Borrowers pay off £8bn mortgage debt

Graham_Devon

£8bn has been paid off the UK collective mortgage debt by houseowners in the 3rd quarter of 2012.

The BOE figures show that money is still being injected, reversing the trend of equity withdrawal seen before the crisis.

The BOE state this is not overpayment, rather repayments outstripping new borrowing. I.e. people just paying their mortgage each month, while some are simply unable to do anything else and switch or take new borrowing.

The CML state that remortgage figures are down 14% on the year previous.

Have we entered a new era, where people are actively refusing new debt? Or is it simply an era where they simply can't get hold of more debt?

I'd prefer it to be the first, but instincts suggest it's the second, on the whole.

Theres some other stuff in the article, such as how previous spending was masked by housing equity withdrawl, how some of those with surplus funds are overpaying, and how others are struggling to keep up with the rise in living costs, even though mortgage payments are at their lowest ever etc.

http://www.guardian.co.uk/money/2012/dec/31/borrowers-pay-off-8bn-mortgage-debt

wotsthat

Graham_Devon wrote: »

The BOE state this is not overpayment, rather repayments outstripping new borrowing. I.e. people just paying their mortgage each month, while some are simply unable to do anything else and switch or take new borrowing.

I wonder how much of the mewing figures pre 2007 were simply related to the transaction levels at the time. i.e. the opposite of the above BoE argument.

Maybe the 'party' (which passed me by) was in part related simply to the availability of credit to fund a larger number of higher value entrants to the housing market rather than just being spent on champagne and fast women.

Graham_Devon

wotsthat wrote: »

I wonder how much of the mewing figures pre 2007 were simply related to the transaction levels at the time. i.e. the opposite of the above BoE argument.

Maybe the 'party' (which passed me by) was in part related simply to the availability of credit to fund a larger number of higher value entrants to the housing market rather than just being spent on champagne and fast women.

Housing equity withdrawal is just that. Withdrawing equity.

Remortgaging due to a move is a different ballgame. So you are comparing apples and bananas here.

wotsthat

According to the BoE

Housing equity withdrawal (HEW) is classed as the balance of effects on the stock of housing equity from:

Changes in the stock of secured lending when households take out or repay debt......

Increasing housing transactions are (generally) associated with a positive figure as we saw pre-2007. The BoE say that reducing transactions is associated with a negative figure as we've seen for 4.5 years.

the fall in housing equity withdrawal since the financial crisis is likely to reflect a fall in the number of housing transactions

Doubtless consumer spending was part fueled by HEW but if it's related to transactions then it's related whether HEW is positive or negative.

http://www.bankofengland.co.uk/statistics/Pages/hew/2012/sep/default.aspx

System

HEW seems to be a simple net balance between loans lent and loans repaid, Graham seems to be talking about MEW? I always thought "MEW" was simply taking on more debt.

Graham_Devon

wotsthat wrote: »

According to the BoE



Increasing housing transactions are (generally) associated with a positive figure as we saw pre-2007. The BoE say that reducing transactions is associated with a negative figure as we've seen for 4.5 years.



Doubtless consumer spending was part fueled by HEW but if it's related to transactions then it's related whether HEW is positive or negative.

http://www.bankofengland.co.uk/statistics/Pages/hew/2012/sep/default.aspx

HEW isn't MEW.

You simply can't make out that equity withdrawal figures were actually increased by people moving around more.

You could make the argument that some equity withsrawl was being used to make another house purchase, but again, the figures are seperate. Doesn't really matter what the equity withdrawal was used for.

wotsthat

Graham_Devon wrote: »

HEW isn't MEW.

You simply can't make out that equity withdrawal figures were actually increased by people moving around more.

You could make the argument that some equity withsrawl was being used to make another house purchase, but again, the figures are seperate. Doesn't really matter what the equity withdrawal was used for.

Hew and mew are the same according to the BoE.

Prior to 2007, Bank publications referred to HEW as mortgage equity withdrawal.

So I can make out that that HEW is increased by people moving around more - the BoE seem to agree with me.

What I can't do is rely on there being a relationship between transactions and HEW but only apply it in a one-sided manner.

http://www.bankofengland.co.uk/statistics/Documents/hew/qb110205.pdf

ruggedtoast

I stopped being able to follow any of this after post 3.