Gross mortgage lending declined in January

mystic_trev

Gross mortgage lending declined to an estimated £9.1 billion in January, a 32% fall from £13.4 billion in December and a 21% fall from £11.5 billion in January 2009, according to the Council of Mortgage Lenders.

A decline is typically experienced between December and January. However, this is the lowest monthly total since February 2000 (£7.9 billion) and the lowest January total since 2000 (£7.4 billion). The larger than average drop between December and January this year confirms our view that house purchase activity was boosted in December by a number of borrowers trying to complete their purchase before the end of the year to take advantage of the stamp duty holiday.

In today’s market commentary, CML economist Paul Samter commented:

“We remain in a period of uncertainty for the housing market and economy at large. The market certainly improved over the second half of last year and started 2010 in better shape than most would have predicted twelve months ago. More recent developments have been influenced by the end of the stamp duty holiday, and are likely to foreshadow a larger than usual seasonal drop off in activity in the early part of this year.

“However, the Bank of England is likely to keep rates low which should continue to mitigate mortgage payment problems and help cushion borrowers from the worst of the recession.”

http://www.cml.org.uk/cml/media/press/2558

Graham_Devon

32% fall is pretty big.

I was going to suggest it may have been something to do with the stamp duty rush, but seems it was also 21% lower than a dire Jan 2009.

Seems to me as if round 2 is about to start.

Or, alternatively, shall we just blame it on the snow?

martinbuckley

Thoughts please Hamish.......

Generali

Net mortgage lending (the more important figure IMO) was up GBP1,300,000,000, a reduced increase from the previous month, perhaps not unexpectedly given that wsa the number for December compared with November.

It's a pretty tiny rise overall though. Hardly a sign of a mortgage market glowing with health although at least the trend is upward*.








*Given the very real and increasing IMO risks of deflation in the UK and US (and in the PIIGS countries too perhaps), any increase in lending is good news as it signals a rise in M4 (M3 in the US) measures of money supply. Under current circumstances, deflation would not be pretty.

chucky

Generali wrote: »

Net mortgage lending (the more important figure IMO) was up GBP1,300,000,000, a reduced increase from the previous month, perhaps not unexpectedly given that wsa the number for December compared with November.

It's a pretty tiny rise overall though. Hardly a sign of a mortgage market glowing with health although at least the trend is upward*.

the real comparison of this is to see the LR transactions to see the average mortgage amount borrowed.

you'd get an idea where you are if it dropped or increased from the previous month.
i think the current average new mortgage for the last few months is somewhere around £130k.

this isn't really bad news or even "round 2" just another month of the same or even stagnation.

the appetite for people to remortgage is dead which reflects in the fall in the gross numbers.

doire_2

Must have been the wrong type of snow

DaddyBear

martinbuckley wrote: »

Thoughts please Hamish.......

He doesn't need to. This is just a blip in the data. It's clear that we have a healthy and thriving housing Market built on a strong economy. Anyone believing otherwise is clearly doing too much independent thinking.

doire_2

martinbuckley wrote: »

Thoughts please Hamish.......

Up 200% in Aberdeen

ravenfield

martinbuckley wrote: »

Thoughts please Hamish.......

I'm sure he is preparing a case now.

Sir_Humphrey

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aaRFGTMPaQOo

Mortgage approvals fell to 49000 in January, down from 60000 in December. It is a bit difficult to blame the weather IMO as both months had a lot of snow. It will be interesting to see the February figures.

This could explain some of the slightly more generous mortgage deals we have seen since the New Year. If demand for loans falls, then so will the rates that are able to be charged (qv GlobalARTrader over on the Motley Fool board).

EDIT: Link repaired

bernard_shaw

Much talk of "headwinds" in the Market Commentary document.

the Bank of England is not confident of the resilience of economic recovery

disappointing fourth quarter growth numbers, following some improvement in the third quarter, from Europe (including Germany stagnating and Spain's economy contracting) show how fragile a recovery can be.

many commentators have stressed the need for a sustainable plan to get the public finances into better balance and the debate on when, where and how much to cut spending and/or raise taxes will inevitably play a central role in the election. Fiscal tightening after the election will take some of the impetus out of the recovery.

the CML recently highlighted the need to deal with around £300 billion of wholesale funding liabilities currently sitting with the authorities under various support schemes. Mervyn King made clear that the Special Liquidity Scheme would not be extended once it expires next year. This suggests that whatever is used to replace the funding, be it through the markets or modified official support, will raise funding costs. The Bank itself acknowledged this in its Inflation Report - the upcoming rollover of debt, together with regulators requiring institutions to hold more liquid assets, could impact on the supply of credit to households and businesses.

The governmental intervention in the markets, (while saving us from the total collapse of the payments system) has lead to an increase in medium-term volatility.

When a system becomes chaotic, any attempt to drive or dampen the oscillations merely adds another element to that already-chaotic system, leading to more pronounced unpredictability and wilder oscillations.