Sky: " Mortgage Approvals Take Another Tumble"

[Realistbear]

http://uk.biz.yahoo.com/27122007/140/mortg...als-tumble.html

Thursday December 27, 10:32 AM

Mortgage Approvals Take Another Tumble

By Sky News

The number of mortgage approvals fell by more than 40% in November, compared to the same month last year, latest figures have revealed.

The massive slowdown in lending shows that

would-be buyers have been put off by high interest rates

and have

not been asking for cash.

Crash speed plus plus. I suspect would-be buyers have been out off by falling prices and conventional wisdom that says don't buy when the crash party has only just started!

Edited December 27, 2007 by Realistbear

[damianlsmith]

http://uk.biz.yahoo.com/27122007/140/mortg...als-tumble.html

Thursday December 27, 10:32 AM

Mortgage Approvals Take Another Tumble

By Sky News

The number of mortgage approvals fell by more than 40% in November, compared to the same month last year, latest figures have revealed.

The massive slowdown in lending shows that would-be buyers have been put off by

high interest rates

and have

not been asking for cash.

Crash speed plus plus.

It is a shame that the higher interests may be a thing of the past, given the likelyhood of further interest rate cuts. Maybe the average punter is waiting for this inconjuction with a flat market at the moment

[Guest happy?]

It is a shame that the higher interests may be a thing of the past, given the likelyhood of further interest rate cuts. Maybe the average punter is waiting for this inconjuction with a flat market at the moment

Everybody's convinced that further interest rate cuts are inevitable, everyone tells me it's a dead cert. I ain't so sure. Time to start re-examining their thinking.

[salamander]

It is a shame that the higher interests may be a thing of the past, given the likelyhood of further interest rate cuts. Maybe the average punter is waiting for this inconjuction with a flat market at the moment

From the article:

"It also demonstrates that, if they do apply, lenders are being stricter about doing business with them."

It's not just down to what the average punter wants. If banks won't lend the money, prices will continue to fall, sure as eggs is eggs. Even if BofE interest rates fall, banks will continue to withhold cheap lending to all but the best prospects until the credit crunch is over. I don't see this happening any time soon but time will tell on this one. Once reality hits and fear takes hold, your "average punter" will simply not pay a falling price.

This is the miracle of Brown's economy. Probably best to head back to NZ before it falls apart completely.

[damianlsmith]

From the article:

"It also demonstrates that, if they do apply, lenders are being stricter about doing business with them."

It's not just down to what the average punter wants. If banks won't lend the money, prices will continue to fall, sure as eggs is eggs. Even if BofE interest rates fall, banks will continue to withhold cheap lending to all but the best prospects until the credit crunch is over. I don't see this happening any time soon but time will tell on this one. Once reality hits and fear takes hold, your "average punter" will simply not pay a falling price.

This is the miracle of Brown's economy. Probably best to head back to NZ before it falls apart completely.

Of ocurse lenders are going to be stricter, however the subprime market represents 5-6% of all mortgage applications.

So if you reduce these applications and lets say a further 10% who are marginal at being subprime, you still have a 85% that can borrow sucessfully.

As for NZ, well that is just mess as it is here in many respects.

However ANZ are doing expat cross country mortgages, borrow here for NZ funds, saving about 3% interest.

[the end is a bit nigher]

It is a shame that the higher interests may be a thing of the past, given the likelyhood of further interest rate cuts. Maybe the average punter is waiting for this inconjuction with a flat market at the moment

It's a shame the average punter hasn't come to terms with the credit crunch yet - still, they'll get there soon enough

Edited December 27, 2007 by the end is nigh

[Ash4781]

Everybody's convinced that further interest rate cuts are inevitable, everyone tells me it's a dead cert. I ain't so sure. Time to start re-examining their thinking.

They'll cut aggressively but with RPI at 4.3% they might create negative (real) savings rates. Wake up one day, and everyone has Euro savings' accounts and the pound has collapsed (against the Euro). Well it's a race to the bottom, and the ECB will have to start cutting at some point due to the drag of the weaker EU economies. Or maybe the ECB will crunch the EU economy to bring inflation back to target?

Edited December 27, 2007 by Ash4781

[Realistbear]

Of ocurse lenders are going to be stricter, however the subprime market represents 5-6% of all mortgage applications.

So if you reduce these applications and lets say a further 10% who are marginal at being subprime, you still have a 85% that can borrow sucessfully.

As for NZ, well that is just mess as it is here in many respects.

