Monday, December 20, 2010

Weaknesses in mortgage market: volumes and total lent both down

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As per a recent calculation I saw in one of the HPC comments, there are far fewer mortgages being approved, and the total amount loaned is way down. Given the high price of the average house, the figures add up. All based on CML data; nothing particularly surprising. We went to see 2 houses for sale at the weekend. Neither suitable (whew!). I guess I'm being contrarian...? Note: registration for the Financial Times website might be required.

Posted by notyethomeless @ 02:19 PM (960 views)
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2 thoughts on “Weaknesses in mortgage market: volumes and total lent both down

  • notyethomeless says:

    Yipe! Sorry about the nasty title – the FT web police have hijacked the title of the article when I cut and paste. Nice work in a social networking universe – make it difficult to share your stories. *sigh*

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  • little professor says:

    Get firefox+adblock
    Add to your filter list, and you will never have to deal with these annoying copyright tag hijacks.

    The article for those that are having trouble: (it’s nothing special):

    There were no signs of a let up in the weak housing market last month, with mortgage lending remaining very low amid falling house prices.

    Mortgage approvals moved up from 44,000 in October to 45,000 in November, the Bank of England recorded. Approvals are down 26 per cent from 61,000 in November 2009, less than half the average number of approvals per month than before the crisis, and well below the level that many economists believe is consistent with rising prices.

    The past three months have seen the smallest number of approvals since May of last year, although the number was marginally up from 44,000 in each of October and September, the lowest level since April 2009.

    A number of other house price measures have been pointing to falling prices in recent months. Halifax earlier this month reported that house prices fell 2.1 per cent in the three months to the end of November compared with the three months to the end of October. Prices are also lower than a year ago according to Halifax. The other closely watched house price measure produced by Nationwide Building Society, has shown falling prices in four of the past five months.

    The Council of Mortgage Lenders expects house prices to remain flat or fall slightly during 2011, consistent with many other economists’ forecasts.

    “This evidence of low – but possibly stabilising – housing market activity reinforces our belief that house prices will not crash but will trend down gradually to lose around 10% from their peak 2010 levels by the end of 2011,” said Howard Archer, chief UK economist at IHS Global Insight.

    Separate data from the CML on Monday showed gross mortgage lending fell by 5 per cent in November to £11.1bn compared with October, and 10 per cent lower than a year ago, when a tax holiday for first-time buyers of cheaper homes had boosted demand for mortgages. The total in November was the lowest for the month since 2000 £10.9bn and marks the fifth month in a row where gross mortgage lending has been at its weakest since the equivalent month in 2000.

    “The fall in gross mortgage lending in November reflects the usual seasonal slowing of activity at this time of year, and reinforces the picture of a continuing flat market,” said Bob Pannell, CML chief economist. “Both demand for mortgage borrowing and the supply of funds for lending remain heavily constrained.”

    The CML expects gross mortgage lending for next year to be similar to this year and total about £135bn.

    “Critical will be when will the Bank of England starts to raise interest rates,” said Mr Archer. “Any early interest rate hike in 2011 would be bad news for the housing market – not just the rate rise itself but the impact on potential house buyers’ psychology resulting from the fact that they would be facing rising interest rates.”

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