UK Gross Mtge Lending Eases To GBP10.3B In May - CML

Generali

chucky wrote: »

there is an endless list of people it will affect.

a more general view is that it affects people who could not afford pre-credit crunch and those who took out lending post/during credit crunch. the latter is going to be very small.

rising rates won't snuff out recovery but maybe 'flatten' it out, a slightly less pessimistic view than yours

in saying that rates will also depend on inflation etc...

Well my feeling is that rising interest rates will be caused by Governments borrowing huge sums of money (not just the UK although they are one of the worst offenders). That will have a twin impact of reducing funds available to the private sector (the only creators of wealth) and raising interest rates. A nasty double whammy that will put pressure on businesses and unemployment.

I think we are already seeing this in Australia where the Commonwealth Bank increased interest rates across the board by 0.1%. It's hard to measure though.

Graham_Devon

So were increasing QE, and lending is descreasing.

Mindyou, in Gordon's terms, a cut is actually an increase! Therefore, this is all good! QE must be working!

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chucky wrote: »

there is an endless list of people it will affect.

a more general view is that it affects people who could not afford pre-credit crunch and those who took out lending post/during credit crunch. the latter is going to be very small.

rising rates won't snuff out recovery but maybe 'flatten' it out, a slightly less pessimistic view than yours

in saying that rates will also depend on inflation etc...

I honestly think many people are on the edge, their debt is servicable at this time, but even if SVR's went to 7%+ (a modest increase), there would be an avalanche of repo's, it started last year, when 750,000 more people were in employment than now, so it's safe to say with the lack of equity to move to new deals, a slight lift in the SVR will send many, many people under. This is one of the main reasons why rates are being kept low, as inflation is above target, and likely to shift higher over the coming months.

Graham_Devon

ad9898 wrote: »

I honestly think many people are on the edge, their debt is servicable at this time, but even if SVR's went to 7%+ (a modest increase), there would be an avalanche of repo's, it started last year, when 750,000 more people were in employment than now, so it's safe to say with the lack of equity to move to new deals, a slight lift in the SVR will send many, many people under. This is one of the main reasons why rates are being kept low, as inflation is above target, and likely to shift higher over the coming months.

Can anyone tell me what happened before interest rates went to 15% under the tories?

Were we turning the corner of a slump? I know inflation was sky high. But what were the factors 5 years before the day they hit 15%? What caused the inflation etc?

What I'm trying to do is look at then, and look at now, and look to see where we may be heading in terms of interest rates.

chucky

Graham_Devon wrote: »

So were increasing QE, and lending is descreasing.

Mindyou, in Gordon's terms, a cut is actually an increase! Therefore, this is all good! QE must be working!

you didn't read the whole article

"Underneath the headline gross lending figure, it's likely that a moderate improvement in house purchase lending in May has been offset by very low remortgaging volumes as borrowers stay with existing deals," he added."

lending is increasing for house buying but not for remortgaging as SVR is much cheaper (for now)

System

I'm sure it was read, just conveniently ignored.

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Graham_Devon wrote: »

Can anyone tell me what happened before interest rates went to 15% under the tories?

Were we turning the corner of a slump? I know inflation was sky high. But what were the factors 5 years before the day they hit 15%? What caused the inflation etc?

What I'm trying to do is look at then, and look at now, and look to see where we may be heading in terms of interest rates.

IIRC, and I was a teenager at that time, IR's were lifted to cool the overheated economy, inflation was starting to rise and the property boom was getting out of hand. IR's should have been lifted, in 2004-05, to cool the overheated economy and the housing market, they weren't, partly because the government decided to stick to CPI and not RPI, as most of the inflation was in housing the CPI figure stayed relatively low, encouraging the BoE to cut IR's which fuelled the last gasp peak of the housing boom.

Graham_Devon

chucky wrote: »

you didn't read the whole article

"Underneath the headline gross lending figure, it's likely that a moderate improvement in house purchase lending in May has been offset by very low remortgaging volumes as borrowers stay with existing deals," he added."

lending is increasing for house buying but not for remortgaging as SVR is much cheaper (for now)

To be honest, it makes no difference IMO. Were still lending less.

It's like the stuff yesterday on claimants vs unemployment. Makes no difference how many claimants there are, still x number unemployed.

Generali

Graham_Devon wrote: »

Can anyone tell me what happened before interest rates went to 15% under the tories?

Were we turning the corner of a slump? I know inflation was sky high. But what were the factors 5 years before the day they hit 15%? What caused the inflation etc?

What I'm trying to do is look at then, and look at now, and look to see where we may be heading in terms of interest rates.

Interest rates never went to 15% in the early 90s.

Interest rates rose after the 'Lawson Boom' (largely caused by interest rates being kept low as Lawson tried to get the BoE to have the Pound unofficially shadow the Deutschmark) and a house price boom caused by the pre-announcement of the ending of MIRAS (a scheme which allowed some mortgage interest to be offset against personal taxes I believe).

They then fell back a little but were increased rapidly to prop up the value of the Pound against the Deutschmark as a part of a fixed exchange rate agreement the UK was a part of by that time in Europe known as the ERM (the precursor to the Euro). Norman Lamont announced that rates were going to rise from 13% to 15% but never actually got the chance to put words into action as the Pound was withdrwn from the ERM instead, rates rapidly cut and the economy made a pretty rapid return to health.

In the early 80s I believe that Howe as Chancellor increased rates above 15% but then that's a story for another evening children.

Graham_Devon

Thanks both. So nothing really like now. That's what I was trying to look at.