Tumbling mortgage demand

Wookster

Mortgage approvals for home purchases fell sharply to 43,450 in March, their lowest level since December 2010, according to the latest Mortgage Monitor from e. surv chartered surveyors,
It blamed the fall on increasing funding costs which has forced banks to reduce lending to borrowers with small deposits.

The fall was driven largely by a sharp drop in lending to first time buyers. Loans for purchase of the cheapest property – typical first time buyer homes – fell 14pc in March to their lowest level for 15 months.

Rather a gloomy article suggesting that the stats show that any market 'progress' over the last few months is stopping.

I suspect that if the market was just allowed to correct itself rather than be subject to interference we'd see more activity.

HAMISH_MCTAVISH

It blamed the fall on increasing funding costs which has forced banks to reduce lending to borrowers with small deposits.

So not tumbling demand at all, but rather increased mortgage rationing.

Graham_Devon

As I stated on one of Hamish's threads yesterday, the lenders are now going to reign in lending, as the cost increases and the funds decrease. In part, this is caused by pretend and extend (economists words) and money not circulating in a functioning housing market.

But the major fact is sentiment and funding costs.

Deposits could also rise again too, as lenders protect themselves against further falls in the housing market (again not my words).

ILW

Why is the mortgage market not based on a price versus demand model like most other markets?

StevieJ

Some fall in one month?

typical first time buyer homes – fell 14pc in March to their lowest level for 15 months

chewmylegoff

StevieJ wrote: »

Some fall in one month?

Good selective quoting!

Just looks like the rush to beat the stamp duty change falling out of the figures to me.

shortchanged_2

Looks like there is only one solution to this problem. A fall in house prices.

HAMISH_MCTAVISH

shortchanged wrote: »

Looks like there is only one solution to this problem. [STRIKE]A fall in house prices.[/STRIKE] An increase in mortgage funding.

Fixed that for you.

shortchanged_2

HAMISH_MCTAVISH wrote: »

Fixed that for you.

Why are you so scared and against a fall in house prices Hamish even if it would help get the housing market moving again?

HAMISH_MCTAVISH

shortchanged wrote: »

against a fall in house prices Hamish ?

Obviously.

Look at Ireland....

Prices down 50% plus from peak, economy in ruins, unemployment at nearly 15%.

Significantly falling house prices are an economic catastrophe to the wider economy, and only a fool or a masochist would want that.

shortchanged_2

HAMISH_MCTAVISH wrote: »

Obviously.

Look at Ireland....

Prices down 50% plus from peak, economy in ruins, unemployment at nearly 15%.

Significantly falling house prices are an economic catastrophe to the wider economy, and only a fool or a masochist would want that.

You are getting desperate now Hamish. The housing market in Ireland was the symptom of a bigger problem in the Irish economy i.e to rapid, booming economic growth fueled by unsustainable borrowing levels. Hence there was massive HPI in Ireland. To be honest Ireland was a disaster waiting to happen.

The UK housing market has also become overinflated and whilst not as bad as Irelands still needs to drop because it was also fueled by loose lending practices which you wish/need to return in order for prices to increase.
This would not be a good thing for the UK housing market or economy in general because high house prices just suck up more of peoples disposable income.

What is needed it a true house price correction so that housing becomes more affordable again without the need for 4+ times income mortgages etc, then and only then will the housing market start to recover.