Mortgages repaid at record rate

RenovationMan

Blimey Graham, your analogies are more confusing that the actual subject matter you're trying to simplify. Here is a simpler explanation that actually discusses mortgages, not credit cards:

"Mortgages paid down by record £9bn in quarter

Homeowners pumped a record £9.1bn into reducing the debt on their properties in the second quarter, the Bank of England revealed yesterday.

It was the highest negative figure since comparable records began in 1970 and means the total amount owed on mortgages has fallen by £92.9bn since the height of the credit crunch.

The trend for increasing the amount of equity homeowners have in their property has been gradually increasing since 2008. That is partly on the back of the flat or falling housing market, but also because of volatile stock markets and record low interest rates."

http://www.independent.co.uk/news/business/news/mortgages-paid-down-by-record-9bn-in-quarter-6270187.html

Graham_Devon

You didn't like it then rennoman?

OK, try this for size, direct from the BOE:

"The decline in HEW – and move to injections of housing equity - since the start of the financial crisis (Chart 1) has not been associated with an increase in repayments of secured debt."

Or how about this? Should it be ignored? Clearly, it should, when all you want to say is "everything is fine, people are funneling cash into their mortgages".

"An article in the 2011 Q2 Quarterly Bulletin explains that the fall in housing equity withdrawal since the financial crisis is likely to reflect a fall in the number of housing transactions, with little sign that households in aggregate are making an active effort to pay down debt more quickly than in the past"

Ignore all you like. Clearly people are not overpaying en masse.

wotsthat

Graham_Devon wrote: »

"An article in the 2011 Q2 Quarterly Bulletin explains that the fall in housing equity withdrawal since the financial crisis is likely to reflect a fall in the number of housing transactions, with little sign that households in aggregate are making an active effort to pay down debt more quickly than in the past"

Ignore all you like. Clearly people are not overpaying en masse.

The fact of the matter is that people are paying down mortgage debt at a record rate - end of.

It's great news however you look at it because overall people are improving their LTV's which reduces risk to the bank as well as the debtor. Additionally it allows mortgage holders access to better mortgage rates.

I read the BoE report when it came out. I thought it was well written and thought out if a little dry. I've no axe to grind except I think their conclusions are academic rather than 'real life'. The MFW board for example is one of the most read boards on this site and multiple posters here have reported details of their own overpayments.

There's no doubt that MSE isn't representative of the population as a whole. However, to conclude that active overpayment isn't a significant part of these figures doesn't ring true.

Just because it's a report from the BoE doesn't mean it's gospel either. Certainly their inflation reports aren't accepted as a universal truth that's for sure.

It looks as if transactions are increasing so it will be interesting to see if the overpayment trend continues. My prediction is that it will and that as soon as interest rates increase we'll see huge overpayments of capital. Why? Because I think significant numbers of people have realised that overpayments might be better saved in accounts where savings interest is greater than mortgage interest. These fund are destined for mortgage accounts as and when the mortgage rate exceeds the savings rate.

Graham_Devon

wotsthat wrote: »

The fact of the matter is that people are paying down mortgage debt at a record rate - end of.

Yup...

So why the desperation to make out it's actually people overpaying? Thats completely wrong...or at least there is no evidence, apart from your anecdotal stuff from people on a mortgage free wannabe board....who somewhat surprisingly (?!) paying down their mortgages.

Somewhat surprisingly, quad bike owner forums are often populated with people who own quad bikes.

The fact is, were paying debt down, which is good.

HAMISH_MCTAVISH

Graham_Devon wrote: »

direct from the BOE:.

Oh, so NOW you want to quote a BOE report as gospel.:rotfl:

Do make your mind up Graham....

Graham_Devon

Alright, well I'm not going to enter a to and fro as to who we are supposed to believe, depending on whether the figures they realise back up the bullish point of view or not.

I've had problems with the BOE predictions. And quite rightly too, considering they have all been wrong. These are not predictions, they are results.

It's clear the bullish now want to ignore the BOE and put their own slant on the figures. That's fine. Carry on. Ignore the evidence. It's nothing new!!

Remember....when the inflation figures come out next and it shows a drop...they are to be ignored, and classed as wrong

wotsthat

Graham_Devon wrote: »

So why the desperation to make out it's actually people overpaying? Thats completely wrong...or at least there is no evidence, apart from your anecdotal stuff from people on a mortgage free wannabe board....who somewhat surprisingly (?!) paying down their mortgages.

I'm making a rational argument.

However, I can understand the accusation. That's your VI, your raison d'etre. You would like us to believe that people don't have a spare penny that they could possibly pay into their mortages and when rates rise by 0.1% thousands of people will be repossessed and you'll be able to take a step up the housing ladder or buy the rest of your house cheaper.

Yes I know you haven't stated that now or in the past but it's certainly the impression you give.

Of course me accusing you of arguing with your VI leaves me open to the same accusation. Maybe I want to believe that things aren't as bad as you suggest because I'm s**t scared that house values might fall and interest rates rise.

Maybe your view is overly pessimistic and mine overly optimistic. Chances are we are both wrong to a greater or lesser degree - desperate, however, I'm not.

RenovationMan

Graham_Devon wrote: »

You didn't like it then rennoman?.

No, I told you that I didn't. As I said, I don't see why you need to create a more confusing analogy using a financial product totally unrelated to what we are discussing (mortgages). You seem to do this a lot and I'm still unsure whether you do it deliberately to muddy the waters or whether you genuinely think your confused analogies help.

Graham_Devon wrote: »

OK, try this for size, direct from the BOE:

"The decline in HEW – and move to injections of housing equity - since the start of the financial crisis (Chart 1) has not been associated with an increase in repayments of secured debt."

Or how about this? Should it be ignored? Clearly, it should, when all you want to say is "everything is fine, people are funneling cash into their mortgages".

"An article in the 2011 Q2 Quarterly Bulletin explains that the fall in housing equity withdrawal since the financial crisis is likely to reflect a fall in the number of housing transactions, with little sign that households in aggregate are making an active effort to pay down debt more quickly than in the past"

Ignore all you like. Clearly people are not overpaying en masse.

I don't think you quite understand what the BoE are saying here. I'll help, you have to ask yourself where the HEW money is 'going'.

Graham_Devon

wotsthat wrote: »

I'm making a rational argument.

However, I can understand the accusation. That's your VI, your raison d'etre. You would like us to believe that people don't have a spare penny that they could possibly pay into their mortages and when rates rise by 0.1% thousands of people will be repossessed and you'll be able to take a step up the housing ladder or buy the rest of your house cheaper.

That's a pretty long winded way of having a go.

I'm JUST looking at what the BOE state. They state it's not due to overpayments. That's all I'm highlighting.

You can slap whatever psycological reason you like on why I'm doing it.

But the real reason I'm doing it is because posters wish to make out something different is happening to what is actually happening. That is all. I've already suggested that of course there are those overpaying, so your point about people not having a penny to rub together is a complete fabrication.

JonnyBravo

Graham_Devon wrote: »

But the real reason I'm doing it is because posters wish to make out something different is happening to what is actually happening. That is all. I've already suggested that of course there are those overpaying, so your point about people not having a penny to rub together is a complete fabrication.

Yes I think he said it was a fabrication.
But it is the impression you give.
You can say it's not what you intend, but you can't ask me to change my perception just because you don't like it.