas, a Spring Bounce looks on the cards. :(

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UK Nov net mortgage lending up by 8.7 bln stg, highest since July 2004 - BoE

"...Meanwhile, the number of approvals for house purchases -- which are often seen as a good indicator of future demand in the property sector -- stood at 115,000 in November, the highest since May 2004. In October, approvals totalled 113,000...."

This is approvals for home purchase, after the property survey is completed. (Does not include MEW or remortgaging)

A figure over 90k has historically led to positive HPI 6-9 months later. A figure this high usually means HPI of around 10% or so, 6-9 months later.

Alas, a Spring Bounce looks on the cards. :(

It is surveys completed not completed transactions.

It could mean a spring bounce....

then again it could be the hangover from SIPPS and some purchases may not go through in the end.

We will just have to wait and see.

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Guest wrongmove

Increased volume leads to price movement, but not necessarily upwards.

This is increased demand, which historicallyy leads to increased prices.

But maybe it's different this time......

:):ph34r:

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I am personally expecting price rises though out this year – but only small rises. Infact I am considering buying a house as I am beginning to think that a crash is still a way off.

I think that it is very likely that we will have interest rate reductions this year + there is still enough 1st time buyers to keep the market moving.

I sold to rent over a year ago but I am not renting in the place I want to live and do not want to rent again. So I could stay here for a maximum of 2 years or buy – but I don’t think that the crash will have even started in that time – making it probably in my best interests to buy now before any more increases in house prices.

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but last year.

House sales were at a 30 year low.. Hurray.

We are told that people are in massive debt.. hurray..

2 year fixed term mortgage from peak.. and they are now ending....

Hurray...

People are re-mortaging yes.

approvals.. my own bank has approved me for a mortgage.. I have never asked them..

Houses are not selling.. and yes.. more might sell this month then last..

but its either up or down.. or exactly the same..

Its still a 30 year low...

Don't sweat it

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Guest wrongmove

I am personally expecting price rises though out this year – but only small rises. Infact I am considering buying a house as I am beginning to think that a crash is still a way off.

I think that it is very likely that we will have interest rate reductions this year + there is still enough 1st time buyers to keep the market moving.

I sold to rent over a year ago but I am not renting in the place I want to live and do not want to rent again. So I could stay here for a maximum of 2 years or buy – but I don’t think that the crash will have even started in that time – making it probably in my best interests to buy now before any more increases in house prices.

I am a longterm bear (FTB, currently renting), but I have to agree with everything you say here. I am a bit of a nomad, so I will probably continue to rent, but families, nesters etc visiting the site need all the facts, not just the HPC VI ones.

Approvals up, IRs low and falling, inflation low and falling, GDP expected to RISE this year - this is NOT the late 80s.

The only bearish indicator is income multiples, but these take no account whatsoever of IRs. Are we saying that IRs are totally irrelevant ? Yes we are, if income multiples are the only thing that matters. This is BS.

The next recession will cause HPs to drop, but it might not be for a while.

My 2p's worth !! :)

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Yeah, but you also have to consider that most markets on a downward trend will show the odd dead cat bounce. We have all seen the way the media were shouting about SIPPS as loud as they could and it would not surprise me in the slightest if some of this activity was people hoping to make a quick buck off the back of SIPPS.

Now SIPPS is dead in the water, these same people will be looking to offload when the bad news starts coming in thick and fast in the next couple of months.

Anecdotally, there seem to be a lot of landlords starting to offload stock at the moment.

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but last year.

House sales were at a 30 year low.. Hurray.

We are told that people are in massive debt.. hurray..

2 year fixed term mortgage from peak.. and they are now ending....

Hurray...

People are re-mortaging yes.

approvals.. my own bank has approved me for a mortgage.. I have never asked them..

Houses are not selling.. and yes.. more might sell this month then last..

but its either up or down.. or exactly the same..

Its still a 30 year low...

