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Buy Toilet

The Boe's Mew Graph Says It All

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I've not seen any recent MEW data on the site so I thought I'd post this.

It's the Bank of England's MEW statistics (mortgage equity withdrawal) though they call it HEW (Housing equity withdrawal) now.

It is dive bombing from its most recent peak in 2007, where MEWed 'income' corresponded to an extra 6% on top of post-tax income.

No amount of government golden rule trickery is going to replace this as a source of consumer and housing spending.

One more year till it plunges negative?

hew.gif

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It wont go negative. If you're in negative equity, you just sit tight. If you get repossessed, that doesn't go into the stats. Worst it could fall to is zero.

Then it can only go up. Things can only get better. We'll be back to another golden age of big TVs, cars, cosmetic surgery and mass stupidity.

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Not true. It was negative for a lot of the time between 92 and 96. I think it is Paddles who likes to tell us all about margin calls. The bank makes you give them money to maintain your LTV as your house value plummets.

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Cheers for popping that one up, Buy Toilet. It always leaves me somewhat lost for words.

It is dive bombing from its most recent peak in 2007, where MEWed 'income' corresponded to an extra 6% on top of post-tax income.

...especially when expressed as a percentage of take-home. When you consider that MEW's limited to certain sections of society, the two recent peaks really are mindblowing, both from the point of view of the borrowers and of the companies that have been on the receiving end of the spending. Glad I don't work in a Beemer dealership? To f'ing right I'm glad!

It wont go negative.

Unless I'm totally mistaken (not uncommon, sadly), it went negative the last time round.

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The BOE don't have a handy chart for pre 2000 but I've knocked one up with their data to prove the point.

There is a long period where MEWing dips repeatedly in and out of negative territory then we see the ramp up as HPI got underway.

For me the loss of MEWing as a driver for consumption will make all attempts to prevent further house price falls ineffective.

MEW90to04.bmp

BOE data can be found here

www.bankofengland.co.uk/statistics/mew/2003/2003Q4.xls

Edit: Spelling

MEW90to04.bmp

Edited by Buy Toilet

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Great chart. MEWing has kept the economy going these past few years. Frightening stuff.

Just like I said on another other thread 6% of post tax income is about £100 a month on the average wage. Hardly an amount to "KEEP THE ECONOMY GOING" is it? Ridiculous lack of analysis on you part my dear boy.

I will spend more than £100 on one night out this weekend. If I don't go out the economy will not crumble. If everyone in the country didn't go out it wouldn't either.

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Just like I said on another other thread 6% of post tax income is about £100 a month on the average wage. Hardly an amount to "KEEP THE ECONOMY GOING" is it? Ridiculous lack of analysis on you part my dear boy.

I will spend more than £100 on one night out this weekend. If I don't go out the economy will not crumble. If everyone in the country didn't go out it wouldn't either.

Are you serious? Please just re-read what you've written...

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Are you serious? Please just re-read what you've written...

Ok it might be late but bear with me...

MEW is an average of 6% of post tax income (taken from BoE website over last 5 years rounded up to nearest percent).

Now correct me if I'm wrong but the average income is £26,000. Post tax that is about £1600 per month (can we assume its been that for the last 5 years I can't be atsed going on the ONS for that one).

6% of £1600 is £96. £1200 approx per working individual per year in equity withdrawal or 6% of post tax income.

?

Edited by bobby9983

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Ok it might be late but bear with me...

MEW is an average of 6% of post tax income (taken from BoE website over last 5 years rounded up to nearest percent).

Now correct me if I'm wrong but the average income is £26,000. Post tax that is about £1600 per month (can we assume its been that for the last 5 years I can't be atsed going on the ONS for that one).

6% of £1600 is £96. £1200 approx per working individual per year in equity withdrawal or 6% of post tax income.

?

one thing you are leaving out, or not making clear, is that the bottom percentiles of income can't afford to buy, so their salaries aren't included in those numbers.

the average salary of ALL Britons might be 26k, but the average salary of all Britons with mortgages is much higher.

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Good graph, thanks. It has confirmed my suspicions - Uk visitors to my little island in the windies started taking off around 2001 and peaked big time with a huge influx in 2004, then has slid downwards ever since. exactly following the chart! Given the typical cost of a 2 week trip for a family of four IRO 3-6k, I always suspected that MEW was behind these holiday purchases, especially since the kind of folks coming off the planes became increasingly "sub-prime" as the years went by (chav-types), whereas our British visitors used to be the rich and the honeymooners alone. Trips here for ordinary folks went from "once in a lifetime" to annual for some folks and I never got it. They have stopped coming now of course, things are dead.

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Consumer spending is about 70% of the UK economy. Remove 6% of that and you're looking at the Mother of All Recessions.

So that's 4.2% of total spend but it's argued that consumer spending is between 60-70% so on the low side @ 60% its 3.6% of total spending.

But then MEW is still at 2.2%. Can't be arsed to work out the rest.

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Without MEWing we can say goodbye to expensive cars, exotic overseas holidays, 2nd homes, holiday park log cabins, caravans, big plasmas, expensive laptops, new business startups using MEWing as a main source of capital, home improvements.

Without the ability to MEW the chances are that many businesses will go out of business. There is no real wonder that the last 10 years have been great for businesses who relied on people pulling equity out of there homes.

