Fancypants Posted November 14, 2006 Share Posted November 14, 2006 Check it out Mortgage figures signal slowing housing market Staff and agencies Tuesday November 14, 2006 Guardian Unlimited The number of people remortgaging their home in September fell to its lowest level in five years in a sign that the housing market is beginning to cool, new figures out today indicated. The Council of Mortgage Lenders (CML) said that 79,000 people remortgaged in September, down more than 13% on the previous month's total of 91,000. The number of people taking out a new home loan to buy a property also fell in September, down to 88,000 from August's figure of 101,000. Article continues The sharp drop in the popularity of remortgaging may reflect the fact that lenders are managing to retain more customers for longer by reducing the incentive to switch to other lenders, the CML said. However, the drop in total mortgage lending could also be a sign that the property market is beginning to slow. There was a substantial fall in the number of mortgages for home movers, dropping from 66,100 loans in August to 56,700 in September. The number of loans to first-time buyers also fell to 31,100 in September, from 35,200 in August. Michael Coogan, director general of the CML, said: "The downward trends in remortgaging illustrate how lenders are reacting to competitive conditions and offering attractive retention products and policies to their customers. "Today's figures show that slowly but surely the market is cooling as we approach the end of the year in an environment of higher interest rates." Only 36% of the total number of loans was given to first-time buyers, and buyers borrowed on average 3.25 times their household income. In 1996, almost half of all homebuyers were purchasing their first property. Fixed rate mortgages have also been less popular. Fixed rates made up for 59% of home loans in September, and the average for the third quarter of this year was 60%. In the previous quarter, 70% of homebuyers chose to fix their rate of interest. The drop is likely to be connected to August's quarter-point increase in the base rate. As a result, lenders increased the rates of their fixed-rate deals, making them more expensive than the best value variable rate products. According to the CML, the average interest rate on a fixed-rate mortgage reached 5.24% in September, up from 5.18% in August. Quote Link to comment Share on other sites More sharing options...
Guest Shedfish Posted November 14, 2006 Share Posted November 14, 2006 very! looks like all kinds of mortgage are down Quote Link to comment Share on other sites More sharing options...
Fancypants Posted November 14, 2006 Author Share Posted November 14, 2006 very! looks like all kinds of mortgage are down as is "churn". Perhaps this is really because lenders are successfully consolidating their loan books, and people are finding it harder to re-mortgage to cheap deals as re-mortgage fees go up, and up, and up. I saw at the weekend that Nationwide (a very popular one) are charging £1500 on one of theirs! Quote Link to comment Share on other sites More sharing options...
Neil D Possitt Posted November 14, 2006 Share Posted November 14, 2006 Fixed rate mortgages have also been less popular. Fixed rates made up for 59% of home loans in September, and the average for the third quarter of this year was 60%. In the previous quarter, 70% of homebuyers chose to fix their rate of interest. The drop is likely to be connected to August's quarter-point increase in the base rate. As a result, lenders increased the rates of their fixed-rate deals, making them more expensive than the best value variable rate products. This phenomenon always amazes me. Surely when rates are rising its time more people should be considering a fixed rate? The attitude seems to be; "with a variable rate the repayments will probably be cheaper this month, next month & the month after. Sod what happens over the following 297 months, worry about that when it happens". Quote Link to comment Share on other sites More sharing options...
Fancypants Posted November 14, 2006 Author Share Posted November 14, 2006 This phenomenon always amazes me. Surely when rates are rising its time more people should be considering a fixed rate? The attitude seems to be; "with a variable rate the repayments will probably be cheaper this month, next month & the month after. Sod what happens over the following 297 months, worry about that when it happens". presumably fixed rates are being made (on the sly) much less attractive. If the lenders feel that rates are going up, they won't wanna get stiffed by the punters. Quote Link to comment Share on other sites More sharing options...
PropertyGuru Posted November 14, 2006 Share Posted November 14, 2006 presumably fixed rates are being made (on the sly) much less attractive. If the lenders feel that rates are going up, they won't wanna get stiffed by the punters. that sounds likely. Quote Link to comment Share on other sites More sharing options...
Neil D Possitt Posted November 14, 2006 Share Posted November 14, 2006 presumably fixed rates are being made (on the sly) much less attractive. If the lenders feel that rates are going up, they won't wanna get stiffed by the punters. Yes, conversley the times when lenders are falling over each other to offer fixed rates are the times when no one needs a fixed rate! Quote Link to comment Share on other sites More sharing options...
OzzMosiz Posted November 14, 2006 Share Posted November 14, 2006 When rates go up, but prices don't come down then you will see volumes coming down instead. Cos its like that! And that's the way it is..... Quote Link to comment Share on other sites More sharing options...
jp1 Posted November 14, 2006 Share Posted November 14, 2006 (edited) No complex anaysis is needed here It's simply bad news - there's no mention of it over on the 'good news only' BBC website They are always the 1st to slap CML reports on the homepage or Business homepage, as long as it's "record" "bouyant" "strong" mortgage lending Edited November 14, 2006 by jp1 Quote Link to comment Share on other sites More sharing options...
mammys little soldier Posted November 14, 2006 Share Posted November 14, 2006 Nobody is making a fuss about what is one of the most bearish pieces of news there has been for a while "The number of people taking out a new home loan to buy a property also fell in September, down to 88,000 from August's figure of 101,000." Spline will be able to explain better than I can but as I understand it the volume of loans for purchase being taken out is one the best leading indicators of HPI. I would think that this still represents positive HPI but it's still a 13% drop on last month Quote Link to comment Share on other sites More sharing options...
