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Mortgage lending fell in July before rise in interest rates

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It makes sense to me what the US are doing by slowly raising rates, it may well be a little bit of a struggle here and there as they do rise, but if the US hits a crisis in the future, and there is a good chance of that, at least they will have one weapon in being able to drop rates.

Carney really has in his vanity policies left us totally unarmed, to hear complaints about rates going to 0.75% are a joke when many of these mortgage holders held debts when BOE rates were 5%. Yes house prices might drop bit by bit as UK rates are rising, but at least we will have a safety net. Just wait and see, Carney has left the inevitable collapse until the minute he leaves.

 

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30 minutes ago, deadlyavenger said:

https://www.theguardian.com/business/2018/aug/24/mortgage-lending-fell-in-july-before-rise-in-interest-rates

Apologies if already posted??? (Mods please ignore if so)

Either way...significant news, shirley?

I think the real story here is that transactions are dropping,and are at 10 year lows iirc.

The recent rise in rates is a smokescreen.

Edited by Sancho Panza

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9 minutes ago, Sancho Panza said:

I think the real story here is that transactions are dropping,and are at 10 year lows iirc.

The recent rise in rates is a smokescreen.

I wonder what the transactions would be without HTB? HTB props up a chain of sales also as we all know, many of which would not happen without HTB. Does anyone know the HTB stats?

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2 minutes ago, Freezer? Best place for it said:

You don’t get a football team by installing Central Heating in a Mortuary.

I am still laughing even as I type this several seconds later.

What you do get by installing central heating in a mortuary is whole bunch of new problems - including the extra smells.

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36 minutes ago, Captain Kirk said:

I wonder what the transactions would be without HTB? HTB props up a chain of sales also as we all know, many of which would not happen without HTB. Does anyone know the HTB stats?

If you believe the Beeb (who are just regurgitating others' analysis) then:

"Help to Buy loans were used to purchase 76,559 homes outside of London between April 2013 and April 2016. This is equivalent to 30% of the 255,960 privately built new properties completed in that period."

So that is about 22k per year. So it will likely be something in that region (maybe 15k a year, maybe 40k a year).

If we start with the assumption that each HTB mortgage was either the 'start of' or a key 'enabler for' a chain of purchase transactions.

If:

  1. 40k HTB mortgages in a year (max probable guess) AND
  2. 4 transactions in the chain (a 'guessed' average)

...then that is 160k transactions that would either be less likely or wouldn't have happened at all.

All mortgage approvals (including remortgaging) for the 1 year period to June 2018 is approximately 775k.

OK, in all this t-shirt sizing ... yes, I think that HTB could well have sped a lot of transactions along (relative to market size - depressed as it is or otherwise).

Captain Kirk - probably a very good point.

But bear in mind how many of those transactions are effectively 'captured' from the Estate Agents - since a HTB transaction is managed/commissioned (if you will) by the developer themselves.

And we have all seen the death of the Countrywide (or their share price at least).

Edited by Aidan Ap Word
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42 minutes ago, Quicksilver said:

Hi Aidan, can you please explain how a HTB buyer is typically in a chain? all FTBs of HTB new builds will NOT be in a chain and my understanding was most were FTBs?

My thoughts exactly...I was trying to think about the chain point and could not reach same conclusion as some posters above. HTB sucks a lot of FTBs into new builds therefore hampering chain formation not helping it...?

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1 hour ago, Wayward said:

My thoughts exactly...I was trying to think about the chain point and could not reach same conclusion as some posters above. HTB sucks a lot of FTBs into new builds therefore hampering chain formation not helping it...?

They do assisted moves and trade ins also to get people to that HTB limit (thought apparently trade ins are not allowed against HTB).  

In  my area the chronic shortage is in family homes regular wages = 300/350K max on dual income and 20% dep.  HTB = 400K+ with same income/dep.

So in essence if you have a small flat you may very well sell to go into a HTB 4 bed new build miles from the school at the **** end of Wroxham for 360K.

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1 hour ago, Fromage Frais said:

They do assisted moves and trade ins also to get people to that HTB limit (thought apparently trade ins are not allowed against HTB).  

In  my area the chronic shortage is in family homes regular wages = 300/350K max on dual income and 20% dep.  HTB = 400K+ with same income/dep.

So in essence if you have a small flat you may very well sell to go into a HTB 4 bed new build miles from the school at the **** end of Wroxham for 360K.

Okay...point taken.  I was thinking vast majority of HTB were FTB ers going into new build and therefore closed circuit.  HTB will facilitate some second steppers as you say but I don't know the numbers....

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5 hours ago, Aidan Ap Word said:

If you believe the Beeb (who are just regurgitating others' analysis) then:

"Help to Buy loans were used to purchase 76,559 homes outside of London between April 2013 and April 2016. This is equivalent to 30% of the 255,960 privately built new properties completed in that period."

So that is about 22k per year. So it will likely be something in that region (maybe 15k a year, maybe 40k a year).

If we start with the assumption that each HTB mortgage was either the 'start of' or a key 'enabler for' a chain of purchase transactions.

If:

  1. 40k HTB mortgages in a year (max probable guess) AND
  2. 4 transactions in the chain (a 'guessed' average)

...then that is 160k transactions that would either be less likely or wouldn't have happened at all.

