Monday, March 2, 2009

Mortgage lending plunges NINETY PER CENT

Mortgage lending plunges 60%

Mortgage lending dived by more than 60% during January to just one 10th of its level 12 months ago, figures showed today. Net mortgage lending, which strips out redemptions and repayments, was £690 million during the month, down from £1.79 billion in December, according to the Bank of England. It was the second lowest monthly total recorded by the Bank began since it began to keep statistics in this format in April 1993, and represented a steep dive from the £6.91 billion lent in January last year.

Posted by mark wadsworth @ 10:01 AM (1125 views)
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7 thoughts on “Mortgage lending plunges NINETY PER CENT

  • I wonder if this is because the naughty banks won’t lend or because the naughty borrowers have finally worked out that they don’t want to be geared up to the eyeballs into assets which are falling in price.

    Either way, its good news for anyone that puts value on their money.

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  • Isn’t it odd how we don’t see these figures as a sign that “SENSIBLE LENDING” has returned but as a sign that there MUST STILL BE A PROBLEM! The PROBLEM WAS THE LENDING or hasn’t anyone been reading about the TRILLIONS of pounds that we are in debt? When Northern Rock were paying off their debts they gave bonuses to all their staff for reducing lending and paying off debts. SO WHY ARE WE NOT HEARING EVERY DAY ABOUT HOW MUCH THE LENDERS ARE SAVING and how sensible they are being now only lending 60% mortgages and 3.25 loan to income as house prices are due to come down at least 40% (US house prices only increased 75% and have come down nearly 50% and their subprime broke the global banks, UK prices went up 190% in 10 years and defaults on the 5 million people heading into negative equity hasn’t even begun). Current lending is not disadvantageous to first time buyers, they just need to wait a year and will find property much more affordable, the spin last week about 9 billion in mortgage lending from the Rock and another few billion from RBS etc IS NOT ABOUT THE GOVERNMENT being concerned about first time buyers, it is about the government putting another few million people into negative equity, a 90% mortgage on an inflated house price is not a good idea which is why the lenders are NOT LENDING. Mortgage lending pluges 60% should read A RETURN TO SENSIBLE LENDING IS CONFIRMED NOW WE MUST DEAL WITH THE CONSEQUENCES OF THE MADNESS OF THE PAST 10 YEARS.

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  • Quick shower the banks with printed money in the hope that they’ll lend some!

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  • fdraoa gives a US perspective on the lending/borrowing conundrum:

    “Helicopter Ben” has been busy circling the planet in his whirly bird, trying to deliver freshly printed cash to the minions below. But something terrible has happened; something does not compute. There are no people, below. No arm waiving, no hailing Ben’s timely arrival, no one to gobble up his pretty little prepackaged predatory parachute-loans. Where have all the dumb people gone? Aren’t borrowers just as stupid today as they were yesterday?

    Ben is confused, disoriented. Unexpectedly, his Fed helicopter, laden with pallets of immovable counterfeit cash, sputters as fuel runs dry. Dreadfully, Pink Providence 1 goes down in the middle of an abandoned subprime neighborhood. Ben is never heard from again.

    My goodness, how could this happen to a professional academic with no market experience?

    You see, this funny thing happens when intelligent people act in their own best interest: during peacetime, they run towards helicopter sounds; during wartime, they run away. They actually aren’t as stupid as the helicopter pilot, who managed to convince himself they just really, really liked him.

    http://fdralloveragain.blogspot.com/2009/03/helicopter-sounds.html

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  • Even without considering the current scenario’s special details, prices are falling which means lenders won’t want to lend to those without an adequate buffer (deposit) to weather likely falls, and potential buyers will want to wait if they can in order to get the most for their money. Psychology and credit both give prices momentum.

    The current scenario does not seem particularly different in nature to any other bubble, does it?

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  • £690,000,000 divided between 60,000,000 ish UK population = £11.50 for every man woman and child, annualized to £138.

    Divided by the total 24,700,000 UK households = £27.94/household

    Divided by the 75,140 households for sale, monitored by rightmove, that’s £9182/household for sale (ish). (Add deposits, and, the rightprice would have all properties sold, we are looking at £12-15k housprices (Prices were that low in the 1970’s).

    Divided by the 31,000 mortgages granted January, that’s a pitiful 22,258/mortgage. On average, mortgage sales people are not lending more than the amount of the average wage. What does this mean? Prices will have to return to late 1970/early 1980 levels when you could buy a house for between 10 and 20k.

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  • stillthinking says:

    The banks are lending less because of the risk of default. You heard it here first ! (not really)

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