Sorry to be a party pooper, but hold fire on bigging up the mortgage figures
There has been much joy in the housing sector at the news that the number and amount of home loans approved by banks grew for the third consecutive month in February, according to the British Bankers’ Association.
While this is clearly not more bad news for housing and homes loans businesses it may be worth holding back on hopes that this represents the start of an upward slope.
Certainly the figures are consistent with other data indicating the first signs of “green shoots”. And the surveyors’ body RICS has been quick to suggest that this mortgage data concurs with its figures on growing interest being shown by buyers and has used the BBA figures to dismiss claims that the interest was just “window shopping”.
But with the spectre of unemployment and short time working looming large and with a consensus among experts that house prices have further to fall, it may be that the rise in the number of mortgages approved during the three months to February proves little more than a slight upward adjustment.
Most people have at some point to move and even in this climate plenty will prefer to buy than rent. Indeed there may have been a backlog with more than usual holding back in the run up to the festive season, which has assisted in bumping up the February figure. Without closer examination it is hard to know.
But with interest rates down sharply and mortgage lenders slightly more willing to lend (providing there is a healthy deposit) it would be unreasonable to assume that lending would remain at the crisis levels of late last year.
It is worth noting that, according to the BBA figures, the number of loans approved for home purchase in November 2008 was about 20% that of November 2006. Let’s face it you would be shocked if the numbers didn’t bounce back from that.
Naturally it is good when things stop getting worse. But frankly looking at the figures for mortgage approvals over last winter, there was little scope for them to get much worse.
3 thoughts on “Sorry to be a party pooper, but hold fire on bigging up the mortgage figures”
I think we need to remain positive about the housing market and things in general, people are buying property again, banks just need to be working to lend and help the situation. I recently got some very good advice on property and think that I can put it to good use.
Brian,
Discussions with a few people over the weekend, who are just putting their properties on the market at the price they bought them for back mid-2006, makes me realise that the housing downturn, at least in terms of prices, has a long way to go.
All we need to inject some confidence back into the markets is for banks to start lending 7 times salary multiples to high risk borrowers based on 125% of the value of the property. This debt could be re-packaged and sold on to the international money market as AAA-rated high quality investments to some unsuspecting pension fund. As soon as house prices start to take off, due to DEMAND OBVIOUSLY (as we live on a small island and more people are getting divorced / living longer / immigration etc etc), why not let existing mortgage holders take as much equity out of their property as they see fit (only for lifes essentials like 4×4’s, private number plates, and Caribbean cruises, of course). Whilst we are at it, why not de-regulate the financial sector making them completely unaccountable, and force the Bank of England to rip up the rule book on interest rates, setting them at their lowest level in history for a substantial number of years? SIMPLES!
(I recently got some good advice on property. Don’t touch it with a barge pole for the next 8 years)
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