All mortgage approvals (including remortgaging) for the 1 year period to June 2018 is approximately 775k.

OK, in all this t-shirt sizing ... yes, I think that HTB could well have sped a lot of transactions along (relative to market size - depressed as it is or otherwise).

Captain Kirk - probably a very good point.

But bear in mind how many of those transactions are effectively 'captured' from the Estate Agents - since a HTB transaction is managed/commissioned (if you will) by the developer themselves.

And we have all seen the death of the Countrywide (or their share price at least).

OK, so over 10K transactions a month is reliant on HTB which is quite a lot. We really need to get the message out to FTB that they are just perpetuating the bubble by getting suckered into these schemes.

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43 minutes ago, Captain Kirk said:

OK, so over 10K transactions a month is reliant on HTB which is quite a lot. We really need to get the message out to FTB that they are just perpetuating the bubble by getting suckered into these schemes.

I'm not sure it has had that sort of impact. In my view the real impact is to further push up teh price of newbuilds. 

The bulk of help to buy loans are taken out by FTBers and can only use the scheme to buy newbuilds therefore there is only one in that chain. 

https://www.bbc.co.uk/news/uk-41473493

"The latest figures from the Department of Communities and Local Government show that from the launch of the scheme, in the second quarter of 2013, up to the end of June 2017, 134,558 properties had been bought.

The vast majority of these were purchased by first-time buyers - 108,620 of them, or just over 80%."

Although differing in time scales by an additional year or so from the above example over this four year period some 80% of HTB transaction went to FTBers (the poor sods). 

I don't therefore agree that HTB is really supporting transaction volume (maybe it is a bit with the other 20% of existing owners who move into a newbuild) but it's real impact is in jacking prices by way of further cheap and easy credit - well for the first five years. It will be interesting imho to see what happens now those loans start to charge interest in year six (1.75%) and thereafter (1.75% + RPI + 1% - which is jolly expensive compared to existing mortgage rates if you have a half prudent deposit). Bearing in mind that newbuilds command a premium by virtue of the fact that everything is new (and now you can get 'free' money for 20% of the purchase price) and in six years they wont be new and in a stagnant market their values will have at best trod water, or sunk it might get interesting iwhen we start to hit that wall. 

As it happens in about two years I think we are also at full impact of S.24 too. 

It might also be that any two year transition period for Brexit will be up shortly after this too. 

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1 hour ago, Wayward said:

Okay...point taken.  I was thinking vast majority of HTB were FTB ers going into new build and therefore closed circuit.  HTB will facilitate some second steppers as you say but I don't know the numbers....

Jan 18:

" In total, almost a quarter of Help to Buy loan recipients already owned a property. "

https://www.independent.co.uk/news/uk/politics/help-to-buy-property-millions-pounds-government-housing-home-ownership-shelter-a8156631.html

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9 hours ago, Democorruptcy said:

Jan 18:

" In total, almost a quarter of Help to Buy loan recipients already owned a property. "

https://www.independent.co.uk/news/uk/politics/help-to-buy-property-millions-pounds-government-housing-home-ownership-shelter-a8156631.html

And this must be behind the 400-600k homes on secondary locations in Norfolk.  As per usual  with subsidies they are manipulated right up to the government limit.

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19 hours ago, Sancho Panza said:

I think the real story here is that transactions are dropping,and are at 10 year lows iirc.

The recent rise in rates is a smokescreen.

They are at all time lows.

Its not that they low in 2018, its the fact that theyve been low for 15 years.

Theres do many untransacted sales kicking around. Once irs start rising, theres going to be almost 10 years of sales hitting the market.

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18 hours ago, Switch625 said:

US Fed chair Jerome Powell backs cautious path on rates

https://www.bbc.com/news/business-45300759

A consensus view on continued interest rate rises from the other side of the pond and we all know what that means for rates on this side.

Thats apath up to 3%-4%.

BoE need to be 5%- 6%. Or sterling will collapse and gilts shoot up.

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1 hour ago, spyguy said:

Thats apath up to 3%-4%.

BoE need to be 5%- 6%. Or sterling will collapse and gilts shoot up.

Carnage leaves the BoE in July 2019 so less than a year now. Maybe he'll try to get 1 or 2 more rises before he leaves to show he is not a complete currency debaser, or maybe we'll need to wait.

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20 hours ago, Captain Kirk said:

Carnage leaves the BoE in July 2019 so less than a year now. Maybe he'll try to get 1 or 2 more rises before he leaves to show he is not a complete currency debaser, or maybe we'll need to wait.

Complex.

Carny got his rep due to luck - Canadian banks did not blow up in 2008.

His problem is, bar some work on sorting out new mortgages - MMR - theyve not adddressed the issue with the toxic junk from Browns credit buble - io lians, btl io loans.

QE should have forced the banks to keep irs for that sh1t at 6%. The difference should have been used to pay off tge principle.

All very St Austinest - make me solvent ... later.

Again, FED sets risk free rate for cash. All other banks have to move their base rates accordingly.

Fed is running off its emergency assets too, then usgov going to start borrowing heavily, pushing up FED rate even more.

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  • 261 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% +
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      • Even
      • up 2.5%
      • up 5%



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