Saturday, April 9, 2011

White Elephant Conspicuously Absent

Mortgage lending still at very low levels, lenders say

Mortgage lending is still running at very low levels, according to the Council of Mortgage Lenders (CML). There were just 32,300 mortgages arranged with house buyers in February - 8% more than in January but still 12% down on the same month a year ago.

Posted by rantnrave @ 01:07 PM (2096 views)
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5 thoughts on “White Elephant Conspicuously Absent

  • Could be the banks have been keeping their heads down. Maybe they were expecting trouble in Portugal, maybe not. However this is not the time to go lending money unless the borrowers are sound and secure (= high LTV).

    Current buying reflects higher interest rates, my IFA friend tells me. Most Banks and BS have put up rates for new borrowers. Maybe FTBs are thinking twice?

    I know a few people who have moved because of their jobs or retirements to the sunny South Coast. The moves were mainly cash – so not much difficulty encountered.

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  • The article says: “The CML said that cash sales, now accounting for about 40% of all sales, were helping to prop up the market.”. This might be a case of investors keeping their heads down with a looming fiscal storm and economic turmoil. The fact is that cash sales are probably one-offs and are not unexpected (IMO) at this point in time. People who made their money over the past 10 years (or so) are simply trying to protect the money they made. Cash sales wont continually prop up the market. I firmly believe there will be a point when we run out of people who can make a cash purchase.

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  • sibley's b'stard child says:

    “I firmly believe there will be a point when we run out of people who can make a cash purchase.”

    That’s true Miken, I believe MW gave some back-of-a-fag-packet figures to support that theory.

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  • mark wadsworth says:

    I did indeed do some figures on the back of a fag packet, but I threw it away.

    Either way, it stands to reason that most of those they refer to as ‘cash purchasers’ are in reality no such thing – the ‘cash’ that they have is the proceeds of selling a house to somebody else who took out a mortgage. So as mortgages dry up, so will the number of ‘cash purchasers’.

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  • MW,

    I know a few people who, disappointed with low interest rates on their savings, decided to get into property instead. In one situation the cash-rich parents bought a three-bedroom house for their cash-poor son, on the proviso that he rent out two rooms to lodgers and forward the the income to the parents. Needless to say, more often than not there’s at least one of the two spare rooms unoccupied. (It’s the old Principal-Agent problem again.)

    My point is, these people are true cash buyers. Knowing that isn’t enough though. You have to follow the money to see who the seller was and what they did with that money. If they used it to pay off a mortgage, then that represents a fall in net lending/borrowing, which in turn will lead to a fall in house prices.

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