Wednesday, Aug 30, 2006

... onwards and upwards!

BBC - who else!: UK mortgage lending rises sharply

The buy-to-let market has boosted demand for mortgages. The strength of the property market has been highlighted by the latest mortgage figures from the Bank of England. The number of new mortgages approved for house buying, but not yet lent, rose again in July to 120,000 - the highest level since the start of 2006.

Approvals have been rising steadily this year and are up 24% on a year ago.

Meanwhile the amount of money actually lent on new mortgages in July was 9.8bn, the second highest monthly figure on record.

Posted by tyrellcorporation @ 11:26 AM (623 views)
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27 Comments

1. Neitherbullnorbear said...

"BBC - who else!"

Hey - don't shoot the messenger.

The figures are indeed strong. Suggests autumn could be strong - and that a 0.25% IR hike in November is more likely.

Wednesday, August 30, 2006 11:34AM Report Comment
 

2. Jolo said...

Well then another interest rate raise won't matter then. As demand is still strong (good old BTL's) Bring on the next 0.25% please MPC!

Wednesday, August 30, 2006 11:36AM Report Comment
 

3. Mattpascoe said...

Out of this number how many are first time buyers? How can they say the property market is strong when it is absolutely fragile?

Wednesday, August 30, 2006 11:43AM Report Comment
 

4. bidin'matime said...

Its called a bubble. The problem seems to be that the BBC cannot, or as TC suggests, does not wish to, distinguish between a bubble a strong market.

Wednesday, August 30, 2006 01:19PM Report Comment
 

5. C'mon Correction said...

Please help me with this someone - when did the total personal debt figure pass 1 trillion? I thought it was about 1-2 years ago (maybe less)? Surely the british public hasn't racked up a further 1/4 trillion in that time !?! 1.24 trillion !!!!!!!!!!!!!! So in 2-3 years we'll have over 2 trillion worth ??? Gordon Brown "...Economic Stability..." - WHAT !?

Wednesday, August 30, 2006 01:39PM Report Comment
 

6. The Bald Man said...

Looks like the dot.com boom all over again. Overpriced assets with insufficent income flow for investors. Just look what is starting to happen in the US property markets.

Wednesday, August 30, 2006 01:49PM Report Comment
 

7. The Bald Man said...

Is buy to let going to be the next mis selling scandal?

Wednesday, August 30, 2006 02:25PM Report Comment
 

8. markd said...

Lots of MEWing to cover existing debts I suspect.

Wednesday, August 30, 2006 02:40PM Report Comment
 

9. tyrellcorporation said...

True... people are going crazy consolidating debt and transferring it from unsecured to secured against their home (extending mortgages)... a disaster waiting to happen IMHO and the financial organisations are frantically pushing this migration of unsecured debt because they are so worried about the ease at which people can go bankrupt. Like lemmings, people are just signing along the dotted line and opening themselves up to huge risk which, until before signing, was being shouldered by the lenders...Genius!

Wednesday, August 30, 2006 02:52PM Report Comment
 

10. Bfskinner said...

this should'nt be unexpected as is probably inline with the other reports from arround July time. With the August rate hike, and hints of further ones, it would be interesting to see how many of those approved got cold feet and backed off.

The problem with articles like this is that the data is already out of date and is presented as market IS booming, as opposed to market WAS booming one or two months ago (before rates hike and reported drop in asking prices)

BFS

Wednesday, August 30, 2006 03:07PM Report Comment
 

11. J. B. M. C. said...

I didn't think the BoE figures included MEW.

Wednesday, August 30, 2006 03:08PM Report Comment
 

12. kpjcomp said...

-> new mortgages approved

Does'nt that just mean the number of approved mortgages, so hav'nt yet been used to buy anything yet.
IOW: Is this just people trying to get a good deal on a mortgage rate before the BOE puts interest rates up?.

Wednesday, August 30, 2006 03:44PM Report Comment
 

13. uncle tom said...

Few points -

- the 'trillion' was reached a couple of years back - mortgages alone are now over that threshold.

MEW IS included in these stats

BTL mis-selling scandal? - You can be sure the victim culture will go into overdrive - when it goes pear-shaped the lawyers will doubtless be busy!

Wednesday, August 30, 2006 03:50PM Report Comment
 

14. inbreda said...

The Bald Man said...
Is buy to let going to be the next mis selling scandal?

No, just a very effective method for evolution - survival of the least stupid.

Wednesday, August 30, 2006 04:19PM Report Comment
 

15. markd said...

I believe overall personal debt rises by 1m every four minutes ie 360 million per day, or a further approx 131 billion per year-hence the additional approx 0.25 trillion since we passed the 1 trillion total a couple of years ago! (apologies if any of this is incorrect but just thinking about these numbers gives me a headache and my calculator is incapable of handling them)

Wholly and completely unsustainable!

Wednesday, August 30, 2006 04:55PM Report Comment
 

16. uncle tom said...

Mark - you're not far off.

The real detail that doesn't appear in published stats, is the breakdown of who is actually running up these extra debts.

Looking at it from various angles, you can work out there's around five million people whose lifestyle is so out of sync with their income that they are effectively in financial meltdown - some will escape by taking on extra jobs and making severe cutbacks to their lifestyle, but I project their will be upwards of two million bankrupts. However, to massage the figures, I suspect the Govt will allow many to call it an IVA, - even though back virtually nothing.