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So that's 4.2% of total spend but it's argued that consumer spending is between 60-70% so on the low side @ 60% its 3.6% of total spending.

But then MEW is still at 2.2%. Can't be arsed to work out the rest.

In January. Wonder what it is now? You might also care to consider this.

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Without MEWing we can say goodbye to expensive cars, exotic overseas holidays, 2nd homes, holiday park log cabins, caravans, big plasmas, expensive laptops, new business startups using MEWing as a main source of capital, home improvements.

Without the ability to MEW the chances are that many businesses will go out of business. There is no real wonder that the last 10 years have been great for businesses who relied on people pulling equity out of there homes.

Agreed but affect is as yet unknown and unqualified. I just don't buy it that if MEW ceases entirely that lost income, if you want to look at it that way, can't be made up elsewhere. Like I said it's about £100 a month on the average wage. Even if you only got paid minimum wage for your overtime its 4 hours a week.

Well if I'm an average wager who MEWS my 6% every year I'll just get a part time job to pay for my lost income but in reality I won't need to. Like I said earlier I'll just cancel Sky+ and my gym membership. Boo hoo.

Edited by bobby9983

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Without MEWing we can say goodbye to expensive cars, exotic overseas holidays, 2nd homes, holiday park log cabins, caravans, big plasmas, expensive laptops, new business startups using MEWing as a main source of capital, home improvements.

Without the ability to MEW the chances are that many businesses will go out of business. There is no real wonder that the last 10 years have been great for businesses who relied on people pulling equity out of there homes.

Succinct and accurate summary - I guess your list will also be the same list of things which will be very cheap to buy second hand these next years. Which is nice, because there are some sexy log cabins in North Norfolk woodland parks I would love to buy, when theur current silly prices of IRO 108-140k drops down to about one third of that.

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Without MEWing we can say goodbye to expensive cars, exotic overseas holidays, 2nd homes, holiday park log cabins, caravans, big plasmas, expensive laptops, new business startups using MEWing as a main source of capital, home improvements.

Without the ability to MEW the chances are that many businesses will go out of business. There is no real wonder that the last 10 years have been great for businesses who relied on people pulling equity out of there homes.

Was thinking the very same thing!

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another thing overlooked, is that as MEWing and living beyond ones means has taken off, the saviongs rate across the country has gone down into the negative.

what has happened in the past in these circumstances is that once the sentiment turns negative, people start saving again and the rate goes back up to it's historical average, about %8 or %9 I believe.

so not only are you going to have %6 lost to MEWing but you are also going to have %8-9 lost, from the economy, due to saving.

those two together are enough to put you into to a pretty big recession/depression.

once you toss in lost jobs, static wages etc, it looks pretty grim.

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So that's 4.2% of total spend but it's argued that consumer spending is between 60-70% so on the low side @ 60% its 3.6% of total spending.

But then MEW is still at 2.2%. Can't be arsed to work out the rest.

Mate, you do realise a 3.6% fall in total stpending would be catastrophic dont you?

Linky - How bad would 3.6% be compared to previous recessions?

1974: 1.4% fall in GDP

1975: 0.6% fall

1980: 2.1% fall

1981: 1.5% fall

1991: 1.4% fall

Previous fall figures. What you are talking is a 3.6% fall SOLELY down to MEW. Add in other factors, net migration, banking sector losses, bloodbath on the high street, falls due to unemployment, falls tue to decreasing tax revenues, falls due to decreased public spending. you are talkking about devastation at the 3.6% stage.

double that figure, then realise how deep in the dwang we are.

This is going to be HUGE. :(

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Guest Mr Parry
Mate, you do realise a 3.6% fall in total stpending would be catastrophic dont you?

Linky - How bad would 3.6% be compared to previous recessions?

Previous fall figures. What you are talking is a 3.6% fall SOLELY down to MEW. Add in other factors, net migration, banking sector losses, bloodbath on the high street, falls due to unemployment, falls tue to decreasing tax revenues, falls due to decreased public spending. you are talkking about devastation at the 3.6% stage.

double that figure, then realise how deep in the dwang we are.

This is going to be HUGE. :(

Nice to see a :( smiley rather than the usual schadenfreude :rolleyes: smiley after a prediction (probably correct too) of economic devastation.

You restore my faith, you do.

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Its even worse IMHO

mewing has provided the working capital to hundreds of thousands of small businesses

much cheaper to raise finance at house mortgage rates then high street business loan rates....

now these small business owners are not making enough to pay their base mortgage

bad by xmas it will be all over apart from the crying....

but think of china.... workers paid peanuts to make tat for the rest of the world.....

hungry angry workers will cause a revolution.... china could easily turn communist :blink: again....

india is close to having its government debt downgraded....

there may be war in a the next few years as angry people look for answers.....

its not the end of the world but its an incredibly ugly business cycle...

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It certainly looks very grim.

A whole host of spending has been generated via MEW it's frighting to think how much MEW has boosted the pay packets in both the public and private sector to unsustainable levels. This then gets worse because these people have then borrowed against these unsustainable pay packets and bought more expensive houses.

Now it's all going to unravel. It's going to get very nasty.

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  • 395 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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