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Realistbear

Times: Houses "off The Boil" As Mortgage Lending Plummets

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http://business.timesonline.co.uk/tol/busi...icle1818532.ece

From Times Online

May 21, 2007
Signs emerge that
UK housing is off the boil
Mortage lending is falling and house prices are stabilising as the fourth interest rate rise in ten months begins to take hold
The rising interest rate is finally putting the brakes on the UK housing market after
mortgage lending fell by 9 per cent in April
and the average house price showed its smallest gain since the beginning of 2007.
In April, gross mortgage lending reached £28.8 billion - an 18 per cent increase on the same month last year but a 9 per cent fall compared with March.

9% fall MoM is impressive.

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Guest Bart of Darkness
Mortage lending is falling and house prices are stabilising as the fourth interest rate rise in ten months begins to take hold

I'm wondering if the effects of the most recent rises have yet to filter through (isn't there supposed to be some kind of 9 month lag?)

Can anyoner confirm or deny this?

BoD

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Guest d23
9% fall MoM is impressive.

i guess it's a bit more impressive than the 7.25% fall mom that occurred during the same time last year, altho not sure that was 18% up yoy and a record high for April like it was this year.

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I'm wondering if the effects of the most recent rises have yet to filter through (isn't there supposed to be some kind of 9 month lag?)

Can anyoner confirm or deny this?

BoD

there is no real lag. if you want to know why, i can explain, or just take my statement as true :P

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Prior to the last recession we had the straw that broke the camels back.

This is a double whammy, HIP's and rising interest rates, and banks now tightening their credit lending criteria.

Its for sure the green shoots of a recession. Bring it on, its going to be great to see how Brown gets out of this one without being written down in history as the worst chancellor this country has ever had. No more boom to bust, for sure, its bust bust bust with this bunch of retards.

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http://business.timesonline.co.uk/tol/busi...icle1818532.ece

From Times Online

May 21, 2007
Signs emerge that
UK housing is off the boil
Mortage lending is falling and house prices are stabilising as the fourth interest rate rise in ten months begins to take hold
The rising interest rate is finally putting the brakes on the UK housing market after
mortgage lending fell by 9 per cent in April
and the average house price showed its smallest gain since the beginning of 2007.
In April, gross mortgage lending reached £28.8 billion - an 18 per cent increase on the same month last year but a 9 per cent fall compared with March.

9% fall MoM is impressive.

Thing is, the fourth interest rate can't be taking hold yet surely? It takes a while to feed through, as has been discussed at length on here. So it's worse than that Jim.

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there is no real lag. if you want to know why, i can explain, or just take my statement as true :P

Or you could keep in step with mainstream economic theory and consider the statement false.

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Guest Bart of Darkness
Or you could keep in step with mainstream economic theory and consider the statement false.

:lol:

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Or you could keep in step with mainstream economic theory and consider the statement false.

i don’t know what mainstream economic theory is but you can conclude pretty easily interest rates have no lag

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I'm wondering if the effects of the most recent rises have yet to filter through (isn't there supposed to be some kind of 9 month lag?)

Can anyoner confirm or deny this?

BoD

Yes and no. Obviously the only lag time for those with mortgages is the weeks between the rises and their next mortgage payment. However, there is a lag between interest rates and the wider economy. Different things seem to be affected at different times- I think 9 months is the shorter end of the scale with 18 months being the general figure although it could be even longer. For instance some economists believe that the increase in inflation we have seen this year is directly attributable to the cut in interest rates in summer 2005. Given that money supply increased to 14% in 2006 and has continued relatively unabated (13% in February 2007) we can expect inflation to stay high for some time to come.

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My take on it is that interest rates have an immediate effect on lending - the banks pass the rise onto borrowers with no intermediary.

However, the 9-month lag refers to inflation as the interest rates have the gradual effect of taking money out of the system through various intermediaries.

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If you had some properties for "capital growth" you would have to be concerned at the amount of bearish news that is coming out lately. I wonder how long it will be before some start hitting the panic button and making a dash for the exits???

Hopefully it wont be too long till it starts now, stop me feeling like a nutcase

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i don’t know what mainstream economic theory is but you can conclude pretty easily interest rates have no lag

Of course interest increases have a lag, particularly regards property. One reason is lots of people have fixed rate mortgages (often for 2 years) so any base increase has no immediate cash effect, but there are a lot of people who fixed for probably about 4% two years ago who will be remortgaging in the next few months for rates of 5.5% or more. Also increases affect sentiment, which takes time to filter through, and the practical effect (i.e. families have less cash left, start have problems making their monthly payments etc takes a while to pick up, after all an extra £100 for one month most people can find, but after a year of £100 each month it gets harder.

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I think the interest rate rises have immediate effect if you're intending to buy a home. It might make you take the plunge more quickly in order to lock in a fixed rate deal; it might deter you; or you might consider that it's the beginning of a series of rises and property investment doesn't make sense any longer.

I think most mortgages are specific to a house i.e. non-transferable. If you have to renegotiate a deal with the bank to buy another house the interest rate effect is immediate too.

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