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Cml: Mortgage Lending Falls 44pc Year-on-year

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http://www.telegraph.co.uk/money/main.jhtm...8/bcncml108.xml

"Mortgage lending for house purchases rose slightly in May compared with April, but was down by 44pc overall year-on-year, according to the latest figures from the Council of Mortgage Lenders.

The modest monthly increase was not enough to buck the trend of big annual falls in lending for a seventh consecutive month, despite the number of mortgages granted rising 4pc to 52,700, with the total value of all mortgages climbing by 2pc to £7.9bn.

The CML also warned that mortgage data from the Bank of England showed that loans for home purchases will fall further still in the coming months."

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Interesting that remortgages are falling quite quickly now. Basically people are stuck with negative equity or can't meet the lending criteria to get a new fixed rate and so are forced onto the SVR. If BoE rates start rising this could get very bad for those that overstretched themselves.

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Just wait until Bradford & Bingley are taken out of the equation! I think this is going to get worse as the number of lenders reduces.

You are right. The lenders who are left, will have to take on these risky borrowers that met the lax criteria of NR, and BB, and A&L to add. Any nationalised bank will have a remitt to reduce its cutomers on the books, as we have seen with NR.

As these stronger lenders take on more "subprime" customers, their risk profile on their books changes dramatically as a whole. They will raise rates, to get the money comming in to this reduce risk exposure. This is a paradox though, if you raise rates, you are more likely to get people to default.

This is bad situation to be in to put it mildly.

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You are right. The lenders who are left, will have to take on these risky borrowers that met the lax criteria of NR, and BB, and A&L to add. Any nationalised bank will have a remitt to reduce its cutomers on the books, as we have seen with NR.

As these stronger lenders take on more "subprime" customers, their risk profile on their books changes dramatically as a whole. They will raise rates, to get the money comming in to this reduce risk exposure. This is a paradox though, if you raise rates, you are more likely to get people to default.

This is bad situation to be in to put it mildly.

Surely it just means that NR, BB, A&L et al will lose all of their 'prime' customers (i.e. not in negative equite, can make payments) to the other lenders, and end up with the most toxic loans left reverting to SVR.

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Surely it just means that NR, BB, A&L et al will lose all of their 'prime' customers (i.e. not in negative equite, can make payments) to the other lenders, and end up with the most toxic loans left reverting to SVR.

I presume NR and BB A&L are fringe lenders, their "prime" is not as prime as the main lenders. But cant be sure of this.

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All new stats

http://www.cml.org.uk/cml/statistics

Gross mortgage lending, by type of advanceXLS 159Kb | 08 Jul 08 ML1

First-time buyers, lending and affordabilityXLS 146Kb | 08 Jul 08 ML2

Home movers, lending and affordabilityXLS 144Kb | 08 Jul 08 ML3

All loans for house purchase, lending and affordablityXLS 134Kb | 08 Jul 08 ML4

Fixed and variable rate lending, house purchases and remortgagesXLS 149Kb | 08 Jul 08 ML5

Methods of repaymentXLS 266Kb | 08 Jul 08 ML6

Distribution of property valuationsXLS 98Kb | 08 Jul 08 ML7

Lending via intermediariesXLS 36Kb | 08 Jul 08 ML8

Edited by maxwell

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Now the game's over, I haven't seen that loathesome little toad on TV or in press desperately trying to keep the bubble inflated.

Stand up and be counted Michael Coogan - should be shot in my opinion.

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Interesting that remortgages are falling quite quickly now. Basically people are stuck with negative equity or can't meet the lending criteria to get a new fixed rate and so are forced onto the SVR. If BoE rates start rising this could get very bad for those that overstretched themselves.

[/quote

The majority of remortgage cases that I have not been able to process recently are because lenders are desperate to hang on to good paying clients with reasonable equity still in their property. The lenders are basically giving the clients a rate that cannot be obtained on the general market and it is therefore not worth the client remortgaging.

best regards

Carrington

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http://www.telegraph.co.uk/money/main.jhtm...8/bcncml108.xml

"Mortgage lending for house purchases rose slightly in May compared with April, but was down by 44pc overall year-on-year, according to the latest figures from the Council of Mortgage Lenders.

The modest monthly increase was not enough to buck the trend of big annual falls in lending for a seventh consecutive month, despite the number of mortgages granted rising 4pc to 52,700, with the total value of all mortgages climbing by 2pc to £7.9bn.

The CML also warned that mortgage data from the Bank of England showed that loans for home purchases will fall further still in the coming months."

The "total value of all mortgages climbing by 2pc to £7.9bn." should read, "total value of all Loans for house purchases"

Table ML1: Gross mortgage lending by type of advance

Purchase 000s £mn %, Remortgage 000s £mn %, Other 000s £mn %, Total £mn

Apr 2008 51 7,700 30 83 11,000 42 7,400 28 26,100

May 2008 53 7,900 32 71 9,600 39 7,000 29 24,500

Edited by maxwell

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You are right. The lenders who are left, will have to take on these risky borrowers that met the lax criteria of NR, and BB, and A&L to add.

Wait, what?

They will have to lend money to bad credit risks with shaky collateral? :unsure:

No bank or other financial institution is ever under an obligation to lend money to anyone, as I understand it. If a nationalised bank has to run down its books, it can either try to arrange to palm off its customers onto other lenders as you describe, or it can repossess the properties on which the loans are secured and try to get its money back.

Of course, the government could force the surviving banks to take these customers, and the outcome would be exactly what you'd predict - they'll jack their rates up sky-high to compensate for the additional risk.

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Do the banks really have to take on the mortgages of a failed bank?

If they didn't take them on what would happen? If I was in charge of a bank I certainly wouldn't want to take on someone else's liabilities.

Couldn't they just turn the business away?

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A big decrease in lending means a big decrease in bank deposits as less new money is created and deposited back into banks. The money supply figures will be interesting to watch - M4 in particular. Its a pretty good indicator of slowdown.

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  • 400 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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