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canny man

Mew Is Plummeting

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From the BBC

Housing equity withdrawal, where owners take out bigger mortgages to spend on things other than their homes, fell from £13.1bn in the first quarter of the year to £10bn in the second quarter.

Since the start of 2000, UK home owners have borrowed £287bn, providing a very significant boost to peoples' incomes.

In the second quarter of this year, housing equity withdrawal increased the after-tax income of all UK households by 4.5%

http://news.bbc.co.uk/1/hi/business/7021599.stm

This predates the recent credit market turmoil and is a very significant indicator of a change in consumer sentiment (or tightening of credit conditions). If MEW continues to contract then the knock-on effect on retail, travel, household goods etc and ultimately jobs will not be far behind.

Coincidentally, I met up with a mate in the auto industry at the weekend and his firm is predicting a very poor next year.

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Actual stats, falling but not plummeting yet.

http://www.bankofengland.co.uk/statistics/...rrent/index.htm

As posted before there is a VERY strong correlation between falling MEW and housing correction/the economy. The fall in MEW in 2004 halted price rises for 2 years in most of the country...

MEW_Q2_07.JPG

post-552-1191317932_thumb.jpg

Edited by moosetea

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Meanwhile at the bottom of the market hardly any FTB's left and just the BTLs who apparently borrowed and extra £7.8 Bn in July, they are going to have to dig a lot deeper to fill the gap and carry the economy.

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Meanwhile at the bottom of the market hardly any FTB's left and just the BTLs who apparently borrowed and extra £7.8 Bn in July, they are going to have to dig a lot deeper to fill the gap and carry the economy.

No they won't :P

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Housing equity withdrawal, where owners take out bigger mortgages to spend on things other than their homes, fell from £13.1bn in the first quarter of the year to £10bn in the second quarter.

As the lenders tighten MEW will shrivel up. However, people will still need to finance their deficit spending lifestyles.

Remember huge numbers of people are in terrible economic circumstances unable to pay back debt, only service it.

THEY WILL TURN TO UN-SECURED CREDIT en-masse, as a last resort. Expect to see borrowing on cards and overdrafts rocket up in the final days before recession.

PS this is what is happening in the US right now.

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To me, this means two things:

-Those who could MEW, did it already and they are now mortgaged to the hilt in a stagnating market

-Less MEW money (which is largely spent on the high street), less spending.

People have been withdrawing money from their equity in their mortgaged houses to buy plasma screens, SUVs, holidays, whatever they couldn't afford with their normal income.

That was Gordon Brown's wet dream. Increasing peoples' spending without touching their salaries. Except, money has been spent, people are in ever more debt that before, and somehow, someday, that money needs to be repaid.

That's why I see trouble ahead.

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Not everyone who could MEW has done so - it isn't as if it is real money and still has to be paid back at some point. I don't really get the attraction myself - can someone explain to me why anyone would see it as anything other than extending your mortgage? Am I missing something? All I know is that remortgaging used to be seen as something only the desperate did.

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-Less MEW money (which is largely spent on the high street), less spending.

People have been withdrawing money from their equity in their mortgaged houses to buy plasma screens, SUVs, holidays, whatever they couldn't afford with their normal income.

...and deposits for some of the more highly leveraged BTL amateurs.

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Not everyone who could MEW has done so - it isn't as if it is real money and still has to be paid back at some point. I don't really get the attraction myself - can someone explain to me why anyone would see it as anything other than extending your mortgage? Am I missing something? All I know is that remortgaging used to be seen as something only the desperate did.

Yes it used to be called a second mortgage, but now it's been rebranded "equity release".

But it is real money and it has been keeping the High Street afloat for the past few years.

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Apologies, thread subtitle meant to say 33bln.

Does anyone know whether the figures for MEW cover the so called consolidation loans, which are second mortgages? After Northern Rock, I can't see how Picture, Ocean et al's business model stacks up - they are 100% packagers of sub-prime debt after all.

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GDP - MEW = recession

MEW running at £50bn a year has been powering the economy. It took over when we stopped "making things" which was our previous economic activity here in the UK.

As Gordon well knows HPI leads to MEW which keeps everyone in a job and the cash registers in the shops ringing and hence New Labour in power.

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Yes it used to be called a second mortgage, but now it's been rebranded "equity release".

But it is real money and it has been keeping the High Street afloat for the past few years.

I think of real money as being money I have, rather than money I owe. A rather old fashioned concept I think! Have a lot of people extended the lifetime of their mortgage to get at this money or just upped their mortgage? I still think I'm missing something.

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GDP - MEW = recession

MEW running at £50bn a year has been powering the economy. It took over when we stopped "making things" which was our previous economic activity here in the UK.

As Gordon well knows HPI leads to MEW which keeps everyone in a job and the cash registers in the shops ringing and hence New Labour in power.

Beat me to it :lol::lol:

Lack of MEW means and end to foreign invasions and extending the British Empire, and huge cuts in Public Service Jobs.

The 22million Dollar Question, will Brown invent a new MEW vehicle ? Tax relief on MEW anyone ?

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Beat me to it :lol::lol:

Lack of MEW means and end to foreign invasions and extending the British Empire, and huge cuts in Public Service Jobs.

The 22million Dollar Question, will Brown invent a new MEW vehicle ? Tax relief on MEW anyone ?

sounds like MIRAS

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I MEWed £25K last year and left it in my offset mortgage. It's my emergency fund for dealing with various shocks such as redundancy etc. I could MEW another £80K - perhaps I should get in quick before the credit crunch gets worse.

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I MEWed £25K last year and left it in my offset mortgage. It's my emergency fund for dealing with various shocks such as redundancy etc. I could MEW another £80K - perhaps I should get in quick before the credit crunch gets worse.

Why didn't you MEW enough to offset your whole mortgage, then you'd have no mortgage to pay at all?

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I think of real money as being money I have, rather than money I owe. A rather old fashioned concept I think! Have a lot of people extended the lifetime of their mortgage to get at this money or just upped their mortgage? I still think I'm missing something.

It should be called "More Debt", as in "Would you like "More Debt" ? Well borrow more money from us, preferably over a longer term so you pay the same each month but we make more money out of you for longer".

For banks this has been a gold mine. Now the miner wants paying back!

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I MEWed £25K last year and left it in my offset mortgage. It's my emergency fund for dealing with various shocks such as redundancy etc. I could MEW another £80K - perhaps I should get in quick before the credit crunch gets worse.

Aren't you having to pay interest on that £25k, whether you touch it or not?

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I MEWed £25K last year and left it in my offset mortgage. It's my emergency fund for dealing with various shocks such as redundancy etc. I could MEW another £80K - perhaps I should get in quick before the credit crunch gets worse.

You extended your mortgage to offset your mortgage? How does that work exactly? :blink:

People used to save money for a rainy day. Now they borrow money for a rainy day! The world gets madder!

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People used to save money for a rainy day. Now they borrow money for a rainy day! The world gets madder!

I agree - it does seem a very different way of building up an emergency fund to what I'm used to. Bu then friends/colleagues seem to think nothing of consolidating all of their loans and putting it on their mortgage - why would anyone want to pay for a car over 25 years?! It is just a different mindset.

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......can someone explain to me why anyone would see it as anything other than extending your mortgage?

Its a cheaper form of borrowing and its over a longer term.

Try getting a regular personal loan for 100k over 20 years and see what it would cost.

But youre right - its a sign that people are ultimately living on credit.

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