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Nationwide Index Dec 2020


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Well, with such strong figures over the past five months, even with Brexit waiting in the wings, its difficult to see this being a negative.  I'll go for a +0.2 monthly seasonally adjusted.  Even though prices are toppy at present, I suspect the feelgood factor of Brexit will send prices on a continuing upward trajectory for most of next year (although if the new COVID strain proves resistant to the vaccine I think all bets are off for both the economy and housing market).  Interesting to see how unemployment impacts upon prices but banks are now more understanding and I think the benefits system will keep people in their houses even if unemployed, so I don't think there will be a glut of property whatever the situation.

 

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The BBC were on this almost immediately. Top of the Business section too as befits it's wonderful status as a positive piece of news.

https://www.bbc.co.uk/news/business-55483432

Indeed, Mark Harris, a pusher of debt, exclaims [emphasis mine]:

"Competitive mortgage rates show no sign of disappearing anytime soon, with lenders most notably returning to the 90% loan-to-value space, providing a further boost for first-time buyers."

This can only end well!

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The BBC were on this almost immediately. Top of the Business section too as befits it's wonderful status as a positive piece of news.

https://www.bbc.co.uk/news/business-55483432

Indeed, Mark Harris, a pusher of debt, exclaims [emphasis mine]:

"Competitive mortgage rates show no sign of disappearing anytime soon, with lenders most notably returning to the 90% loan-to-value space, providing a further boost for first-time buyers."

This can only end well!

As expected the removal of higher ratio loans (and possibly higher multiples) allowing the lenders to cherry pick the top customers to throttle demand. 

Mate of mine is a mortgage broker- exacts no sleep for the next month or so and then it'll go quiet. 

Obviously it's isn't good news for first time buyers at all but I can only imagine the impact on the economy if house prices started falling right now. 

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As expected the removal of higher ratio loans (and possibly higher multiples) allowing the lenders to cherry pick the top customers to throttle demand. 

Mate of mine is a mortgage broker- exacts no sleep for the next month or so and then it'll go quiet. 

Obviously it's isn't good news for first time buyers at all but I can only imagine the impact on the economy if house prices started falling right now. 

So is he expecting property sales, I'll assume England as nowhere else seems so busy, to go from circa 100k per months to nil in the next month?

https://www.gov.uk/government/statistics/monthly-property-transactions-completed-in-the-uk-with-value-40000-or-above

Month                Year                                                         Residential Property Sales (England)

January 2020 71,030
February 2020 70,960
March 2020 74,490
April 2020 32,410
May 2020 40,250
June 2020 59,410
July 2020 70,460
August 2020 73,090
September 2020 provisional 82,200
October 2020 provisional 99,970
November 2020 provisional estimate 103,690
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So is he expecting property sales, I'll assume England as nowhere else seems so busy, to go from circa 100k per months to nil in the next month?

https://www.gov.uk/government/statistics/monthly-property-transactions-completed-in-the-uk-with-value-40000-or-above

Month                Year                                                         Residential Property Sales (England)

January 2020 71,030
February 2020 70,960
March 2020 74,490
April 2020 32,410
May 2020 40,250
June 2020 59,410
July 2020 70,460
August 2020 73,090
September 2020 provisional 82,200
October 2020 provisional 99,970
November 2020 provisional estimate 103,690

I'm not sure we share your definition of 'quiet' to be 'nil'. It'll calm down, he wont be as busy and the pull forward of purchase related mortgages will have cannibalised his pipeline somewhat. The majority of mortgages do not come from sales though, they come from remotgages but these require far less work than a move. 

My point was that since the workload will fall the lenders will no longer throttle demand with less favourable deals and will move back to higher LTV and multiples. 

Sorry, I didn't quite get the point you were trying to make?

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My point was that since the workload will fall the lenders will no longer throttle demand with less favourable deals and will move back to higher LTV and multiples. 

 

Ah, that's an interesting point. I suppose the key question is whether they really were throttling demand, or just reducing their own risk? We'll see heh

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Ah, that's an interesting point. I suppose the key question is whether they really were throttling demand, or just reducing their own risk? We'll see heh

Yes, I could be wrong but the word from a few friends on the inside was they were struggling to cope. The house movers create more work than the simple remortgage and on the back of that lenders were struggling to get the same productivity out of their staff as they weren't all set up for remote working. 

We'll see, I could be wrong and I think there is some risk ahead but then you've got the government potentially stepping in to act as a back-stop for the banks to start lending (who knows what they'll come up with next!).

