Mortgage Lending Falls 10%

CloudCuckooLand

Curious as to how CML get away with saying "seasonal downturn is normal" in November's figures.

In 2007 and 2008 there were downturns, when comparing November to October.

Which was fair enough, as Nov 2007 was the beginning of the crash, and Nov 2008 was mid-crash.

But for those looking for signs of a return to "normal" years, it appears not to be normal at all;

http://www.epolitix.com/stakeholder-...tgage-lenders/

In 2006, it was UP 9%, Nov vs Oct. It also beat the record August of that year.

http://www.epolitix.com/stakeholder-...tgage-lenders/

In 2005, it was UP 5%, Nov vs Oct.

Really2

Cannon_Fodder wrote: »

So if porting is neither new nor re-mortgaging, where is it covered in the stats??


Not saying you are wrong, but I'd have thought porting was fairly common. So could be statistically significant. So should not be accidentally excluded or overlooked.

It's not, if you port and buy a cheaper house there is no new lending so nothing to show.
But the reality of that is you most probably would only port a tracker to a cheaper house as a fix would have you paying a redemption fee of any repayment over 5% of the loan value (usual term on any previous fixed rate I have had).

If you port and buy a more expensive house the extra would be new lending.

tomterm8

HAMISH_MCTAVISH wrote: »

Approvals for new purchase are what drive prices.

Erm, maybe you would like to explain to me quite how all these figures fit together. Having read the site over the last month, I have seen statistics that say

1. Total mortgage lending is falling, by around 10% over the last month, and 13% year on year
2. House prices are rising roughly 7% per month.

Now, I would have thought that in terms of a mathematical identity, this would suggest that actual house sales are falling. Because, if people spend less money on houses, and houses cost more, well it doesn't take einstein to realise we should be buying less houses.

And yet, your nice pretty graphs suggest house approvals are increasing?

Well, I don't see how that can be. One or more of the figures has to be wrong or misleading.

Really2

tomterm8 wrote: »

Erm, maybe you would like to explain to me quite how all these figures fit together. Having read the site over the last month, I have seen statistics that say

1. Total mortgage lending is falling, by around 10% over the last month, and 13% year on year
2. House prices are rising roughly 7% per month.

Now, I would have thought that in terms of a mathematical identity, this would suggest that actual house sales are falling. Because, if people spend less money on houses, and houses cost more, well it doesn't take einstein to realise we should be buying less houses.

And yet, your nice pretty graphs suggest house approvals are increasing?

Well, I don't see how that can be. One or more of the figures has to be wrong or misleading.

Gross lending includes re-mortgages and mortgages for purchases.

To judge what is being spent on new purchases you need net lending for new purchases.

You can not exclude that from this data unfortunatly.

Non of the figures or wrong or miseading it is just that you can't find out what is happening with gross lending unless it is broken down.

HAMISH_MCTAVISH

tomterm8 wrote: »

Erm, maybe you would like to explain to me quite how all these figures fit together. Having read the site over the last month, I have seen statistics that say

1. Total mortgage lending is falling, by around 10% over the last month, and 13% year on year
2. House prices are rising roughly 7% per month.

Now, I would have thought that in terms of a mathematical identity, this would suggest that actual house sales are falling. Because, if people spend less money on houses, and houses cost more, well it doesn't take einstein to realise we should be buying less houses.

And yet, your nice pretty graphs suggest house approvals are increasing?

Well, I don't see how that can be. One or more of the figures has to be wrong or misleading.

No, both figures are right, gross lending is falling and approvals are rising. (but prices have only risen by either 7% or 10% this year depending on which indes, not 7% per month.....)

Gross mortgage lending (which fell last month) is irrelevant to house prices, as it includes remortgaging.

Lending for new purchases is what drives house prices, and the number of approvals rose last month, as it has done for most months this year, along with prices.

Graham_Devon

HAMISH_MCTAVISH wrote: »

No, both figures are right, gross lending is falling and approvals are rising. (but prices have only risen by either 7% or 10% this year depending on which indes, not 7% per month.....)

Gross mortgage lending (which fell last month) is irrelevant to house prices, as it includes remortgaging.

Lending for new purchases is what drives house prices, and the number of approvals rose last month, as it has done for most months this year, along with prices.

So in other words, you are saying it was remortgages which fell this month then?

HAMISH_MCTAVISH

Graham_Devon wrote: »

So in other words, you are saying it was remortgages which fell this month then?

That is the most likely explanation.

phil_b_2

CloudCuckooLand wrote: »

In 2007 and 2008 there were downturns, when comparing November to October.

Which was fair enough, as Nov 2007 was the beginning of the crash, and Nov 2008 was mid-crash.

But for those looking for signs of a return to "normal" years, it appears not to be normal at all;

http://www.epolitix.com/stakeholder-...tgage-lenders/

In 2006, it was UP 9%, Nov vs Oct. It also beat the record August of that year.

http://www.epolitix.com/stakeholder-...tgage-lenders/

In 2005, it was UP 5%, Nov vs Oct.

You cant really dismiss 07 and 08 figures by claiming they were abnormal due to being the beggining of the crash, and then draw attention to 05 and 06 being 'normal'. They were on the run up to the height of the boom.

'Normal' doesnt really fit in anywhere post 2001'ish.

HAMISH_MCTAVISH

phil_b wrote: »

You cant really dismiss 07 and 08 figures by claiming they were abnormal due to being the beggining of the crash, and then draw attention to 05 and 06 being 'normal'. They were on the run up to the height of the boom.

'Normal' doesnt really fit in anywhere post 2001'ish.

Well, all those figures are normal for different points in the cycle. But the gross lending figures are still irrelevant to prices, it's approvals that count. Of course some people claim that even approvals are far lower than they need to be, without understanding that they also fluctuate over the course of the cycle.

If we look at the point in the cycle just after the last crash, which should be most comparable to now, then approvals were around 80K per month.

However, as has been pointed out previously, those numbers used to be published as a gross figure, now they are published net of cancellations. And cancellations used to be up around 20% to 30%.

So the chances are good that the old net figures, after the last crash, were right around todays net figure of 55K to 60K approvals per month. That the published index figures don't reflect this seems to confuse some commentators who still believe todays levels are lower than normal.