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Building Society Lending Down By 17% Year On Year

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Commenting on the mortgage market, Adrian Coles, Director-General of the BSA said:

"It has been a slow start to the summer. Building society mortgage lending is down year on year, as the interest rate rises since August last year have started to take the heat out of the mortgage market.

"New lending (net advances) fell year on year by 17%, having been buoyant since summer last year. Similarly approvals, loans agreed but not yet made, a good indicator of what will happen in the market over the next few months, were down year on year by 13%, having fallen year on year in April by 8%.

"There is likely to be more subdued lending as the year progresses and the rate rises continue to feed through. Another rate rise would add to the slowdown later in the year and into 2008. However, a reasonably strong economic outlook, especially continuing robust employment, should provide support to lending and property prices

http://firstrung.co.uk/articles.asp?pageid...&cat=44-0-0

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Commenting on the mortgage market, Adrian Coles, Director-General of the BSA said:

"It has been a slow start to the summer. Building society mortgage lending is down year on year, as the interest rate rises since August last year have started to take the heat out of the mortgage market.

"New lending (net advances) fell year on year by 17%, having been buoyant since summer last year. Similarly approvals, loans agreed but not yet made, a good indicator of what will happen in the market over the next few months, were down year on year by 13%, having fallen year on year in April by 8%.

"There is likely to be more subdued lending as the year progresses and the rate rises continue to feed through. Another rate rise would add to the slowdown later in the year and into 2008. However, a reasonably strong economic outlook, especially continuing robust employment, should provide support to lending and property prices

http://firstrung.co.uk/articles.asp?pageid...&cat=44-0-0

More like people are borrowing instead from the latest dodgy banks from overseas (as recommended by their entirely trustwirthy mortgage brokers - do they have to declare their fee income for different mortgage offers to the client?)

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Commenting on the mortgage market, Adrian Coles, Director-General of the BSA said:

"It has been a slow start to the summer. Building society mortgage lending is down year on year, as the interest rate rises since August last year have started to take the heat out of the mortgage market.

"New lending (net advances) fell year on year by 17%, having been buoyant since summer last year. Similarly approvals, loans agreed but not yet made, a good indicator of what will happen in the market over the next few months, were down year on year by 13%, having fallen year on year in April by 8%.

"There is likely to be more subdued lending as the year progresses and the rate rises continue to feed through. Another rate rise would add to the slowdown later in the year and into 2008. However, a reasonably strong economic outlook, especially continuing robust employment, should provide support to lending and property prices

http://firstrung.co.uk/articles.asp?pageid...&cat=44-0-0

Now that is the first thing I've read that really gives me belief that this madness is finally in the process of unwinding.

Houses round here are really sticking now. Although some are still selling I know of a number that have had the board up for 3 months or more - quite a bit more in a few cases and joint agency is with us again. I would say one house in 3 (that is for sale) has two boards outside it.

If you are thinking of buying now - don't. You'll get the same property for a good bit less later this year or beginning of next.

If at any point they drop interest rates - even by just 0.25% - the lesson from August 2005 is to buy immediately.

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Doom mongering in the Guardian again:

http://money.guardian.co.uk/news_/story/0,,2107309,00.html

Robust mortgage market starts to cool
Laura Howard
Wednesday June 20, 2007
Guardian Unlimited
Housing industry figures have started to show what many experts predicted - that in 2007 the market would start to cool in the second half of the year.
According to the Building Societies Association (BSA), mortgage approvals (loans agreed by building societies but not yet completed - a useful indicator of the short-term future of the housing market) fell by 13% in May this year compared with May 2006, and in April this year they were 8% lower than in April 2006. Actual lending also dropped in May by 17% compared with the same month last year.

How very different the stories appearing in the press these days. No a bull in sight. Has anyone noticed the absence of bulls on HPC lately? Even the neithers have quietened down.

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Guest wrongmove
Even the neithers have quietened down.

NOT ALL OF THEM!!!!! ;)

Yes, today's figures were a bid less bad (for people like me who want cheaper housing) than last year. But I should hope so! Last year saw double-digit HPI according to all the main indices. I would be seriously worried if approvals numbers were headed up :o

But we still MoM rise in all the main indices, month after month. The level of approvals now is not at boom levels, but it is still some way above bust levels. We need these drops to be increased and sustained before I will be calling an imminent crash.

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Building Society Lending Down By 17% Year On Year

So suprisingly virtually unchanged

This is still a massive 83% on last year which equates to debts rising at around 83% of the pace of last year? It shows there has been no shortage of liquidity, yet. The unwinding of the carry trade has got some way to go.

I think we'll see some changes by the beginning of 08. Can debt hit the 1.5 trillion before collapsing back? Will it be liquidity or affordability that will eventually cause the crisis?

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Guest wrongmove
:P

Nov 2006 106,000 down to Apr 2007 80,000.

Come on down.

I'm afraid that is just seasonal. Q1 is always down on Q4.

A better comparison is YoY as it avoids seasonality:

Q1 2004: 296k

Q1 2005: 196k

Q1 2006: 234k

Q1 2007: 238k

So, down on 2004, but up on 2005 and about the same as last year.

i.e. not much of a drop

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I'm afraid that is just seasonal. Q1 is always down on Q4.

A better comparison is YoY as it avoids seasonality:

Q1 2004: 296k

Q1 2005: 196k

Q1 2006: 234k

Q1 2007: 238k

So, down on 2004, but up on 2005 and about the same as last year.

i.e. not much of a drop

Ah.

Not so exciting then.

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Guest wrongmove
Ah.

Not so exciting then.

No, but April and May have shown YoY drops - these of course are not in the Q1 figs.

Approvals are headed in the right direction. As I posted earlier, we need these trends to continue. Another IR rise next month would do no harm.....

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This is what I find interesting:

1987

..approvals . lent (£m)

Q1 228,700 5,904

Q2 280,400 7,598

Q3 299,200 8,357

Q4 299,200 8,668

1988

Q1 284,500 8,566

Q2 337,600 11,123

Q3 366,200 13,244

Q4 261,200 8,939

1989

Q1 204,500 6,990

Q2 245,000 8,734

Q3 213,600 8,178

Q4 222,500 8,696

Everyone I know who was in the property game last time it crashed say it went down in 1988 with the end of DI MIRAS. But look at any graphs of house prices and the crash doesn't show up until at least 1989. The fall in approvals from 88 Q3 to 89 Q1 is about 42%. Even with seasonality this still a big drop - one that has no competition until 2005, and we all know what happened then... The current figure is 24%, which is noteworthy, but not unheard of. According to a seasonal trend we can expect the numbers to pick up for Q2 this year.

If the number of approvals (currently 238,100) remains below 250,000 then we can expect nominal MoM price falls by the end of Q3. If it falls, we are talking meltdown.

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Guest wrongmove
Everyone I know who was in the property game last time it crashed say it went down in 1988 with the end of DI MIRAS. But look at any graphs of house prices and the crash doesn't show up until at least 1989.

The graphs usually show YoY figures, so there is a lag of 6-12 months.

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It’s interesting to see what happened in 1988 when interest rates moved from 8% to 13% in a few months and then went on up to 15% - look at how the transactions (HMRC) collapsed, closely followd by HPI. Note that YoY is effectively lagged by 6 months, and correlates with transactions/approvals 6 months earlier.

HMRC Transactions - monthly

crashtranscr2.gif

BoE Reop Rates

crash1dc1.gif

Graphs are from: http://www.houseprices.uk.net/graphs/

Edited by spline

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