Don't sweat it

Expect these figures are for house purchase and do NOT include remortgage, and the approval is only when the surveyor approves the valuation of the house to be purchased

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"oh no..!!"

id better rush out now and not be too picky and just buy what i can as those houses are booming up again...

on another note. i was looking at rightmove today for a laugh in the NW, and then for a bigger laugh i checked out fish4jobs for that area and im afraid its 16k on average. local houses were the usual outer space prices. same for the rents in a way.

i was thinking. who are these working people and why do they do it ?

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UK Nov net mortgage lending up by 8.7 bln stg, highest since July 2004 - BoE

"...Meanwhile, the number of approvals for house purchases -- which are often seen as a good indicator of future demand in the property sector -- stood at 115,000 in November, the highest since May 2004. In October, approvals totalled 113,000...."

This is approvals for home purchase, after the property survey is completed. (Does not include MEW or remortgaging)

A figure over 90k has historically led to positive HPI 6-9 months later. A figure this high usually means HPI of around 10% or so, 6-9 months later.

Alas, a Spring Bounce looks on the cards. :(

Can you explain what drivers could possible result in an HPI of 10% in 9 months time? I'm struggling to see any...

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Expect these figures are for house purchase and do NOT include remortgage, and the approval is only when the surveyor approves the valuation of the house to be purchased

But how do you know if it is a genuine new purchase or if the current owner is simply moving the entire mortgage?

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Guest wrongmove

Yeah, but you also have to consider that most markets on a downward trend will show the odd dead cat bounce.

Two points:

a dead cat bounce happens AFTER a crash, not before. The cat is not dead yet.

what downward trend ? Prices are RISING. HPI is down. That is not the same.

Can you explain what drivers could possible result in an HPI of 10% in 9 months time? I'm struggling to see any...

I don't see 10% either, but the driver is demand. Demand (as indicated by approvals over the last 6 months) is strong and rising.

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The only bearish indicator is income multiples, but these take no account whatsoever of IRs. Are we saying that IRs are totally irrelevant ? Yes we are, if income multiples are the only thing that matters. This is BS.

Other indicators:

1. Doubling of prices in five years looks speculatative rather than a response to changes in fundamentals.

2. FTBs at an all time low.

3. Rental yields less than 6%

4. Transaction volumes at a very low level

5. HPI now approximately zero.

They key point to note in the interest rate argument is that it is real interest rates that matter, not nominal rates. Real interest rates are not at a particularly low level, certainly not at a level that can explain the inflation over the past five years.

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Well, over in my parallel universe - things seem to be going from bad to worse - or from good to better depending on your perspective.

New build flats - still not selling - still offering big discounts.

Stuff that is selling is selling lower than a year or two ago.

My brother's fixed rate mortgage has just run out and they wanted another £400 a month from him. So he has just applied for, and had approved, a new mortgage on the same house. From the new lender's point of view it is a new mortgage, not a re-mortgage. I mean the VIs are not going tick one off the mortgage closed list and add one on the new mortgage list to let them cancel themselves out - are they?

No as far as they are concerned - or at least as far as they want you to be concerned - it is yet another new mortgage approval and another sign of how healthy the market is.

The person who wrote on here that we'll see prices rise 10% in 9 months is living in cloud cuckoo land.

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But how do you know if it is a genuine new purchase or if the current owner is simply moving the entire mortgage?

There's a lot of remortgaging taking place. In fact it makes up a "HALF of all new house lending" according to the Council of Mortgage Lenders..............

Remortgaging

Normally, demand for mortgages tails off towards the end of the year and then revives in the spring as people start house hunting again.

However, the CML pointed out that the figures were being bolstered by high levels of remortgaging.

This happens when people stay put but simply move their mortgages to another lender to take advantage of a more favourable deal.

This currently accounts for about half of all new house lending.

BBC business

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Well, over in my parallel universe - things seem to be going from bad to worse -

Marina happy new year.

Sorry to be pain but you several times last year replied to my posts (where I said the SM had good prospects) that you couldnt see any potential what with offshoring and people having no money left to spend.

