Friday, January 21, 2011

December Mortgage Lending -18% YoY -6% MoM

Renewed drop in mortgage lending

(Whole Article) The total amount of mortgages advanced in December fell by 6% compared with the previous month, lenders say. The £11bn advanced in December was also 18% lower than the same month a year earlier, when some buyers were beating the end of the stamp duty holiday. The data, from the Council of Mortgage Lenders (CML), is the latest evidence of dampened demand from buyers at the end of 2010. The CML added that some home loans had been increasing in cost recently.

Posted by wdbeast @ 10:08 AM (2901 views)
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14 thoughts on “December Mortgage Lending -18% YoY -6% MoM

  • A spokesman from the Comedy of Mortgage Lenders said “the impact of snow and ice coupled with the Christmas party season and an extended series of X-factor led to a quieter than normal December”. He went on to say “there is a tremendous amount of pent up demand from eager buyers and with interest rates pegged at a 300 year low the Spring bounce would be the biggest on record”. He urged people to get out and buy right now before missing the opportunity of a lifetime.

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  • Cheryl Cole has also been asked to reduce the amount of different dresses she is seen in.

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  • On a more serious note

    Deposits hit 40-year high as 100,000 first-time buyers kept off property ladder

    At least 100,000 first-time buyers who have no help from the ‘bank of mum and dad’ were unable to enter the housing market last year, as the number of low deposit mortgages slumped to a record low.

    In 2009 there were only 28,000 loans to first-time buyers at 90 per cent or more – where buyers had to find a 10 per cent deposit or less – down from 245,000 in 2006¹. And numbers of younger first-time buyers able to buy a home without help with a deposit fell by 100,000 per year between 2006 and 2009².

    The UK Housing Review published by the Chartered Institute of Housing (CIH) has been collating and analysing UK housing market data for nearly twenty years, tracking market trends over decades. The new edition, published on 21 January, highlights the jump in the size of deposit needed to get on the housing ladder. First-time buyers needed a 30 per cent deposit on average in 2009 in order to purchase a home, higher than at any time since 1970³. According to co-author Professor Steve Wilcox this makes the collapse in the availability of low-deposit mortgages the largest single barrier to home ownership.

    Richard Capie, CIH Deputy Chief Executive, said: “Deposits are now at a 40 year high and prospects for first time buyers look bleak. The deposit barrier has become a mountain that more and more potential home owners simply can’t climb without help from mum and dad. While we don’t want to return to the days of 110% mortgages and irresponsible lending, it is clear that the pendulum has swung too far in the other direction. This report shows that more work needs to be done to set out new rules which will enable responsible lending to households who can afford to sustain a mortgage. It also shows that we need to make sure that other tenures, such as the private rented sector, provide a better alternative for the increasing numbers of people who will simply be unable to buy a home in future.”

    SOURCE – Chartered Institute of Housing (CIH) http://www.cih.org/news/view.php?id=1346

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  • sibley's b'stard child says:

    Jack, out of curiosity, historically (ie 70s, 80s and 90s) would 90% LTV be typical for a FTB?

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  • FWIW My dad had to put down about 40% as the cottage he bought in the early 70’s was ‘an older property’ and in those days building societies didn’t lend as much against older preoperties (incase they fell down I suppose)

    Also I believe he could only borrow about 2.5 times a single income.

    Now you can get 4 times joint if you’re putting down 40%, in fact they still don’t really ask.

    How times have changed, you can see why property prices are high and holding up – at the moment.

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  • From the BoE Trends in Lending report:

    “Household demand for secured lending for house purchase was reported to have fallen unexpectedly and markedly in 2010 Q4, according to the Credit Conditions Survey and was expected to fall further over the next three months. The Royal Institution of Chartered Surveyors’ new buyer enquiries balance remained negative over the past three months, indicating a weakening in demand for house purchase.”

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  • mark wadsworth says:

    It’s all good bear nibbles i suppose.

    Also what Jack C says at 2. “Interest rates can’t go any lower so now is the perfect moment to buy”

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  • Sib’s @ Friday, January 21, 2011 11:17AM

    During the time span you mention max 90% LTV would typically apply however things were different back then in so much as the lender would probably also insist upon a MIG (Mortgage Indemnity Guarantee) where the LTV was between say 75%-90%. This provided additional security for the lender ie an insurance paid by the borrower for the benefit of the lender. They dont really apply in the current market although you might see them described as HLC (higher lending charge). During the last decade MIG’s were abandoned and lending criteria totally relaxed and as you know the rest is history.

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  • Lives In A Cave says:

    @6 A great example of supply driving demand and NOT the other way around. If lenders stick to lending at 2.5x and IRs stay low (so that repossessions also remain low) then we are in for a long cold winter whilst prices correct. 10 years anyone?

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  • RE Loan costs increasing a 4.99% fixed for 2 years has just been cancelled from HSBC and the cost is going up to who knows what, will find out monday.

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  • mark wadsworth says:

    Jack C, they still have MIG or HLC, but it’s heavily disguised.

    e.g. 75% LTV mortgage is (say) 4%, then a 90% mortgage is (say) 5%.

    so £75,000 x 4% = £3,000 interest per year
    and £90,000 x 5% = £4,500 interest per year.

    You could just as well say that the 90% mortgage is actually 4% = £3,600 and then there’s a £900 per annum MIG or HLC payment, which is an extra 6% of the amount in excess of 75% LTV (£15,000 x 6% = £900). Even gullible FTBs might baulk at paying 9% interest on the top slice of £15,000, so the banks smoothe it all out and tell gullible FTB they are only paying 5% on the whole lot.

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  • MW – you are correct that they are differentiating interest rates based on LTV and dressing up their product offerings in differing ways including hefty application/booking fees etc.. I suppose looking back maybe MIG’s were more transparent and not as unfair as many in the industry claimed which ultimately has more or less led to their demise. Sliced diced and packaged up and sold on has also been another “innovation” that we didnt really have 20-30 years ago.

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