However ANZ are doing expat cross country mortgages, borrow here for NZ funds, saving about 3% interest.

Subprime is said to be 8% of the market in 2006.* The broader sense of "sub-prime" in the UK is probably closer to 70% of mortgages taken out in the last 3-5 years. That would include all types of risky transactions: SI, IO, 125% LTV, balloon loans etc. Most expect repossessions to rise by at least 50% in 2008--they are already up 70% in 2007 compared with 2006 so the base is getting larger.

Al Greenspan suggests that the UK will go down harder than the US because our exposure to debt is much larger and our economy less resilient with too much dependence on financial services. Given that the US housing market is going into a nosedive we can't expect anything but a total catastrophe here. 50-60% down from the peak to trough.

______________________

*

http://uk.biz.yahoo.com/10092007/325/subpr...nistration.html

Britain's subprime mortgage market is far smaller and more recent than its U.S. counterpart. Subprime loans accounted for around 8 percent of lending in 2006 but 20 percent of U.S. lending.

[the end is a bit nigher]

Of ocurse lenders are going to be stricter, however the subprime market represents 5-6% of all mortgage applications.

So if you reduce these applications and lets say a further 10% who are marginal at being subprime, you still have a 85% that can borrow sucessfully.

You're in fantasy land mate - you really haven't got a clue, have you?

[damianlsmith]

You're in fantasy land mate - you really haven't got a clue, have you?

You're going to have to do better than that.

If I am grossly wrong in what I am saying, fine tell me. Tell me why I am wrong. If I am wrong, I will glady admit it.

But to say I have not got a clue & living in fantasy land- well that seems a bit rich coming from someone who has been waiting in fantasy land for the last two or so years. How is the 2005 recession you called going? or was it just abit delayed?

The thing is, there are two sides to each argument or discussion, it seems you and many others can not handle some one who may share a different view than you.

Edited December 27, 2007 by damianlsmith

[Rinoa]

BBA approval numbers since August are:

Aug 2007 56,371

Sep 2007 53,778

Oct 2007 44,321

Nov 2007 44,811

Notice the increase in today's figures.

They might be 40% less than this time last year, but they are certainly higher than last months.

Building Society Association approvals also increased this month.

Hmmm.

[eric pebble]

Of ocurse lenders are going to be stricter, however the subprime market represents 5-6% of all mortgage applications.

Sorry mate -- it is more like 60-70%. The "average" price of a property in the UK is $250k --- you're not going to tell me the average person earns [£250k/3.5] £71.72k per anum ---- which --- if you're lending RESPONSIBLY --- is what you have to earn to buy the "average" property!!!!! WHAT A FARCE!!!!!!

As far as most sensible people are concerned, borrowing at ANYTHING over 3.5 x salary p.a. IS SUB-PRIME!!!!!!!!!

Edited December 27, 2007 by eric pebble

[Realistbear]

http://biz.yahoo.com/ap/071227/apfn_mortga...plications.html

AP

Mortgage Application Volume Tumbles

Thursday December 27, 7:30 am ET

Mortgage Application Volume Drops 7.6 Percent,

Despite Declines in Interest Rates

WASHINGTON (AP) -- Mortgage application volume dropped 7.6 percent during the week ending Dec. 21, despite a drop in interest rates, according to the Mortgage Bankers Association's weekly application survey.

Despite tumbling IR. When crash momentum has built up nothin can stop it.

We should be comforted by a 10% drop in mortgage applications YoY. 40% down is bloody fantastic news!

[laurejon]

Sorry mate -- it is more like 60-70%. The "average" price of a property in the UK is $250k --- you're not going to tell me the average person earns [£250k/3.5] £71.72k per anum ---- which --- if you're lending RESPONSIBLY --- is what you have to earn to buy the "average" property!!!!! WHAT A FARCE!!!!!!

As far as most sensible people are concerned, borrowing at ANYTHING over 3.5 x salary p.a. IS SUB-PRIME!!!!!!!!!

The salary ratio is somewhat antiquated for the simple reason that interest rates are much much lower than when this was in play, in addition there was no such thing as IO mortgages, and in those days the vast majority of people didnt get 20% annual salary performance related bonus's that most of us get today in management positions in public services.

We also didnt get generous top ups on our salaries via the benefits system. Most couples on low incomes earning less than 70k are entitled to family tax credits to help out on their low salaries. Of course these people number few, however poverty is still an issue despite the sterling work Labour have done in removing the ugly face of poverty from the face of England.