So your parallel universe is perhaps not as gloomy as it might seem, its all about the way your brain filters?

:rolleyes:

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Two points:

a dead cat bounce happens AFTER a crash, not before. The cat is not dead yet.

what downward trend ? Prices are RISING. HPI is down. That is not the same.

I don't see 10% either, but the driver is demand. Demand (as indicated by approvals over the last 6 months) is strong and rising.

Lots of people demand houses. But demand doesn't mean they can afford them.

Where I live we are in a steady downward trend - but measured against what? The market peaked two years ago but most houses are still selling for more than they were sold for last time.

But lots are selling for a lot less than they would 2 years ago and for a lot less than the price they went on the market at.

If everthing is so tickety-boo why did a former neighbour's house sell recently at auction for £260k after a year and a half on the market - starting at £385k.

Why did a beautiful, big, brick and flint detached house near me sit on the market for a year between Jan 04 and Jan 05 finally selling at 469k - when it went on at £565k.

Why will local developers knock 30k off a 230k flat without you even haggling.

It baffles me. If the market is as good as some of you guys believe, you should tell the developers round here they are nuts dropping prices to try to stimulate sales.

When I click my fingers, you will wake up.

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Guest wrongmove

Other indicators:

1. Doubling of prices in five years looks speculatative rather than a response to changes in fundamentals.

2. FTBs at an all time low.

3. Rental yields less than 6%

4. Transaction volumes at a very low level

5. HPI now approximately zero.

They key point to note in the interest rate argument is that it is real interest rates that matter, not nominal rates. Real interest rates are not at a particularly low level, certainly not at a level that can explain the inflation over the past five years.

1. The fundamental changes are the longterm outlook for IRs and inflation, plus the change in the housing laws

2. The market does not care about the type of buyer, just the number

3. Bank account yields less than 5%

4. True(ish) a year ago. Not true now

5. HPI approx 3% - not bad with gearing and yield to boot.

I know what real IRs are, but we pay our debt in nominal money. Investors need to worry about real growth, real IRs etc, but punters just care about nominal values.

Say we have 10% inflation, and 5% HPI - in real terms, prices have dropped and investors have done poorly. However nesters still have to pay an extra 5%. If they bought before the 5% rise, they will still have their pay rise, a cheaper house and one years less mortgage to pay.

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Marina happy new year.

Sorry to be pain but you several times last year replied to my posts (where I said the SM had good prospects) that you couldnt see any potential what with offshoring and people having no money left to spend.

So your parallel universe is perhaps not as gloomy as it might seem, its all about the way your brain filters?

:rolleyes:

Hello dogbox, and a Happy New Year to you.

I must admit the present performance of the UK stock market baffles me - and, like most people (particularly property bulls), I have to stick to my guns until I cannot argue otherwise.

I must assume people are investing in the SM and not property (as you have said before).

Looking around at the wider economy - I can only see stormy waters ahead. Everything with regard to markets is gradual. It took a long time for the brakes to stop the property market. Although the SM is much more volatile it takes a while for full bull market to turn bear and vice versa. So the SM must have a bit more to go yet I guess.

I find people are harder up than they were. Car sales are down, consumer spending is down, the sale bargains at the moment are nuts, holidays being discounted already. As I said somewhere else - even in Windsor - a wealthy town with a massive tourist trade - there are several shops with closing down sales.

I look around the world - filter the data through my rose tinted specs but, try as I might to see things looking good - I just can't. I think the mess we are in - in terms of debt - in terms of a millon manufacturing jobs replaced with public sector jobs since 1997 - with the ongoing emergence of China and India etc - is going to end up in a slump/recession that will take a generation to come out of.

And then I read posts on here from people predicting a 10% rise in property prices and I really do feel I live in a different world.

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But how do you know if it is a genuine new purchase or if the current owner is simply moving the entire mortgage?

Well the forms, ask where do you currently live, which should give the game away that it's a remortgage. The lender will then redeem the old mortgage and take charge of the deeds.

