"mortgage Lending Strong In December""

[Leodhasach]

Just out on BBC....

:angry:

According to Duncan Pownall, spokesman for Bradford & Bingley, mortgage lending picking up in the latter part of 2005 could indicate first-time buyers returning to the property market.

"Strength in the housing market combined with buyers realisation that prices will not significantly fall has encouraged more and more people to step onto the property ladder," he said.

Edited January 20, 2006 by Leodhasach

[karhu]

Just out on BBC....

:angry:

According to Duncan Pownall, spokesman for Bradford & Bingley, mortgage lending picking up in the latter part of 2005 could indicate first-time buyers returning to the property market.

"Strength in the housing market combined with buyers realisation that prices will not significantly fall has encouraged more and more people to step onto the property ladder," he said.

With gilts yields so low, surely it must be time for a rise in interest rates. The only people calling for reductions now are manufacturing (which is quite frankly dead in UK) and retail, but as we knew their poor performance is due to more people using internet services (we'll naturally need less high street shops in the future):

http://newsvote.bbc.co.uk/1/hi/business/4630472.stm

[Leodhasach]

With gilts yields so low, surely it must be time for a rise in interest rates. The only people calling for reductions now are manufacturing (which is quite frankly dead in UK) and retail, but as we knew their poor performance is due to more people using internet services (we'll naturally need less high street shops in the future):

http://newsvote.bbc.co.uk/1/hi/business/4630472.stm

Karhu,

Let them put it off as long as they can. The longer they do, the bigger the tide that's going to swamp Gordy "King Canute" Brown will be. If they keep resisting, they'll eventually have to start incrementing in 50 point jumps instead of 25s. We'll be at 5.5 by late 2007 regardless. I hope!!!

[karhu]

If they keep resisting, they'll eventually have to start incrementing in 50 point jumps instead of 25s.

Yes, that is something that I often think about and would send out a huge shock. The reality is that the forces that have resulted in deflation are coming to an end and the forces that result in inflation (namely commodities) are on the up. Plus we have huge equity bubbles. This is a seriously bad situation.

[zorn]

With gilts yields so low, surely it must be time for a rise in interest rates.

But if rates go up, there's a serious risk of the BoE undershooting its inflation target of 1%-3% later in the year when the big oil price hikes drop out of the figures.

[karhu]

when the big oil price hikes drop out of the figures.

???????????? $65 a barrel. Iran and Nigeria in turmoil, Venezuela recently, congress say "no" to Alaska. Virtually all metal prices spiralling ??????

[Leodhasach]

But if rates go up, there's a serious risk of the BoE undershooting its inflation target of 1%-3% later in the year when the big oil price hikes drop out of the figures.

Yes, but the £20 DVD players and £60 DVD recorders will be dropping out of the figures by then too...PCs, LCD TVs and TFT monitors are plateau-ing a bit now too...they've been helping the inflation figures for the last 2 or 3 years. Although the immediate costs of fuel and lubricants may have stabilised, the manufacturing costs of the September oil spike haven't fully worked their way into the inflation figures yet. I don't see any chance of an overshoot at all.

[karhu]

Yes, but the £20 DVD players and £60 DVD recorders will be dropping out of the figures by then too...PCs, LCD TVs and TFT monitors are plateau-ing a bit now too...they've been helping the inflation figures for the last 2 or 3 years. Although the immediate costs of fuel and lubricants may have stabilised, the manufacturing costs of the September oil spike haven't fully worked their way into the inflation figures yet. I don't see any chance of an overshoot at all.

If interest rates go down, we'll pass the point of no return and ultimately end in a huge depression, period. We need to raise interest rates now, suffer a short recession, deflate the equity bubbles, get our house in order and then think about growing again.

[Ferret]

But if rates go up, there's a serious risk of the BoE undershooting its inflation target of 1%-3% later in the year when the big oil price hikes drop out of the figures.

In turbo mode now zorn?

With all that O/T the boss pays you, think of that nice big house you will be able to buy after the correction.

[JBFTB]

"Over the coming year we anticipate increased activity in the first time buyer market in particular," Mr Pownall added.

Rrrrrrrrrrrrrrrrr! Are these people thick or something? If FTBs are priced out (but prices will not significantly fall, honest), where is this magic supply of money suddenly going to come from?

[Fudge]

Just out on BBC....

:angry:

According to Duncan Pownall, spokesman for Bradford & Bingley, mortgage lending picking up in the latter part of 2005 could indicate first-time buyers returning to the property market.

"Strength in the housing market combined with buyers realisation that prices will not significantly fall has encouraged more and more people to step onto the property ladder," he said.

Since the start of this new year I have been seeing busier estate agents, and looking at Rightmove for my area a marked pickup in SSTC. So I think some people have been arranging mortgages end of last year to

buy start of this year. However so far this year also seeing reduced and new price in papers and about 25% increase in new instructions.

Could it be higher volumes of sales due to sellers accepting lower offers?

[Realistbear]

If, as the article claims, the housing market is continuing to rise it seems unlikley that the FTBs that are mentioned will come back into the marketplace as houses have long since passed the point of affordability for all but a tiny minority. Without FTBs this market is dead in the water.