I would guess that today with the average wage for a skilled worker being around 40k that 200k for a property is around 4x earnings so not that far removed from yesteryear, and with the retirement age being moved to 75 in the next decade it makes sense to extend mortages.

[damianlsmith]

Sorry mate -- it is more like 60-70%. The "average" price of a property in the UK is $250k --- you're not going to tell me the average person earns [£250k/3.5] £71.72k per anum ---- which --- if you're lending RESPONSIBLY --- is what you have to earn to buy the "average" property!!!!! WHAT A FARCE!!!!!!

As far as most sensible people are concerned, borrowing at ANYTHING over 3.5 x salary p.a. IS SUB-PRIME!!!!!!!!!

http://business.timesonline.co.uk/tol/busi...icle1692670.ece

Also people are buying with double incomes, as such a single salary therefore effective doubles.

So a husband and wife on 30k each now doubles to 60k x 3.5

Affordibility also comes down to disposable income.

For example someone on say 40k PA can most likely afford to pay say 5 times their salary, where as some one on 20k probably cant.

[Scunnered]

We also didnt get generous top ups on our salaries via the benefits system. Most couples on low incomes earning less than 70k are entitled to family tax credits to help out on their low salaries. Of course these people number few, however poverty is still an issue despite the sterling work Labour have done in removing the ugly face of poverty from the face of England.

I would guess that today with the average wage for a skilled worker being around 40k that 200k for a property is around 4x earnings so not that far removed from yesteryear, and with the retirement age being moved to 75 in the next decade it makes sense to extend mortages.

You're just making these numbers up, aren't you?

[laurejon]

You're just making these numbers up, aren't you?

No I think they are pretty much up to date.

Often people include the wages of jobs that formerly paid a reasonble salary but due to modernisation are now conducted using cheap imported labour. It would be foolish to bring the wages of third rate workers into the equation, and it would be equally foolish to expect a nation as small as ours to have an economy that would afford to pay shelf stackers, or coffee makers, or bum washers, a salary that would buy a house. Its simply not feasible.

If you take the wages of skilled British workers only you will find they are on around 40k. The world has changed and I think it will be the case that our economy will prosper over the next few years such as most English People would be able to give up work and utilise the cheap slave labour we are seeing imported for our useage.

Lets face it, you dont have a dog and bark yourself.

[Selling up]

I would guess that today with the average wage for a skilled worker being around 40k that 200k for a property is around 4x earnings so not that far removed from yesteryear, and with the retirement age being moved to 75 in the next decade it makes sense to extend mortages.

Laurejon, as ever I think you're being deliberately provocative!

But in case you mean this, can I point out the flaw in your logic:

You imply:

"Houses are still affordable for skilled workers therefore prices may not have to come down"

But in conceding that they are unaffordable for unskilled workers, you've just reduced "demand" by whatever proportion of the workforce is unskilled. So your reasoning that this could keep house prices up is faulty.

[Methinkshe]

No I think they are pretty much up to date.

Often people include the wages of jobs that formerly paid a reasonble salary but due to modernisation are now conducted using cheap imported labour. It would be foolish to bring the wages of third rate workers into the equation, and it would be equally foolish to expect a nation as small as ours to have an economy that would afford to pay shelf stackers, or coffee makers, or bum washers, a salary that would buy a house. Its simply not feasible.

If you take the wages of skilled British workers only you will find they are on around 40k. The world has changed and I think it will be the case that our economy will prosper over the next few years such as most English People would be able to give up work and utilise the cheap slave labour we are seeing imported for our useage.

Lets face it, you dont have a dog and bark yourself.

Do you count police and nurses and social workers as "skilled" because I can tell you for a fact that the average nurse/policeman/social worker is not on 40K. They'd be lucky to be earning 40K after 20 years in the job.

[gravity always wins]

The salary ratio is somewhat antiquated for the simple reason that interest rates are much much lower than when this was in play, in addition there was no such thing as IO mortgages, and in those days the vast majority of people didnt get 20% annual salary performance related bonus's that most of us get today in management positions in public services.

We also didnt get generous top ups on our salaries via the benefits system. Most couples on low incomes earning less than 70k are entitled to family tax credits to help out on their low salaries. Of course these people number few, however poverty is still an issue despite the sterling work Labour have done in removing the ugly face of poverty from the face of England.

I would guess that today with the average wage for a skilled worker being around 40k that 200k for a property is around 4x earnings so not that far removed from yesteryear, and with the retirement age being moved to 75 in the next decade it makes sense to extend mortages.

