Thursday, August 18, 2011

Bear Nibbles

Mortgage market slumps in July

Gross mortgage lending for July falls six per cent compared to 2010 while mortgage applications fall by eight per cent on a monthly basis. Monthly mortgage lending data published today (18 August) by the Council of Mortgage Lenders (CML) show that lending for house purchases dropped by one per cent in July from June's figure of £12.7bn to £12.6bn. The drop means that July mortgage lending was some six per cent down compared to 2010, when the figure stood at £13.3bn...

Posted by mark wadsworth @ 10:41 AM (3124 views)
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29 thoughts on “Bear Nibbles

  • The ministry of silly excuses said “this is all down to people going on holiday and nothing to do with market sentiment and affordability”

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  • mark wadsworth says:

    Jack C, I think it’s a fair point about people being on holiday in July.

    We all know that confidence and disposable incomes are on the up, so far more people will have taken a long, expensive holiday this year compared to last year, and that explains why July 2011 was down by 6% compared to July 2010.

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  • sibley's b'stard child says:

    He said: “Not surprisingly, mortgage transaction volumes eased in July after hitting a high point in June, as families headed off on their summer holidays. In a normally functioning mortgage market, application numbers drop off during July and August, so the market performed as expected.

    Be that as it may, it still doesn’t explain why the YoY trend is still firmly downwards.

    The consensus over at EAT seems to be that this landscape of perma-low transactions is the new paradigm. Sigh, all that pent-up demand and nowhere to go.

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  • Aye SBC – they do seem to be in bullish mood over at EAT that prices aren’t going to go down much and transactions levels are going to remain steady. This stand point would perfect sense if you were reading a site by Boomers with BTL portfolios, rather than comments from people whose job depends on transactions… Not always easy to tell the difference between those two groups though over there.

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  • “A stronger indicator as to the health of the mortgage market will be applications in September and October, as historically we would expect to see numbers start to pick up.” – OK lets see what happens in due course but as Sib’s points out the trend is down.

    I was talking to a couple recently and they could afford the mortgage using either or salary rather than joint but no way of re-mortgaging as the LTV doesnt fit – £109k at outset in 2007 now down to £102K. So cheap fixed rates coming out at the moment are all very well but getting everything to fit isnt easy.

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  • To me the dropping in the loan sizes to £135,873 is a good indicator of further house price falls.

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  • miken – agreed, but I also think the requirement of a bigger deposit has filtered through.

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  • Booby Droptables says:

    “We all know that confidence and disposable incomes”

    Beg pardon – what planet are you living on?

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  • sibley's b'stard child says:

    I must admit RnR, it leaves me incredulous.

    It’s akin to a bunch of turkeys idly discussing how demand for festive poultry has more than doubled.

    ‘Ha, that’ll show those doom-monger veggies’.

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  • mark wadsworth says:

    The attitude of EAs is quite puzzling.

    In theory, they ought to be rejoicing if BoE were to hike interest rates, as there’d be a lot more people selling (and hence a lot more people buying). The same applies to a certain simplification of the tax code which I have long advocated.

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  • mark wadsworth says:

    @ Booby, comment 8. I was being ironic :-b

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  • sibley's b'stard child says:

    BD, looks like your sarcasm detector needs a fine-tuning. I know a Lithuanian chap across the road that will do it for half the going rate.

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  • mark wadsworth says:

    Anyways, re what I was saying about Angela Merkel always looking chirpy and upbeat when in the presence of Nicolas Sarkozy, and usually being in fairly close physical contact with him, I submit more evidence from today’s Daily Mail:

    http://www.dailymail.co.uk/news/article-2027231/Sarkozy-Merkel-plot-13bn-tax-raid-UK-save-euro.html

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  • Ringing Roger says:

    Mark, in principle I also advocate LVT. However I was recently posed a question that I would appreciate your thoughts on. If the value of a person’s land falls would they in a LVT regime be compensated? Would these different circumstances have varying implications?
    1) if the land in the area in which they live declined due to socio-economic trends; or
    2) if local government granted PP for infrastructure that negatively effected their land value (e.g. an adjacent large freestanding superstore); or
    3) if government itself developed infrastructure that negatively effected local land values (e.g. a new motorway)?

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  • The ministry of silly excuses said “this is all down to people going on holiday and nothing to do with market sentiment and affordability”

    No! I’m sorry, but you are completely wrong. This is actually due to the effects of the Royal Wedding and the bigger expectations that people have for their lives. Things are only quiet because people are saving so that can spend more money on a much bigger and better house. See!

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  • mark wadsworth says:

    HPW, the Royal Wedding has faded from people’s memories. I reckon the real reason for the slump in July was because all potential home buyers or sellers were busy on Twitter plotting riots.

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  • Maybe everyone’s saving up for a Royal style Wedding rather than a deposit on a house and the mortgage applications reflect this.

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  • phdinbubbles says:

    According to the BBC, “Stock markets in Europe and the US see sharp falls, as the negative mood which has caused recent turmoil takes hold again.”

    Maybe they’ll go up again tomorrow if everyone’s in a more positive frame of mind. Could it be a negative mood that’s also caused the dip in mortgage lending?

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  • phdinbubbles – good to see you back – perhaps you could factor in seasonaly adjusted mood swings to those lovely charts of yours?

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  • 13. sibley’s b’stard child said…BD, looks like your sarcasm detector needs a fine-tuning. I know a Lithuanian chap across the road that will do it for half the going rate.

    Ha ha, wonderful.

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  • phdinbubbles says:

    Cheers jack c

    Here’s the updated chart, although the Haliwide indexes have been looking unreliable of late:

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  • Ringing Roger says:

    As I understand it, the gap between the Nationwide and Halifax indices is largely to do with a greater % of the Nationwide’s mortgages being in the south of England as compared to the Halifax’s.

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  • Although the above chart is looking less and less like a dead cat bounce – not that it makes any difference.

    It’s the currencies that are going to blow up, not house prices.

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  • phdinbubbles says:

    Just come across this – a hedge fund that makes decisions based on the prevailing mood on twitter – maybe the BBC are on to something!

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  • From that chart, looks like the Land Reg’s next direction will be up…

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  • hpwatcher – and what will happen when currencies blow?

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  • The house-less recovery continues..

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  • “”A stronger indicator as to the health of the mortgage market will be applications in September and October, as historically we would expect to see numbers start to pick up.”

    Obviously chaps….especially in London and the inner cities…… after those riots! Duh!

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