The massive increase in borrowing that is alleged may either be false or further re-mortgaging by existing borrowers. There has been no commensurate increase in house sales in which case I suggest this VI news can be dismissed as mere propaganda.

The article claims:

"Over the coming year we anticipate increased activity in the first time buyer market in particular," Mr Pownall added.

FTBs are in no better position as a result of higher prices this year than they were last year when prices were 3% or so lower according to the VIs. That FTBs are specifically mentioned underlies the fact that HPI depends, ultimately, on FTBs coming into the market. If FTBs want to see a crash STAY RENTING or living at home.

Edited January 20, 2006 by Realistbear

[Time to raise the rents.]

"Over the coming year we anticipate increased activity in the first time buyer market in particular," Mr Pownall added.

Rrrrrrrrrrrrrrrrr! Are these people thick or something? If FTBs are priced out (but prices will not significantly fall, honest), where is this magic supply of money suddenly going to come from?

It's called pent up demand, something I let the forum know about a very long time ago, naturally it was barked down like most valid points.

[Come On Down]

Yeah but, no but, yeah but...

How much is re-mortgaging??!

[Guest wrongmove]

Yeah but, no but, yeah but...

How much is re-mortgaging??!

From the article:

"...At the same time, the British Bankers' Association said net mortgage lending rose by £5.4bn during December, the strongest monthly rise since June 2004...."

These figures are post-SIPPs announcement.

[Come On Down]

From the article:

"...At the same time, the British Bankers' Association said net mortgage lending rose by £5.4bn during December, the strongest monthly rise since June 2004...."

These figures are post-SIPPs announcement.

What does net mortgage lending mean?

Edited January 20, 2006 by Come On Down

[bandylegs]

It's called pent up demand, something I let the forum know about a very long time ago, naturally it was barked down like most valid points.

Please expand upon your pent up demand theory. Particularly focusing upon what has released the pent up demand?

[Fancypants]

Please expand upon your pent up demand theory. Particularly focusing upon what has released the pent up demand?

oh there's plenty of pent-up demand alright. I've got bucketloads of the stuff myself.

problem being that if we are to believe that prices have not/are not/will not fall, then what should change to release that pent-up demand? Interest rate cuts? Don't make me laugh, even at 1% interest it's still unaffordable!

[jon]

If you look at the CML gross lending figures, 2005 has seen the first drop in total lending since 1997.

[Surrey cash buyer]

Take a look at the actual press release here

Scroll down to bottom of the page and open the excel spreadsheet.

See next to the December figure the tiny "est". The December figure is an ESTIMATE !

Also, the all important information, the split between new mortgages and re-mortgages, is not there.

[Waiting Patiently]

Yeah but, no but, yeah but...

How much is re-mortgaging??!

According to the Council of Mortgage Lenders last month a half of new lending in November was remortgaging so perhaps it was a similiar amount in December ? Its clear that a substantial amount is not for new purchases though some will try to spin it that way.......

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

[Ted D. Bear]

Pent-up demand comes from FTBs who have been priced out of the market for the last few years, have amassed large deposits and are anxious that its worth will be inflated away. The current lull has allowed them to "catch-up" with prices and so there is currently a window of opportunity. Not everyone is concerned about buying at the bottom, or avoiding buying on the peak. If the payments are affordable (and for those with large deposits this is likely to be the case) then people will buy. It's a real phenomenon, and it's sad if indeed mention of it was "barked down"

The real question is how much pent-up demand there is, how long will it support the market for, and is it strong enough to do anything more than support prices at current levels.

[kingofnowhere]

What does net mortgage lending mean?

Net lending is Gross lending less redemptions. Therefore it doesn't include remortgages, but it will include people increasing their mortgages and also repayments. Basically it the difference between last months outstanding mortgages balance and this months.

Net is a pretty good estimate of the loans made for house purchase.

The BSA approvals are about the same as Nov, and presuming their hasn't been a large shift in the ratio of remortgaging between this month and last, it would indicate the sipps effect was immeasurably small.

[DonnieDarker]

I wonder if these figures are pre-sipps u-turn?

There was a lot of hawking sipps at the end of last year.

[Tempest]

Re the CML report: The talk about it is lies and spin!!!! Please DO NOT believe the "could be due to housing market/FTB's upturn" cobblers. Just don't.

The "lending" is going to be because of a MUCH HIGHER proportion of remortgages/MEW or further advances/debt consolidation to meet our consumer debt/lifestyle millstone.

The actual sales numbers for houses just don't back up this strong "lending" over the last quarter. As CML are still in the process of "changing" their reporting, we will not know the latest breakdown on the lending figures (ie % of purchases/remortgages/further advances) from Sept last year onwards for some time. Funny how this has coincided with the downturn...

I back up my view that remortgages and further advances will be the main reason for this "robust" lending in Dec due to the following trend (taken from the CML statistics section (only available data is up to Aug 2005!) http://www.cml.org.uk/cml/statistics):

By quarter: Proportion of all lending forming remortgages/further advances for Q4 for each year since 1997 - 2004 has gone from 30%, 32%, 26% (millenium reasons?), 36%, 38%, 46%, 47% and 51%!! And this does not include the amount of MEW taken out from mortages used to buy houses - so some of the first column "lending" will be not going into house purchases too.