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And then I read posts on here from people predicting a 10% rise in property prices and I really do feel I live in a different world.

Me too. I really don't get this 10% prediction. What Earthly reason could there be for it? In fact, what Earthly reason is there for all this talk in the papers of things turning round, HPI picking up again etc. It really looks to me like wishful thinking, on the basis of trying to fool people into the idea that somehow we have "been through a cycle" in which HPI fell to near zero, and so now it is just "time" for it to go back up again, as if it was some law of nature over riding all normal economics. If people are going to find ever more money for houses, why didn't they find it for Xmas shopping? Why did the stores have to have 70% off sales in the week before Xmas? Where are the equivalent discounts in housing costs?

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Me too. I really don't get this 10% prediction. What Earthly reason could there be for it? In fact, what Earthly reason is there for all this talk in the papers of things turning round, HPI picking up again etc. It really looks to me like wishful thinking, on the basis of trying to fool people into the idea that somehow we have "been through a cycle" in which HPI fell to near zero, and so now it is just "time" for it to go back up again, as if it was some law of nature over riding all normal economics. If people are going to find ever more money for houses, why didn't they find it for Xmas shopping? Why did the stores have to have 70% off sales in the week before Xmas? Where are the equivalent discounts in housing costs?

Here is approvals (qtrly) against HPI. At present approvals are at about 330K per quarter, which equates historically with about 10% HPI. As there is a lag then it would imply this in the spring. However of course stock levels are higher than normal so it probably will be about 6-7% in the spring IMHO

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Here is approvals (qtrly) against HPI. At present approvals are at about 330K per quarter, which equates historically with about 10% HPI. As there is a lag then it would imply this in the spring. However of course stock levels are higher than normal so it probably will be about 6-7% in the spring IMHO

So, 6-7% you say? So surely that implies some increase in purchasing power or increase in earning potential from owning a house. Is unemployment falling? Are wages rising at 7% or higher? Are rents rising significantly? Are interest rates falling (maybe, by an amount which equals about 1 or 2% on the value of the property over the entire life of a mortgage)? Are other investments becoming less attractive (e.g. stock market doing badly, gold etc.)? Which is it? Where's the driver for this? It can't just happen by magic.

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but last year.

House sales were at a 30 year low.. Hurray.

We are told that people are in massive debt.. hurray..

2 year fixed term mortgage from peak.. and they are now ending....

Hurray...

People are re-mortaging yes.

approvals.. my own bank has approved me for a mortgage.. I have never asked them..

Houses are not selling.. and yes.. more might sell this month then last..

but its either up or down.. or exactly the same..

Its still a 30 year low...

Don't sweat it

ONE ESTATE AGENT REPORTED A 30YR LOW! DONT VI SPIN YOUR CASE! KEEP TO FACTS PLEASE!

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Guest wrongmove

So, 6-7% you say? So surely that implies some increase in purchasing power or increase in earning potential from owning a house. Is unemployment falling? Are wages rising at 7% or higher? Are rents rising significantly? Are interest rates falling (maybe, by an amount which equals about 1 or 2% on the value of the property over the entire life of a mortgage)? Are other investments becoming less attractive (e.g. stock market doing badly, gold etc.)? Which is it? Where's the driver for this? It can't just happen by magic.

Was all this happening two years ago ? No. Well that's a relief. So prices didn't really rise after all. It's all just been a bad dream ! :huh:

All kon is saying is that this level of approvals has historically led to to that level of HPI. The driver is demand. The demand is accurately indicated by mortgage approvals for house purchase, taken at the post-survey stage. He doesn't necessarily have an axe to grind.

I have followed the approval vs. HPI figures, and I am inclined to agree. The correlation (with a 6-9 month delay) is very strong.

To reverse your argument: are IRs rising ? are wages falling ? are rents falling significantly ? Is employment falling significantly ? So why should prices drop ?

Edited by wrongmove

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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