Economists warn jump in home loans is unsustainable

Wookster

http://www.independent.co.uk/news/business/news/economists-warn-jump-in-home-loans-is-unsustainable-1754574.html

Economists warn jump in home loans is unsustainable
By David Prosser, Business Editor

A sharp rise in mortgage lending last month reflects seasonal trends rather than a sustainable pick-up in the housing market, economists warned yesterday.

Total mortgage lending hit £12.3bn in June, the Council of Mortgage Lenders revealed, more than 17 per cent up on May's figure of £10.5bn, and the highest monthly total this year. Early summer is traditionally the busiest time of the year for the housing market.

However, last month's mortgage lending was still 48 per cent lower than in the same month last year, and the CML said that over the three months to the end of June, total mortgage advances had been just £33.3bn, no more than in the first quarter of the year, which was the worst period for the sector since 2001.

"The pick-up in June's lending largely reflects seasonal factors, and these may well support lending volumes at moderately higher levels over the rest of the summer," CML economist Paul Samter said.

"But the combined effects of the restricted nature of mortgage funding, a reduced number of active lenders, a weak labour market and limited consumer demand are likely to hold back any significant and underlying improvement."

The CML is sticking to its forecast for total mortgage lending of £145bn for 2009 as a whole, despite some signs of improvement in recent weeks, including new figures from the Royal Institution of Chartered Surveyors which suggest there was a marked increase in the number of property sales agreed last month.

Mr Samter warned that the supply of mortgages, especially to first-time buyers, continued to be limited and that concerns about the state of the economy – particularly the prospect of continued increases in unemployment – were likely to act as a further brake on the housing market.

Howard Archer, the chief economist at IHS Global Insight, said these factors would combine to mean that housing market activity would remain below historical levels for "some time to come", adding that the cost of some mortgage finance had actually begun to increase over the past month or so.

"Consequently, we suspect that house prices will fall a little further, although we acknowledge that they could now be bottoming out," Mr Archer said.

Yup, I thought it was merely seasonal.

purch

Phew !!!!!!

Just in time :eek:

It was all getting a little too positive for a while :rolleyes:

Bloo_Loo

Houses more expensive? Positive?

the only thing a house creates is loans.

nearlynew

Bloo_Loo wrote: »

Houses more expensive? Positive?

the only thing a house creates is loans.

But haven't you heard?

Debt is the new wealth.

Generali

Wookster wrote: »

Yup, I thought it was merely seasonal.

The cynic in me says it is seasonal as you're approaching election season.

Yakubu22

Generali wrote: »

The cynic in me says it is seasonal as you're approaching election season.

I agree.......

chucky

unsustainable to what - house prices going up, house prices going down or house prices staying flat for a while?

unsustainable would mean that they would be going down but the article says

Mr Samter warned that the supply of mortgages, especially to first-time buyers, continued to be limited and that concerns about the state of the economy – particularly the prospect of continued increases in unemployment – were likely to act as a further brake on the housing market.

"But the combined effects of the restricted nature of mortgage funding, a reduced number of active lenders, a weak labour market and limited consumer demand are likely to hold back any significant and underlying improvement."

"Consequently, we suspect that house prices will fall a little further, although we acknowledge that they could now be bottoming out," Mr Archer said.

so either it's not sustainable and house prices will drop or their bottoming out - the journalist can't have it both ways...

Generali

chucky wrote: »

so either it's not sustainable and house prices will drop or their bottoming out - the journalist can't have it both ways...

To be charitable to the writer, the article reads rather like it's drawn together a bunch of different ideas from different people. The inconsistancy is a result of them having different views about where we're headed, rather like this board.

To be slightly less charitible, the article reads like it's a few quotes from various press releases over the last few days, hastily cobbled together by a journalist who is working for a paper without the budget to do what they are attempting which is to be a serious newspaper.

I had a mate who worked for the Indie. He used to write business pieces for them having been brought in as a writer on matters theological. His knowledge of business and markets was shockingly poor. TBH that's being quite nice about his level of knowledge - he was a really decent and bright lad, just had no interest in the subject.

chucky

Generali wrote: »

To be charitable to the writer, the article reads rather like it's drawn together a bunch of different ideas from different people. The inconsistancy is a result of them having different views about where we're headed, rather like this board.

To be slightly less charitible, the article reads like it's a few quotes from various press releases over the last few days, hastily cobbled together by a journalist who is working for a paper without the budget to do what they are attempting which is to be a serious newspaper.

I had a mate who worked for the Indie. He used to write business pieces for them having been brought in as a writer on matters theological. His knowledge of business and markets was shockingly poor. TBH that's being quite nice about his level of knowledge - he was a really decent and bright lad, just had no interest in the subject.

just shows that people's views can be influenced by others less knowledgeable than themselves just because they're a journalist.

i'd say about 80% of what appears in the press is in this style unfortunately.

it sells newspapers and people read it - who are we to say anything

julieq

there's a difference between unsustainable and unlikely to be sustained, obviously

Thrugelmir

chucky wrote: »

sustainable to what - house prices going up, house prices going down or house prices staying flat for a while?

The reference is to current levels of activity.

(a) Seasonable demand will weaken ( people move in Spring to get their kids in schools for the autumn for eg.)

(b) There is insufficent mortgage funding to support continued lending at this level.