By month: Dec figures for the proportion forming remortgages/further advances for the period 2002 to 2004 are 43%, 45% and 49%!

This is as clear a trend as you will see. I see a leap coming and Dec 2005 lending being at least 55% remortgaging/MEW etc and maybe even higher given that Dec is usually a low month.

See the above CML link to the Excel spreadsheet for the data (although an attempt at cutting and pasting the above periods is below).

Loan purpose: House purchase % Remortgage % Further advance %

1997 Q1 10,800 67 4,600 29 600 4

Q2 15,800 82 2,800 15 700 4

Q3 18,100 83 3,200 14 600 3

Q4 16,000 80 3,400 17 600 3

1998 Q1 12,500 72 4,200 24 600 4

Q2 16,400 73 5,300 24 700 3

Q3 18,500 71 6,600 26 900 3

Q4 15,900 68 6,800 29 800 3

1999 Q1 14,300 67 6,200 29 900 4

Q2 20,000 69 7,600 26 1,200 4

Q3 24,400 73 7,500 23 1,400 4

Q4 22,900 74 6,800 22 1,400 4

2000 Q1 17,600 67 7,000 27 1,500 6

Q2 20,600 67 8,800 28 1,500 5

Q3 21,300 67 8,900 28 1,700 5

Q4 19,900 64 9,400 30 1,700 6

2001 Q1 18,300 59 10,900 35 1,800 6

Q2 25,600 64 11,900 30 2,500 6

Q3 29,400 65 13,500 30 2,700 6

Q4 26,900 62 13,900 32 2,800 6

2002 Q1 22,200 52 16,600 39 2,700 6

Q2 30,700 57 18,800 35 2,900 5

Q3 35,000 56 21,600 35 3,600 6

Q4 31,400 51 24,500 40 3,900 6

2003 Q1 23,400 41 28,000 48 4,300 7

Q2 26,900 41 31,900 49 4,700 7

Q3 35,900 47 32,100 42 5,300 7

Q4 37,800 48 32,400 41 4,900 6

2004 Q1 30,900 46 28,800 43 4,800 7

Q2 38,600 50 29,400 38 5,300 7

Q3 38,500 48 33,600 42 4,900 6

Q4 29,200 44 29,600 45 4,100 6

2005 Q1 22,400 40 27,100 48 4,300 8

Q2 31,200 45 28,800 41 6,300 9

Month

2002 Jan 6,600 49 5,400 41 900 7

Feb 6,600 50 5,400 41 800 6

Mar 8,900 55 5,700 36 1,000 6

Apr 8,900 54 6,300 38 800 5

May 11,900 58 6,800 33 1,200 6

Jun 9,900 58 5,800 34 900 5

Jul 12,400 58 7,400 34 1,200 6

Aug 12,200 58 7,000 33 1,100 5

Sep 10,300 53 7,300 37 1,300 7

Oct 10,500 49 8,600 40 1,500 7

Nov 10,400 50 8,400 40 1,400 7

Dec 10,400 53 7,500 38 1,100 5

2003 Jan 8,000 40 9,900 50 1,200 6

Feb 7,300 41 8,500 47 1,400 8

Mar 8,100 41 9,500 47 1,700 8

Apr 8,200 40 9,900 49 1,600 8

May 8,700 39 11,400 51 1,500 7

Jun 9,900 43 10,600 46 1,600 7

Jul 11,900 46 11,200 44 1,800 7

Aug 11,900 49 9,700 40 1,800 7

Sep 12,100 47 11,300 44 1,700 7

Oct 13,200 47 12,000 43 1,900 7

Nov 12,000 47 10,800 42 1,600 6

Dec 12,600 51 9,500 39 1,400 6

2004 Jan 10,200 47 9,500 44 1,400 6

Feb 9,300 44 9,200 44 1,500 7

Mar 11,500 47 10,100 41 1,900 8

Apr 12,700 51 9,200 37 1,700 7

May 12,000 50 9,300 38 1,600 7

Jun 13,900 49 11,000 39 1,900 7

Jul 14,600 51 11,100 39 1,700 6

Aug 12,800 48 11,000 41 1,600 6

Sep 11,200 44 11,500 45 1,600 6

Oct 10,300 44 10,200 44 1,600 7

Nov 9,100 42 10,400 48 1,300 6

Dec 9,900 47 9,000 43 1,200 6

2005 Jan 6,900 40 8,700 50 1,000 6

Feb 7,000 39 8,700 49 1,300 7

Mar 8,500 40 9,700 46 2,000 9

Apr 9,200 43 9,400 43 2,000 9

May 9,900 45 9,300 42 2,000 9

Jun 12,000 47 10,100 39 2,200 8

Jul 11,800 47 10,200 41 1,900 8

Augrev 12,300 46 11,400 42 2,000 8

Edited January 20, 2006 by Tempest