increases expectations that house prices will drop

brit1234

Mortgage lending slide increases expectations that house prices will drop

Sean Farrell


Saturday 19 November 2011

Gross mortgage lending fell last month from September's two-year peak, adding to expectations that already stagnant house prices are likely to fall as the economy weakens.

Figures from the Council for Mortgage Lenders estimated that gross lending was £13.1bn in October, down 4 per cent from the previous month.

Lending was 13 per cent up on a year earlier but the figure was boosted by remortgaging as borrowers snapped up fixed-rate deals at near record lows. Lending is still far down on activity levels seen before the recession. The third quarter's £39.4bn of gross lending was well below the £60.7bn in the same period of 2008.
The October lending number covered a month when a barrage of gloomy indicators hit consumer confidence at a time of rising unemployment, high inflation and chaos in the eurozone. Banks also struggled to fund their loans as money markets froze over because of fears about the eurozone crisis.

Although interest rates are not expected to rise until 2013, this reflects weakness in the economy that is likely to dampen demand in the housing market. Howard Archer, an economist at IHS Global Insight, said: "We see house prices falling by around 5 per cent by mid-2012. Furthermore, we believe that there are mounting downside risks to this forecast.

"We suspect that squeezed purchasing power, a now markedly weakening labour market and major concerns over the economic outlook will limit potential buyers and weigh down on house prices. And there is a very real danger that banks' future ability to lend to homebuyers could be hit by difficult wholesale funding conditions."
The CML economist Bob Pannell argued that the underlying trend in the housing and mortgage markets had not changed materially in recent weeks.

"The immediate direction of house purchase activity is a little unclear, although the story for remortgages, with strong year-on-year increases in activity this year, is for the time being more straightforward," Mr Pannell said.

He called on the Chancellor to introduce measures to stimulate the housing market in his Autumn Statement at the end of this month. "The housing market ... offers a tried and tested means of providing a timely stimulus to the wider economy."

http://www.independent.co.uk/news/business/news/mortgage-lending-slide-increases-expectations-that-house-prices-will-drop-6264655.html

Pimperne1

IHS Global Insight - the same people who predicted a 10% drop last year and a 15% drop in 2009.

HAMISH_MCTAVISH

Howard Archer, an economist at IHS Global Insight, said "I've been spectacularly wrong for a very long time now, but what the heck, at least I'm getting my name in the paper. Hi Mum!!!"

HAMISH_MCTAVISH

Pimperne1 wrote: »

IHS Global Insight - the same people who predicted a 10% drop last year and a 15% drop in 2009.

They do seem to be determined to take over the mantle of "worst forecaster ever" from Capital Economics.:D

brit1234

HAMISH_MCTAVISH wrote: »

They do seem to be determined to take over the mantle of "worst forecaster ever" from Capital Economics.:D

So what is your prediction for prices by mid 2012?

They say 5%, I say about 3.5% down, What's yours?

nollag2006

HAMISH_MCTAVISH wrote: »

They do seem to be determined to take over the mantle of "worst forecaster ever" from Capital Economics.:D

Nope

That prestigious title still goes to brit1234 for his truly prescient comment that house prices will be down 50% by Christmas 2009.

Ho ! Ho ! Ho! - as Old St Nick might have said on 25th December that particular year

:rotfl:

brit1234

Nollag, yawn, yawn. Same type of boring simple minded reply yet again, yawn.

So what's your house price prediction for Mid 2012 then?

julieq

As can be seen from the ftse thread and just by looking at the threads here since 2008, the bears massively overestimate the downside and discount the upside. It was ever thus. You would think that by now they'd notice and adjust, but no. Still drawing lines sloping 30% downwards towards oblivion.

And of course real terms devaluation is the new nominal price fall, and 20% nominal is the new 70% by Christmas.

brit1234

The falls are still happening, just at a slower pace due to the dramatic interest rate cut.

However wages freezes and inflation are starting to counter the interest rate cuts. Unemployment is growing along with repossessions.

Even with the magic trick on Monday prices will still fall.

nollag2006

brit1234 wrote: »

The falls are still happening, just at a slower pace due to the dramatic interest rate cut.

What falls? You sig clearly shows that the main indices are all turning positive

What interest rate cut? The Bank of England rate has been 0.5% for years now.

brit1234 wrote: »

Even with the magic trick on Monday prices will still fall.

You sound almost as certain as you did when you predicted house price falls from peak of 50% by Christmas 2009

:rotfl:

illgetthere

the only way i will drop 20%+ on my house is if i was ever forced to sell, and that would be the only reason. There is no way that people would happily drop their asking prices if they were financially stable and just selling their property.