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27% DROP in number of Mortgage approvals!!
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phlash
Posts: 883 Forumite
http://business.timesonline.co.uk/tol/business/economics/article2737191.ece
Came across this article, it is a phenominal drop!! 27% drop in the number of approved mortgages from comparing Sep 2006 and Sep 2007. That represents a huge U-turn in the general public's sentiment.
The approved mortgages figures are taken as a leading indicator of future market conditions, which makes sense, since it gives us an indication of the demand for property. Couple this news with the fact that since February this year, house builder's shares have dropped 50%, meaning investors are shifting their money away from property related investments.
Another article recently talked of how 40% of mortgage products had been recently removed from the market, showing that the credit belt is tightening fast.
With such dramatic turns in these statistics, it shows that the market is as susceptable to the herd mentality as any speculative market. The British are very good at herd mentality.....fuel crisis, water shortages, Northern Rock etc, and it seems like it is spilling over into the property market.
Its been long understood that the fundamental principles have pointed to a housing market that is overstretched and bubble like, but it has been difficult to call when a turn may happen. The current news and statistics available, show that that point may now well have been reached. It will take a few months for hard data to show the falls.
I will continue to research and analyse. Anyone disagree with how I see it? Its just these facts seem overwhelming, we'll see if these approvals continue to fall, and the supply continues to rise.
phlash.
Came across this article, it is a phenominal drop!! 27% drop in the number of approved mortgages from comparing Sep 2006 and Sep 2007. That represents a huge U-turn in the general public's sentiment.
The approved mortgages figures are taken as a leading indicator of future market conditions, which makes sense, since it gives us an indication of the demand for property. Couple this news with the fact that since February this year, house builder's shares have dropped 50%, meaning investors are shifting their money away from property related investments.
Another article recently talked of how 40% of mortgage products had been recently removed from the market, showing that the credit belt is tightening fast.
With such dramatic turns in these statistics, it shows that the market is as susceptable to the herd mentality as any speculative market. The British are very good at herd mentality.....fuel crisis, water shortages, Northern Rock etc, and it seems like it is spilling over into the property market.
Its been long understood that the fundamental principles have pointed to a housing market that is overstretched and bubble like, but it has been difficult to call when a turn may happen. The current news and statistics available, show that that point may now well have been reached. It will take a few months for hard data to show the falls.
I will continue to research and analyse. Anyone disagree with how I see it? Its just these facts seem overwhelming, we'll see if these approvals continue to fall, and the supply continues to rise.
phlash.
I can take no responsibility for the use of any free comments given, any actions taken are the sole decision of the individual in question after consideration of my free comments.
That also means I cannot share in any profits from any decisions made!;)
That also means I cannot share in any profits from any decisions made!;)
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Comments
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If you read further articles you will find that the same is happening in the US, where this 'sub-prime' problem originated. The market over there is stacked with houses for sale, due mainly to the ARM's (Adjustable Rate Mortgages) re-setting at a higher rate. One example I heard of....a couple were facing a mortgage increase from 8% to 11%, costing them another $1200/month. (I did not hear what they currently pay, nor can I be bothered to work it out, but that's a heck of an increase)! The woman was working 3 part time jobs and hubby had one full time job, yet they were facing foreclosure due to the increase. These loans (ARM's) were made to the people with less than good credit, hence been 'sub-primers', and they can't afford the increase, hence the housing slump at present. It's not going to go away any time soon either.
This of course has a knock-on, ripple effect throughout...from DIY stores to construction, from furniture manufacturers to carpet makers...the list goes on.
Markets are all about supply and demand, and when there is plenty available and no demand the price drops.
Mortgage companies have tightened up their lending practices, and IMO quite rightly so. Why lend to those who obviously cannot afford the payments. It costs lenders a lot of money to foreclose and they do this only as a last resort.
The current economic crisis is mainly a result of the greedy Mortgage Brokers, who saw an oportunity to sell a large LTV mortgages to those people with less than good credit, at a higher than normal interest rate, so that they could take their commisions. It really stinks!
Thankfully, in the US, many of these brokers have gone out of business, but only in the last 2 months or so.0 -
As a layman, i think the short-sightedness of the lenders is going to bite back, with knobs on!0
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If only all the FTB'ers on this website would read this and realise what is happening to the market.....Its a great shame because a lot of them are going to lose their shirts because they don't understand the significance of this0
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Another House Price Crash trolling thread.
Reported.0 -
nollag2006 wrote: »Another House Price Crash trolling thread.
Reported.
Sorry, think I am missing something here. Why is this a trolling post? It is a link to a well known news site and a (very) recent news story.0 -
These loans (ARM's) were made to the people with less than good credit, hence been 'sub-primers', and they can't afford the increase, hence the housing slump at present. It's not going to go away any time soon either.
The same is happening over here. Once buyers get to the end of their 2 year fixed or discount they'll have to switch to the SVR.
People with good credit and low LTVs should be able to remortgage. Others with bad credit and high LTVs will be stuck and facing negative equity.nollag2006 wrote:Another House Price Crash trolling thread.
Reported.
Someone doesn't like reality! :rolleyes:0 -
Nollag , have you got your head in the sand
In the last decade a 100k house has gone up to 250-300k. Everyone says we have low interest rates
Would you rather have 100k loan at 12% back in the 1990's or today at 250k loan at 7%, we are way past where house crashed last time
Look at this , sadly this website is very out of date but it would be far worse if it was current
http://www.in2perspective.com/nr/stats/house-price-to-earnings-ratio.jsp
My 3 year old daughter could easily tell you what is going to happen next. This market has nothing to do with supply and demand (look whats happened in Japan) , it AFFORDABILITY0 -
Nollag , have you got your head in the sand
In the last decade a 100k house has gone up to 250-300k. Everyone says we have low interest rates
Would you rather have 100k loan at 12% back in the 1990's or today at 250k loan at 7%, we are way past where house crashed last time
Look at this , sadly this website is very out of date but it would be far worse if it was current
http://www.in2perspective.com/nr/stats/house-price-to-earnings-ratio.jsp
My 3 year old daughter could easily tell you what is going to happen next. This market has nothing to do with supply and demand (look whats happened in Japan) , it AFFORDABILITY
Wow! good graph Lypsey.
Wonder where it will go next?.......looks like peaks and troughs to me0 -
Arsenalred..... sorry
As I explained it is very out of date , the market will ALWAYS find its average , its not difficult is it , I'm afraid0 -
Ok, thinking out in type....
If 27% of people are now getting knocked back could that then mean that for the very short term the markets will go a bit wobbly but in the longer term be more secure because less people who possibly shouldn't have gotten mortgages now most likely won't because lenders are being more sensible in the money they are lending, so those that do should in theory be able to afford them? phew, and breath...
Or have I missed the point completely??[STRIKE]Student Loan = 798 @ Jan 2013 Target date to clear = 2013 DONE [/STRIKE]
Mortgage= [STRIKE]38100 @ Feb 2013 Target date to clear = 2026[/STRIKE], 33044 @ April 2015, New target date = Jan 2025
Credit card = 3300 @ April 2015 Target date to clear = April 2016
Debt free nerd no. 540. Proud to be dealing with my debts
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