Monday, July 12, 2010

Rejoice! Credit bubble reinflated!

Affordable rates lift mortgage borrowing

"The number of loans made for house purchases rose slightly in the UK in May amid a market of affordable rates, lenders have said. About 42,000 home loans were granted in May, up 2% on the previous month and 15% higher than May 2009, the Council of Mortgage Lenders (CML) said. Mortgage interest payments accounted for the lowest proportion of home movers' income for 35 years, it added... With the Bank rate at record lows, the environment for low rates has meant that homeowners' mortgage payments have also proved to be low. For those moving home, just 9.5% of average income was spent on mortgage interest payments in May - the lowest since comparative data began 35 years ago."

Posted by mark wadsworth @ 11:04 AM (2528 views)
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15 thoughts on “Rejoice! Credit bubble reinflated!

  • Home To Roost says:

    The Potato Council says “Eat More Potatoes”
    The Dairy Council says “Consume More Dairy Products”
    The Council for Mortgage Lenders says “Buy a House”

    There is nothing worse than a VI …..

    (captcha: “headteacher purer”)

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  • ontheotherhand says:

    What do they mean by ‘for those moving home’? I take this to mean excluding first time buyers. If so, yes, those up the pyramid are fine because they have some equity cushion.

    42,000 is still amazingly low. When are they going to give us the YoY figures?

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  • It’s a very anaemic market – no-one is suggesting that house prices represent a bargain, no-one is bragging about their expanding BTL portfolios any more, and there must be a lot of delayed repo cases that are running out of reasons not to seek possession..

    ..and more to the point, there is an ever swelling army of would be FTB’s who simply cannot afford to play.

    If the rental sector does not expand rapidly, the supply side will start to swamp the market..

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  • I thought there was a recent article on here claiming 60,000 transactions being up 20% on the previous month.

    Was the article I refer to for June and now we’re looking back at May ?

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  • Here we go this was the article ”in the express”.

    http://www.express.co.uk/posts/view/185901/House-sales-soar-20-in-June

    They were claiming 53000 for May increasing to 63500 for June.

    Why are the figures in these articles so different to one another ?

    Can anyone answer that ?

    Trend in both is up though.

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  • mark wadsworth says:

    STR, Express says 53,000 properties SOLD and the BBC says 42,000 mortgages GRANTED, so there are bound to be differences (some houses sold without mortgage; some mortgages granted complete in a subsequent month etc).

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  • Rates are actually not to bad with a hefty deposit, I could do 4.99% with HSBC on 70% LTV but I won’t be piling in with £160 large for a show box in York.

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  • It_is_going_with_a_bang says:

    “Taking the average house price from the Land Registry in May, this would put the cost of a 25% deposit at £41,328.”

    A rather select bunch of first time buyers. £41k deposit plus all the other costs, with a sufficient earnings to loan ratio and a perfect credit score.

    Hardly what I would call “Mr Average”.

    I can’t help but think it will be another Japan situation with 10 years + of stagnation.

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  • “For those moving home, just 9.5% of average income was spent on mortgage interest payments in May – the lowest since comparative data began 35 years ago.”

    And they still want to keep rates low ?!?

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  • Cheers Mark

    I thought someone could spot the detail for me.

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  • bidin'matime says:

    IRs aside, if the proportion of income being spent on mortgages by home movers is the lowest for 35 years, could this be an indicator that more are in fact down-sizing…? If they were buying as people were in the bubble, they would be stretching themselves and spending more…

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  • “In May, first time buyers typically borrowed 75% of the value of the property, at an average of 3.14 times their income”.

    This seems sensible….a decent down payment and a reasonable income multiple.

    recaptcha: some tenement

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  • mark wadsworth says:

    @ Alan, this is where it gets interesting. The article then says “Taking the average house price from the Land Registry in May, this would put the cost of a 25% deposit at £41,328.” which FTBs are running around with such big deposits if not from the BOMAD?

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  • need-a-crash says:

    Well I am, but it’s still not enough and I’m not playing anyway! In my experience it’s only those with BOMAD money who would buy at the moment. No one with large savings they’ve actually saved up themselves would risk it on this pyramid scheme.

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  • Umm, and this is why the crash hasn’t actually started yet…

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