But of course, when this excess spending stops, incomes for many will fall and around two million jobs will be lost. Can the Govt step in to save the situation - err, well, they're already overspending by even more than the consumers...

Historians will remember this as the 'Jam today' government..

Wednesday, August 30, 2006 05:41PM Report Comment
 

17. kpjcomp said...

UT, is'nt most of the Dept been topped up with MEW'ing & Mortgages (secured lending).
Aprox: From the 1.2 Trillion personal dept, I think it's only about 200 billion that's unsecured,
So if everybody who had unsecured dept, went the IVA route, that would still leave 1 Trillion of dept that can't.
And for the people who are left struggling with 1 Trillion secured, they will have only one option, Sell, or the bank will anyway.
I think the late BTL'ers are going to get hit very hard indeed.
Also I think the banks will cotton on fast, and will want to sell A.S.A.P.

Wednesday, August 30, 2006 06:19PM Report Comment
 

18. The Bald Man said...

If there is a collapse in asset prices the banking system will be under intense pressure as their balance sheets are eroded by bad debts.

Wednesday, August 30, 2006 07:06PM Report Comment
 

19. uncle tom said...

kpj,

Much of the 'secured' debt is only secured on over-valued property, part of which will become technically 'un-secured' when property values fall.

One should therefore not attach too much weight to these terms, and the division of the overall statistic.

Yes the BTL brigade will get stuffed, but so will the banks....

Wednesday, August 30, 2006 09:10PM Report Comment
 

20. Ticktock said...

Sadly I don't think the banks are selling, or at least not at the rate that you would expect. It is possible for Bankrupts to keep their house these days, and sale and lease back deals seem to be popular with the banks too. They will likely combine the extra housing that comes into their possession into REIT style investments.

Sorry to keep banging on about REITS but they are (potentialy) huge for the housing market, and for the way that Banks/property companies/Pension funds , view, and treat, their property portfollio's.

This isn't to say that some banks may alter this tactic if prices were to fall sharply, but the incentive is not there to sell as it may have been in the past. Fixed income 'bond type' investments are highly desireable at present.

Wednesday, August 30, 2006 09:20PM Report Comment
 

21. Bubbles. . . said...

Yes mortagae approvals. Yep I got one but have not bought into anything yet... So this figure go into that...I dont have to buy and can cancel that even though I get rung up to say found anywhere yet...Wow this money is just sat there and not earning them anything is that why they ring me?? errrr. Rate rise in september definite everyone knows it and all the spin is saying opposite... What a great bubble wish I could have blown as bigger one when I was six out of fairy liquid!! But it would have burst.. or what does profit a man to gain the world but lose his soul. Mark *:36 to all the BTL's. Get stuffed!!!

Wednesday, August 30, 2006 09:43PM Report Comment
 

22. indiablue19 said...

Hear, hear, Uncle Tom! Eventually everything bottoms out in Bank losses, which should be phenomenal. At some moment in time as prices do fall significantly, those waiting with savings in the Banks to purchase had better make the leap and buy, or even insured funds may substantially evaporate in the fray. Where that "fine line" will be is the challenge.

Wednesday, August 30, 2006 10:14PM Report Comment
 

23. kpjcomp said...

ut,

What I was meaning is that I beleive you can only take out IVA's on un-secured debt, iow: these people who
have been silly and MEW'ed themselfs won't have the option of having the interest frozen and making
an agreement with the banks to pay 100 for 60 months even if the house price falls 80%, they either
pay or loose the house. So although IVA's are a soft option for Credit Card junkies & Loan monsters, they won't be for
mortgages and MEW'ing. To add to this, people have been mew'ing while IVA'ing, so they have converted
un-secured debt into secured debt, fail to pay this time and there out, buy buy house!!

But, if Gordon has a brain wave and makes IVA's available on Secured-Debt, then yes the banks
are in serious trouble!!. Also of course banks are in serious trouble too, if house prices start to crash as
there goes the security value!. Mr X buys for 500,000 keeps onto it untils its worth 200,000 fails to pay
bank gets back only 50%, how the banks have let themselfs be so vunerable is amazing..

Wednesday, August 30, 2006 10:45PM Report Comment
 

24. kpjcomp said...

Oops, I meant 40% of course..

Wednesday, August 30, 2006 10:47PM Report Comment
 

25. indiablue19 said...

KPJ....It occurs to me, not only are the banks vulnerable, but so are investments placed with them as mortgagees default, and central bank debts are called -- enormous amounts they originally borrowed on variable low-interest themselves to fund these insane mortgages and now owe to others internationally [Japan? China?] -- at rates that have also shot up. If the Banks default we're in a whole new world of hurt.

Wednesday, August 30, 2006 10:56PM Report Comment
 

26. Time To Raise Petrol Prices said...

Bald Man - Buy to let can't be the next mis-selling scandal because it isn't regulated by the FSA like residential mortgages are! Any Tom, Dick or Harry can peddle BTL mortgages, and if it all goes belly up, there is no comeback whatsoever!

Thursday, August 31, 2006 08:31AM Report Comment
 

27. Bigwave said...

Don't blame the Beeb for reporting the news! That's what they are supposed to do. I would be inclined to put in something from an expert saying what we think - that it's a bubble rather than being a "strong market." But they can't do that with every house price story. It would be daft. If people don't know by know that it's all going to go horrible wrong, then tough. I am sure they will all bleat about though, and say "But no-one warned us....the banks gave us the loan ... who can we sue?"

Thursday, August 31, 2006 05:06PM Report Comment
 

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