Jump to content
House Price Crash Forum
adsk

More lax lending on the way

Recommended Posts

<blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr">Mortgage lenders asking for Bank of England to relax test that applicants could cope with 3% hike in interest rates</p>&mdash; Simon Gompertz (@gompertz) <a href="https://twitter.com/gompertz/status/855394782323109888">April 21, 2017</a></blockquote>
<script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script>
<blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr">Council of Mortgage Lenders says 3% test risks undermining smooth running of housing market</p>&mdash; Simon Gompertz (@gompertz) <a href="https://twitter.com/gompertz/status/855394990226321409">April 21, 2017</a></blockquote>
<script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script>

While we're all distracted by the election let's find a way to keep the bubble inflating away.

Share this post


Link to post
Share on other sites

Since that didn't work...

From @gompertz BBC

Council of Mortgage Lenders says 3% test risks undermining smooth running of housing market

 

Mortgage lenders asking for Bank of England to relax test that applicants could cope with 3% hike in interest rates

Share this post


Link to post
Share on other sites
5 hours ago, adsk said:

Since that didn't work...

From @gompertz BBC

Council of Mortgage Lenders says 3% test risks undermining smooth running of housing market

 

Mortgage lenders asking for Bank of England to relax test that applicants could cope with 3% hike in interest rates

This isn't news. CML shit-heels have been making the same noises for months.

Quote

CML chair calls for lower stress tests for mortgage borrowers

by: Mortgage Solutions
  • 27/01/2017
The Council of Mortgage Lenders (CML) chairman Peter Hill has criticised regulation for locking people out of the market, urging for reduced stress tests placed on applicants.

Hill (pictured), who is also chief executive of Leeds Building Society, told the Financial Times that regulators should revisit the rates of interest – set at 3% but typically adopted at 5% and above by lenders – to reflect the improved economic environment since the rules came about.

“The question I would ask is can we foresee rates over five years being at that level? It feels quite unlikely,” Hill told the FT. “Is this stress rate realistic in the current environment — because it’s locking people out of the market.”

Hill’s remarks echo comments made by Hometrack’s research and insight director Richard Donnell at the Mortgage and Protection Event in November. Donnell told an audience of brokers that first-time buyers with small deposits were being blocked from getting on the housing ladder due to difficulties faced in passing tough stress test requirements.

The Financial Policy Committee, which introduced the affordability tests, remained firm on its stance in November, noting that the stress rate level remained “proportionate”.

Despite the bank rate falling since 2014, the FPC said that “given the long-term nature of mortgage contracts, it would be imprudent to rely too heavily on potentially volatile market-implied measures of future interest rates. In addition, the current calibration of the affordability test strengthens resilience in the face of adverse income and unemployment shocks.”

 

Share this post


Link to post
Share on other sites

The myth of lax lending post-2007 rides again!

Here's the state of play today with regard to outstanding secured lending in the context of the pre-2008 boom.

58fa5ede40521_LLPMVTXKtoFebruary2017.png.7702ac6fc1c4a8e4b1c832c1593bff47.png

In the 16 months from 31 March 2004 to 31 July 2005, secured lending grew by 15.4%.

In the 110 months from 31 December 2007 to 28 February 2017, secured lending grew by 15.0%.

Recent trends in the various contributions to lending growth also interesting, as per the CML:

Contributions to lending growth on annual basis

20170322-chart-1-mc.gif

Source

If the CML are looking at lending growth being sustained by Mortgage Market Review-constrained first time buyers, it's no wonder they are upping the ante on getting rid of some of those constraints. They've had f**k all luck with that so far, in fact the Bank's FPC and PRA have just recently doubled down on the tightening by choking off the BTL demand.

Game on.

Edited by Bland Unsight

Share this post


Link to post
Share on other sites
1 hour ago, Bland Unsight said:

The myth of lax lending post-2007 rides again!

Here's the state of play today with regard to outstanding secured lending in the context of the pre-2008 boom.

58fa5ede40521_LLPMVTXKtoFebruary2017.png.7702ac6fc1c4a8e4b1c832c1593bff47.png

In the 16 months from 31 March 2004 to 31 July 2005, secured lending grew by 15.4%.

In the 110 months from 31 December 2007 to 28 February 2017, secured lending grew by 15.0%.

Recent trends in the various contributions to lending growth also interesting, as per the CML:

Contributions to lending growth on annual basis

20170322-chart-1-mc.gif

Source

If the CML are looking at lending growth being sustained by Mortgage Market Review-constrained first time buyers, it's no wonder they are upping the ante on getting rid of some of those constraints. They've had f**k all luck with that so far, in fact the Bank's FPC and PRA have just recently doubled down on the tightening by choking off the BTL demand.

Game on.

Something very charming about the RHS of that chart.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   33 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.