BrickingIt Posted November 14, 2006 Share Posted November 14, 2006 Cos its like that! And that's the way it is..... Huhhhhhhh. Quote Link to comment Share on other sites More sharing options...
OzzMosiz Posted November 14, 2006 Share Posted November 14, 2006 No complex anaysis is needed here It's simply bad news - there's no mention of it over on the 'good news only' BBC website They are always the 1st to slap CML reports on the homepage or Business homepage, as long as it's "record" "bouyant" "strong" mortgage lending e-mail them then! Quote Link to comment Share on other sites More sharing options...
BrickingIt Posted November 14, 2006 Share Posted November 14, 2006 Nobody is making a fuss about what is one of the most bearish pieces of news there has been for a while "The number of people taking out a new home loan to buy a property also fell in September, down to 88,000 from August's figure of 101,000." Spline will be able to explain better than I can but as I understand it the volume of loans for purchase being taken out is one the best leading indicators of HPI. I would think that this still represents positive HPI but it's still a 13% drop on last month Seasonal? a question not an answer. Quote Link to comment Share on other sites More sharing options...
StoppedClock Posted November 14, 2006 Share Posted November 14, 2006 Seasonal? a question not an answer. Also do these relate to approvals or draw downs? Quote Link to comment Share on other sites More sharing options...
Fancypants Posted November 14, 2006 Author Share Posted November 14, 2006 Seasonal? a question not an answer. one would expect August to be a quiet month on the housebuying front, being holiday season. Quote Link to comment Share on other sites More sharing options...
Gone baby gone Posted November 14, 2006 Share Posted November 14, 2006 one would expect August to be a quiet month on the housebuying front, being holiday season. Indeed, so if August was 'quiet', September was dead! Maybe the August figures were skewed by people trying to get fixed rate deals before IR rises? Whole thing sounds pretty damn bearish to me... Quote Link to comment Share on other sites More sharing options...
Fancypants Posted November 14, 2006 Author Share Posted November 14, 2006 Maybe the August figures were skewed by people trying to get fixed rate deals before IR rises? unlikely, given the "surprise" that greeted August's hike. Quote Link to comment Share on other sites More sharing options...
Realistbear Posted November 14, 2006 Share Posted November 14, 2006 http://www.telegraph.co.uk/money/main.jhtm...4/bcninf114.xml The number of loans to first-time buyers fell to 31,100 in September, from 35,200 in August. Lending to home movers followed a similar trend, dropping from 66,100 loans in August to 56,700 in September. Not just remortgages that are down. And the VIs have been saying the market is frenzied again? If the numbers are down.... Quote Link to comment Share on other sites More sharing options...
spline Posted November 14, 2006 Share Posted November 14, 2006 Are yes, but these CML figures are for September … and what was the BoE number of approvals for house purchase in September? Quote Link to comment Share on other sites More sharing options...
tenroom Posted November 14, 2006 Share Posted November 14, 2006 (edited) what i found most alarming in that piece was the fact that only 59% of loans were on a fixed rate basis. what are these people on ? Edited November 14, 2006 by tenroom Quote Link to comment Share on other sites More sharing options...
Fudge Posted November 14, 2006 Share Posted November 14, 2006 Are yes, but these CML figures are for September … and what was the BoE number of approvals for house purchase in September? Just tell me will ya, I am too fricken stupid to work it out, alright! Quote Link to comment Share on other sites More sharing options...
spline Posted November 14, 2006 Share Posted November 14, 2006 Just tell me will ya, I am too fricken stupid to work it out, alright! These are the historical CML estimates grossed up from the product sales data (as reported in the linked articles) and the BoE approval data for the same months. Usually the BoE numbers are the ones to use, but it’s interesting that CML and BoE numbers have slightly drifted apart. 2005 CML BoE/nsa BoE/saJan 61 51 82Feb 62 74 86Mar 73 104 92Apr 81 110 94May 86 108 96Jun 100 116 96Jul 95 106 98Aug 96 108 105Sep 92 108 106Oct 87 108 110Nov 92 114 113Dec 93 89 1192006 CML BoE/nsa BoE/saJan 70 78 119Feb 71 97 113Mar 93 143 115Apr 85 109 107May 96 138 118Jun 110 147 120Jul 95 126 121Aug 101 126 120Sep 88 126 126 Quote Link to comment Share on other sites More sharing options...
Willy Weasel Posted November 14, 2006 Share Posted November 14, 2006 Spline The CML figures always seem to be less than the BoE figures. Is that because not all lenders are members of the CML? Also, is your trend based on BoE or CML figures? Thnx Tuffers Quote Link to comment Share on other sites More sharing options...
spline Posted November 14, 2006 Share Posted November 14, 2006 (edited) It looks like the CML “loans for house purchase” run at about 80% of the BoE/nsa and tracks quite well although with a bit of variation – the difference in September is that the BoE nsa has stayed flat while the CML has dropped sharpish. Maybe the BoE will revise it down in October. But given that the two track quite well, the HPI correlation can be equally be applied to the CML data with the neutral level set at very roughly 80% of the BoE *but* you would have to seasonally adjust it first, so it’s probably easier just to wait for the BoE sa number. I’m not sure about the CML methodology – it seems to involve scaling up a smaller sample to reflect a larger market. Edited November 14, 2006 by spline Quote Link to comment Share on other sites More sharing options...
Jason Posted November 14, 2006 Share Posted November 14, 2006 The number of people taking out a new home loan to buy a property also fell in September, down to 88,000 from August's figure of 101,000. I nearly missed this. The slowdown is starting... Now, where is this on the BBC? I wonder if they mention the BoE figures... When do they come out? Quote Link to comment Share on other sites More sharing options...
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