Why weak lending points to lower UK house prices

doire_2

http://www.moneyweek.com/news-and-charts/economic-indicators/uk-house-prices/02-uk-net-mortgage-lending-00011.aspx

purch

It's a jolly nice graph, but you havn't explained why.

I'm feeling a little misled, as your thread title promised far more than you delivered.

System

I suspect that number of transactions has a large part to play here which has been conveniently forgotten.

Really2

Would the fall off in mortgage lending have anything to do with interest rate falls and low SVR?

Would be more beneficial had they done lending for purchases (and transactions as mentioned above) and not all mortgages IMHO.

Really2

Also Inflation adjusted house prices in 1994 were around £72K-£75K not £50K as shown on the graph?

tyllwyd

The graph makes me think that the proportion of cash involved in house purchases must be much higher than before. If buyers can't get even 95% mortgages any more, won't that be one factor that pushes down mortgage lending compared to house prices? Maybe a relatively high proportion of house sales in recent years have been by investment buyers who haven't needed mortgages? Perhaps people just aren't trading up and taking on bigger houses and bigger mortgages?

To me that would point to a slowdown in the market - which I think we have definitely seen - but perhaps the rules of the game have changed and the two lines on the graph won't follow each other in the future.

Blacklight

Net mortgage lending. The answers there somewhere...

Sibley

It's well excepted now in all circles that house prices will never drop.
Granted they won't rise that much for the next few years but no dropping.

Why on earth would anyone sell cheap? No need to thanks.

abaxas

Sibley wrote: »

It's well excepted now in all circles that house prices will never drop.
Granted they won't rise that much for the next few years but no dropping.

Why on earth would anyone sell cheap? No need to thanks.

Maybe they are scared of 'missing the boat'? Would be awful to have known you could have sold for 200k when now all you can get is 160k.

Percy1983

Sibley wrote: »

It's well excepted now in all circles that house prices will never drop.
Granted they won't rise that much for the next few years but no dropping.

Why on earth would anyone sell cheap? No need to thanks.

But in a lot fo cases cheap isn't a problem, EG, my mum and dad bought at £40k and at its peak it was worth £145k, its now worth around £120k, do they lose anything for selling at £120k? no. That maybe a more extreme example but many aren't in NE and if they want something bigger the gap has closed actually saving them money.

With that there is people who can't see that, I asked my Dad in theory if he was to sell what would he want for it "its worth £145k this house" I did point out it wasn't to which he seemed a bit gutted, he couldn't see the bigger picture.

abaxas wrote: »

Maybe they are scared of 'missing the boat'? Would be awful to have known you could have sold for 200k when now all you can get is 160k.

I am actually seeing this on rightmove, I have seen a few adverts with lines like "£6k off asking price if you complete before 31/01/2011"

chucknorris

abaxas wrote: »

Maybe they are scared of 'missing the boat'? Would be awful to have known you could have sold for 200k when now all you can get is 160k.

Would it be that awful? How about when you factor in:

1. You only paid 50k
2. No intention of selling until they go back up (might be 10 years, so what rental profits are exceptional and will still be good when interest rates rise)
3. Rents are still at 2007 levels but mortgage rates have plummeted (hardly a time to sell up)
4. Capital gains tax was 40% in 2007 (now 28%)
5. Selling at the very top of the cycle requires hindsight or good luck (some STR's sold up as early as 2004 according to some old threads I have seen)