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More Lenders Withdraw 100% Loans And Boost Downpayment Requirements

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http://www.independent.co.uk/money/mortgag...les-790023.html

House prices fall as another lender tightens its rules

By Martin Hickman, Consumer Affairs Correspondent
Saturday, 1 March 2008
House prices fell last month at their longest sustained rate since 2000, according to the Nationwide Building Society, which declared the
decade-long boom in house prices was
officially
over
..../
Tighter lending conditions combined with historically high prices are making it harder for people to buy homes, thereby lowering demand and ultimately prices.
The fourth biggest lender,
Lloyds TSB, became the latest to withdraw its 100 per cent mortgage yesterday
, blaming the "competitive environment in which all lenders are operating".
Lloyds will continue to offer mortgages of up to 95 per cent of a home's value, but customers of its
Cheltenham & Gloucester subsidiary will need a deposit of at least 10 per cent.
Lenders have staged a mass withdrawal from the riskiest end of the market and
all six groups that had offered 125 per cent loans pulled them last week.
.../
Mortgage crackdown
*Abbey
Scrapped 125 per cent loan last week, but still offers 100 per cent mortgage.
*Nationwide Building Society
Buyers with less than a 25 per cent deposit have to pay higher interest.
*Alliance & Leicester
Ended 125 per cent mortgage last week. Demands a 10 per cent deposit.
*Northern Rock
Withdrew 125 per cent loan. Minimum 5 per cent deposit.
*Cheltenham & Gloucester
Ended its 100 per cent mortgage yesterday. Buyers now need 10 per cent deposit.
*Bradford & Bingley
Still offers 100 per cent loan.
Source: Independent/Moneyfacts

"Officially over" is correct. It is obvious as the fuel that allowed irrational HPI has run out. Gordon's miracle is officially over. Finito. Terminated.

All we have to do now is watch the market return to equilibrium which usually means a correction below the last bottom before any recovery will be in sight. The drops this year should be spectacular. YoY negative by late Spring?

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All we have to do now is watch the market return to equilibrium which usually means a correction below the last bottom before any recovery will be in sight. The drops this year should be spectacular. YoY negative by late Spring?

Even if the Nationwide average price stays the same as it is now, their March YoY will be below 1% and April will turn negative.

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The drops this year should be spectacular. YoY negative by late Spring?

I have to agree. The Nationwide index is already down nearly 5% from its October peak. Inflation adjusted, it's already gone Y-o-Y negative. March and April last year saw pretty big rises. Once they drop out the deal's done.

Most importantly, we're yet to see the effect of the really big drops in mortgage approvals, which prices lag by 6 months. I wouldn't be surprised if we see an inflation adjusted -10% y-o-y figure by the summer.

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What about the spring bounce ;)

It is interesting to note that Nationwide figures report monthly changes on seasonally adjusted data but YoY figure uses the unmodified average price. So they can doctor the MoM to look better (and they do even retrospectively) but they can't do anything with YoY.

It is also very interesting that raw unadjusted price has been dropping since October in a smooth almost straight line. I guess when emotions subside it is down to pure exponential laws to bring the price down to its equilibrium. Watch the thin blue line below.

 		  Unadjusted	Adjusted	YoY	MoM	Feb-07	£174,706	£177,313			Mar-07	£177,083	£178,186			Apr-07	£180,314	£179,562			May-07	£181,584	£180,331			Jun-07	£184,070	£182,065			Jul-07	£184,270	£182,014			Aug-07	£183,898	£182,946			Sep-07	£184,723	£183,971			Oct-07	£186,044	£186,044			Nov-07	£184,099	£184,249			Dec-07	£182,080	£183,434			Jan-08	£180,473	£182,980			Feb-08	£179,358	£182,115	 2.7%	-0.5%	Mar-08	£178,500	£179,612	 0.8%	-1.4%	(projected)Apr-08	£178,000	£177,258	-1.3%	-1.3%	(projected)

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post-1939-1204369912_thumb.png

Edited by refusnik

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  • 293 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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