Friday, May 05, 2006

Mortgage lending remains strong

MyFinances.co.uk: Mortgage lending at 28-month high

New mortgage lending in March was higher than it has been for 28 months, the Bank of England said today. Not since November 2003 has as much money been leant to home-owners, with the Bank saying today that net mortgage lending rose 9.3 billion in March.

Posted by Webmaster @ 10:49 AM (704 views)
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17 Comments

1. Talking_rot said...

My initial reaction was to post the following comment "I recall reading this Blog some months ago when the fall in Mortgage lending was predicted to precipitate a House Price Crash. Well - where is it then. These figures show no sign of a crash."

But ...

This article reports mortgaging is up but unsecured borrowing has dropped to a 12 year low. This may indicate home owners are MEW-ing in order to pay debts more cheaply. Is this a sign of desperation? Or is it a sign of financially sound individuals moving debts to where the debts cost less to maintain?

It is a shame the article does not mention the value of loans to FTBs.

Still - no sign of a house price crash. Knew I should have bought during 2000-ish.

Friday, May 5, 2006 11:19AM Report Comment
 

2. Nocrashwillcome said...

Me too, T.R. I nearly bought a place in 2001 but pulled out as it seemed risky at the time. Obviously 2000-2001 was a good time to buy. But is it a good time to buy now? I really wish I knew.

Friday, May 5, 2006 01:11PM Report Comment
 

3. Inbreda said...

Oh look, the EA is back with his imaginary friend.
"And me!"
Oh hello, Phil, how are you today?
"I'm a jellyhead!"
You certainly are Phil, you certainly are.
"I'm going to buy a house"
Yes Phil, but you really should have done it in 2000.
"I'm a jellyhead!"

Friday, May 5, 2006 04:23PM Report Comment
 

4. This comment has been removed as it was found to be in breach of our Blog Policies.

 

5. Nocrashwilcome said...

Inbreda, have you ever had a mental health assessment? I'm starting to worry about you, really...

Saturday, May 6, 2006 12:04PM Report Comment
 

6. Nocrashwillcome said...

Inbred, please stop your paranoid fantasies.

Saturday, May 6, 2006 12:41PM Report Comment
 

7. Uncle Tom said...

The growth rate of consumer credit is worthy of comment in two respects:

1) The BOE are fond of expressing the growth rate as an annual percentage rate, rather than as a hard number. - A small percentage of a lot can be more than a large percentage of a little...

It would be more informative to consider the number as a percentage of GDP - the quoted '12 year low' headline is very misleading.

2) Since the start of the year, the card lenders have had a formal arrangement for comparing notes on clients. It is possible that they are quietly screwing down the lid on credit.

The rapid rise in bankruptcies must be worrying them, not least because it is not just the financially incompetant who are now going into voluntary bankruptcy.

There is strong evidence that bankruptcy is becoming a 'lifestyle option' and that people might actually plan the event - taking out fresh cards to 'max out' on stocks of beer, tobacco, cash and advance paid holidays - before sauntering into court to file bankruptcy.

This is the stuff of nightmares for the card companies - it will be interesting to see how things pan out

Saturday, May 6, 2006 01:43PM Report Comment
 

8. Talking_rot said...

Inbreda

Just for the record, I am NOT an Estate Agent. I don't know about "nocrashwillcome" though - try asking him.

Is the UK in the middle of a crash? Answer = No.
Is the UK facing a crash in the short term? Answer = No.
Is the UK facing a crash in the long term? Answer = If anyone tells you they know what the long term will hold, then they are the jelly head and you should run a mile from them.

Are you going to try and tell me that we are about to enter a period where house prices will crash? People on this site have been saying that for a long time and it has still not happened. And it won't be happening tomorrow.

nocrashwillcome

Are you an estate agent?

Saturday, May 6, 2006 02:14PM Report Comment
 

9. Bidin'matime said...

The interesting thing is that, if TR & NCWC are genuine, this gives us a gauge of the extent to which prices are overstated - I too was looking at property around 2001, with a view to BTL, and also felt that prices were a bit 'toppy' at that time. The fact that people have overstretched themselves to pay these prices and more does not make the higher prices justified its just a sign of the increasing craziness in the market - people have taken leave of their senses classic symptoms of a bubble.

So, remember the view you took in more sober times and stand by for prices to fall back to those sorts of levels once people come to their senses.