The vast majority of workers still don't get a 20% bonus

Where are all these genorous top ups from the benefits sytem?

Couples earning under 70K not very many of them? do me a favour

Inequalities are increasing under this govt they have done f**k all to help the poor of this country except destroy skilled manufacturing jobs and undercut trades with cheap imported foreign labour.

Are you one of these overpaid public service managers who geta 20% bonus (as your post seems to imply) I do hope not coz if you are you are probably a waste of space and costing me money.

[gravity always wins]

No I think they are pretty much up to date.

Often people include the wages of jobs that formerly paid a reasonble salary but due to modernisation are now conducted using cheap imported labour. It would be foolish to bring the wages of third rate workers into the equation, and it would be equally foolish to expect a nation as small as ours to have an economy that would afford to pay shelf stackers, or coffee makers, or bum washers, a salary that would buy a house. Its simply not feasible.

If you take the wages of skilled British workers only you will find they are on around 40k. The world has changed and I think it will be the case that our economy will prosper over the next few years such as most English People would be able to give up work and utilise the cheap slave labour we are seeing imported for our useage.

Lets face it, you dont have a dog and bark yourself.

You are either a wind up merchant or a nasty little facist

[eric pebble]

You are either a wind up merchant or a nasty little facist

Is probably both...... I have come across people like this who - if you pointed out that the sky is blue - would instantly come back with the repost - "No it isn't, it's red!" etc etc.

I think Laurejohn is one of those people who has a fairly large BTL Portfolio - and is in that rigid, angry state of denial as the truth starts to bite......

To go back to my original post here - As far as most sensible people are concerned, borrowing at ANYTHING over 3.5 x salary p.a. IS SUB-PRIME!!!!!!!!! --

.............and I will not budge on this. As far as I am concerned, whether we're talking about the USA, Spain the UK or many other places -- when the chips are down - and the credit crunch plays itself out in the coming months/years... The FINAL ANALYSIS will be that the DELIBERATE and CYNICAL manipulatin and disposal of sensible AFFORDABLE mortgages largely lies at fault.

Certainly the feeling by all SENSIBLE people WITHOUT a Vested Interest in what has effectively been the Greatest Ever Pyramid Selling Scam - the "housing market" - will hold the view that it has been UTTERLY corrupted by GREEDY and NASTY Lenders who do NOT care AT ALL about what they have done to society.

The OVER-RIDING conclusion will be that the throwing away of the 3.5 x salary principle was THE cause of unprecedented turmoil in the world's economies - and also the root cause of 1 - 2 generations of whose lives have been dreadfully affected -- they cannot afford to SENSIBLY house themselves and start a family AT A FAIR AND DECENT price.

It is deeply, deeply sad.

Edited December 27, 2007 by eric pebble

[crash2006]

uk housing bust on a epic scale.

[Dr House]

You're going to have to do better than that.

If I am grossly wrong in what I am saying, fine tell me. Tell me why I am wrong. If I am wrong, I will glady admit it.

But to say I have not got a clue & living in fantasy land- well that seems a bit rich coming from someone who has been waiting in fantasy land for the last two or so years. How is the 2005 recession you called going? or was it just abit delayed?

The thing is, there are two sides to each argument or discussion, it seems you and many others can not handle some one who may share a different view than you.

Oh no, I have suddenly realised you are Andy Jones with a new avatar. Same ladybird petulant language. You are going on ignore and I am sure I am not alone.

[jammo]

All the gutter press red topped papers are telling us rates are to be cut at least 4 times next years. And of course they know everything when it comes to finances, like they were so right in telling us all a few months ago that Gordons "miracle" will make even the most financially dysfunctional rich, and that house prices are set to sour forever. These are all Labour pawns, and they are wrong. I predict personally that rates get cut once. Then some economists finally get a job at nu labour, the FSA and the papers (god forbid) and all of a sudden the spin will all get wafted away like that bad fart which lingers after a hearty xmas dinner, a new chancellor will get spawned (not much better but less sucky sucky), eventually a new PM will be ELECTED, and then no 10 will be redecorated. After all that bol*ocks, some clever sorts will be put in charge and rates will no longer be associated with keeping Gordon's friends' property porn plaything alive. Eventually things will revert to normal, but it may well take years of everyday normal people treading water for a while, while red faced politician types fight over the last scraps at the bottom of the trough. Sad but probably true.