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We'll see, I could be wrong and I think there is some risk ahead but then you've got the government potentially stepping in to act as a back-stop for the banks to start lending (who knows what they'll come up with next!).

True. Could be a bit of both. You'd think that with the next GE likely 4 years off the govt wouldn't be under pressure to pump house prices right now. But what do I know.

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True. Could be a bit of both. You'd think that with the next GE likely 4 years off the govt wouldn't be under pressure to pump house prices right now. But what do I know.

I agree, traditionally the Tories would drop interest rates about 18 months prior to the GE (probably the main reason Tony and Gordon gave the BoE 'independence'). I think it's fair to say that the market will be subdued the next couple of years - just reading up that estate agents are saying 1-3% the next couple of years which possibly means 0% or marginal falls. 

I only think they'll come up with something to try to prevent falls. It's sad but true that if house prices fall people double down on their saving and paying down the mortgage which is a negative feedback for the economy. They'll likely want as many to get back to as much a normal life of work and spend as possible I should think - there's £300BN more of debt to service now than a year ago so they'll want to maintain tax revenue as much as possible and get the budget back to normal in the next few years, if not they'll have Labour accusing them of financial mismanagement which is possibly the only reason most people vote Tory.

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I'm not sure we share your definition of 'quiet' to be 'nil'. It'll calm down, he wont be as busy and the pull forward of purchase related mortgages will have cannibalised his pipeline somewhat. The majority of mortgages do not come from sales though, they come from remotgages but these require far less work than a move. 

My point was that since the workload will fall the lenders will no longer throttle demand with less favourable deals and will move back to higher LTV and multiples. 

Sorry, I didn't quite get the point you were trying to make?

The point really is that there are always people in the "know" who expect this or that when it seems unlikely - just worth teasing out what they actually mean - do you think a halving of the 100k would therefore be "quiet"?

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I agree, traditionally the Tories would drop interest rates about 18 months prior to the GE (probably the main reason Tony and Gordon gave the BoE 'independence'). I think it's fair to say that the market will be subdued the next couple of years - just reading up that estate agents are saying 1-3% the next couple of years which possibly means 0% or marginal falls. 

I only think they'll come up with something to try to prevent falls. It's sad but true that if house prices fall people double down on their saving and paying down the mortgage which is a negative feedback for the economy. They'll likely want as many to get back to as much a normal life of work and spend as possible I should think - there's £300BN more of debt to service now than a year ago so they'll want to maintain tax revenue as much as possible and get the budget back to normal in the next few years, if not they'll have Labour accusing them of financial mismanagement which is possibly the only reason most people vote Tory.

Except the main economic drag will be unemployment which needs an entirely different approach, I imagine.

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The point really is that there are always people in the "know" who expect this or that when it seems unlikely - just worth teasing out what they actually mean - do you think a halving of the 100k would therefore be "quiet"?

Allow me to rephrase your question - do you think the rate of completions will remain at this level or increase in 2021 if the SDLT holiday ends?

You could split hairs about what fraction my friend means by 'quiet' (bit of a false argument since I'm not going to ask him and nobody knows the answer) but I think consensus is many house moves in 2020 were motived by the chance to do it without a transaction tax. Would a halving of your workload be deemed quiet? 

Who knows though, new vaccine, Brexit, all sorts happening next year and maybe people will continue to move house like they change underpants. 

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Except the main economic drag will be unemployment which needs an entirely different approach, I imagine.

Yes - but confined mostly to certain sectors which I think makes targeted policy easier. 0% VAT on eating out for instance, or the eat out to help out for instance. Get people out and about and mingling, meeting, spending. No easy (or cheap) fix I think but thankfully the economy was in relative good heath before this hit so I am more optimistic on the speed and magnitude of recovery. 

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Yes - but confined mostly to certain sectors which I think makes targeted policy easier. 0% VAT on eating out for instance, or the eat out to help out for instance. Get people out and about and mingling, meeting, spending. No easy (or cheap) fix I think but thankfully the economy was in relative good heath before this hit so I am more optimistic on the speed and magnitude of recovery. 

You think the govt are going to reduce taxes in the light of record govt debt?

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You think the govt are going to reduce taxes in the light of record govt debt?

They already have done (SDLT and VAT cut in restaurants).

GBP up versus EUR and USD from start of pandemic. There's room to print for now. Plus the eat out to help out and cut to hospitality VAT although temporary would get things moving again just in time for Spring/Summer. 

I can see tinkering in other areas though. I'm genuinely concerned about higher rate relief going on pensions and will be ramping contributions in Q1. 

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