And its not only the buyers who have gone mad its the lenders too. As an accountant I am often asked to provide information about clients income for mortgage purposes. Years ago this would require copies of 3 years accounts. Then this was replaced by a standard questionnaire asking for the profit for the last 3 years. Yesterday I received a letter headed Accountants affordability letter the letter said the amount of the loan (as a multiple of his income this was in double figures..) but did it ask me if he could afford it? No (if it had done I would have said no..) all it asked was that I confirm (a) that he was a client of mine and (b) that he had been in business for more than 6 months. Yes 6 months. And if you think I should have refused to cooperate with this stupidity, the simple fact is that, having lost clients in recent years by warning them not to buy into this overpriced market, I now do no more than I am asked to

Saturday, May 6, 2006 02:31PM Report Comment
 

10. Nocrashwillcome said...

No I am not an estate agent! Just an FTB who wants a home and who sees no sign of a crash.

Saturday, May 6, 2006 02:48PM Report Comment
 

11. Nocrashwillcome said...

Now that we've cleared up that I'm not an estate agent, I think 'bidin'mytime' is talking sense here. I am now easily able to borrow five times my NHS salary or more, whereas 5 years ago the absolute maximum was 4. All credit to you for not encouraging this sort of stupidity. Seeing that in London the price of flats has risen much faster than rents does provide some hope of a correction as BTL has to cease to be proftitable. Yes, its easy to get caught up in the madness, and some of the more informed comments on HPC can provide a reality check. I think I'll wait to see what happens in the autumn.

Saturday, May 6, 2006 03:02PM Report Comment
 

12. European-bear said...

Nocrash.....the lenders have been chasing the markezt up by lending bigger multiples to keep market share, this is classic bubble mentality. But how long this will go on for is still unknown. The peak might have been reached or it could go up further, but I am convinced that the price correction will bring prices down by at least 25-30% from today's levels (i.e. more if prices keep risng). My advice if you want it....Find the type of home you would like. Say a 2 bedroom apartment. If it is cheaper to rent then to buy, then rent it (the landlord will be subsidising you!!!). Once it becomes more expensive to rent than to service a mortgage on that property, then buy! If it really is cheaper to buy now than rent, then go ahead and buy.....

Saturday, May 6, 2006 03:16PM Report Comment
 

13. Glubber said...

My rental situation:

Rent 680pcm
House valuation 220000
To service interest only mortgage

Rate Per month
4% 733
5.5% 1008
6% 1100
8% 1466

My BTL landlady must work so hard subsidising my family's accommodation. I don't know what the circumstances are but I have pondered these possibilities:

Scenario 1: She could sell the house for 220000 and earn 50 per month more risk free assuming she could earn 4% interest after tax on the whole 220000.

Scenario 2: She is having to find 328 per month on top of our rent if it is fully mortgaged at 5.5% interest only.

Scenario 3: She is not having to find extra money if the mortgage is just 150000 at 5.5% interest only, but she is earning nothing on her 70000 of equity.

With interest rates on the rise and static prices around here I think we will sit tight in our rented house and wait for the maths to improve (or deteriorate for my landlady) before buying.

Saturday, May 6, 2006 05:52PM Report Comment
 

14. Bidin'matime said...

Me too - we pay 875 per month for a house that would conservatively fetch 250k if sold today - allowing for agents' fees of around 15% and maintenance costs of 15% (of rents) that leaves a return of less than 3%pa for the landlord before tax, even assuming no void periods.

Luckily our landlord bought many years ago, so will not (hopefully..) feel the need to sell the more greedy fools who invest at todays prices, the more will get into difficulties and more chance of realistic headlines on BTL investment, instead of the rubbish we hear from Feel n Krusty.

Saturday, May 6, 2006 06:25PM Report Comment
 

15. Bidin'matime said...

For a surprisingly well-balanced report from what you would think was a VI, take a look at:-

http://www.findaproperty.com/story.aspx?storyid=9103

Saturday, May 6, 2006 06:47PM Report Comment
 

16. Papabear said...

Interesting comments on all parts

House prices will go down in the end naturally, probability just gets higher every month that goes by now and eventually the trend will kick in.

Saturday, May 6, 2006 08:35PM Report Comment
 

17. Talking_rot said...

bidin'matime

I've enjoyed your posts and in response, yes I am genuine. I'm UK Armed Forces and my Service to the Colours has meant I have never bought a house. In 11 years of marriage I have had 7 homes as my Service has required me to move. (This is not unusual for Service families and I accept it as part of the deal for being in). However, the impact upon my children's education is not good and I would now like to settle the family. I find myself priced out of many areas of the country. The Armed Forces provide an excellent career and the pay is very good so it make me think how on earth those who are paid less can afford a home?

While I can see many risks to the economy, risks may or may not happen. I can't see a house price crash coming - merely stagnation. How can so many economists get it so wrong for so long?

Saturday, May 6, 2006 09:08PM Report Comment
 

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