Green Shoots in the UK Economy and Markets?
There's been a lot of positive talk in the UK housing market over the last few days or so........Onward Christian Soldiers.....
Relaxation of the credit stanglehold?
Total net lending to individuals rose by £0.3 billion in October. The twelve-month growth rate fell to 0.7%, and the three-month annualised growth rate increased 0.3% to 0.5%, according to new figures from the Bank of England.
Money for New Mortgages?
The value of building society mortgage approvals in October was £1,511 million - broadly in line with the £1,565 million of approvals in September according to new figures from the Building Societies Association.
Gross lending also remained steady with £1,666 million being lent in October compared to £1,605 million in September.
Within the total, net lending secured on dwellings increased by £0.9 billion, in line with the September increase and above the previous six-month average of £0.6bn. The twelve-month growth rate was unchanged, at 0.8%. The three-month annualised growth rate increased 0.4 percentage points to 1.0%. Within total secured lending, secured lending by banks (excluding the effects of securitisations) increased by £3.1 billion, slightly below the September increase (£3.3bn) but above the six-month average of £2.6bn.
The number of loan approvals for house purchase (57,345) was above the September figure (56,205) and above the previous six-month average, whereas approvals for remortgaging (24,596) were below both the September figure and the previous six-month average.The number of loans approved for other purposes (29,195) was higher than in September and higher than the previous six-month average.
Credit Cards - Britains 'Secret' loan sharks!
Consumer credit fell by a net £0.6 billion, below the previous six month average of -£0.1bn. Credit card lending increased by £0.1 billion and other loans and advances fell by £0.7 billion. The annual growth rate of consumer credit continued to fall, to -0.1%; the three-month annualised growth rate fell to -2.2%.
Housing Market still in Cheyne-Stokes
House prices grew by 0.2% in November according to the latest national house price survey published by Hometrack, the housing intelligence business - the fourth consecutive increase in prices, bringing the year on year rate of house price growth to -2.9%.
Commenting on this month's survey, Richard Donnell, Director of Research said:
“There are three distinct elements to the latest results from this and other recent surveys. This first is that prices continue to post month on month increases. The second is the extent of prices rises across the country and the number of households who have seen an improvement in market conditions over 2009. The third, and most important element, is the short term outlook for prices.”
“This is the third consecutive month that the survey has posted a 0.2% price rise. Add to this a growth in sales volumes and it is easy to see how agents are beginning to feel more confident about sustainable pricing levels - at least in the short term. But this pick up in market activity and prices is not one that has been felt across the whole country. The stark reality is that there are large swathes of the country where prices have remained unchanged or have seen continued price falls.”
Over the last 6 months London and the South East have consistently seen the largest number of postcodes registering price rises - values are up across 78% of London and over half of the South East. Yet in five regions less than 20% of the market has registered any price rise.
Personally I see nothing in these indicators to warrant any change of course by the Bank of England regarding Interest Rates.
It is quite clear however that the money invested by the British people into the Quantitive Easing 'project' is clearly designed to line the pockets of those within the system where the money will not 'trickle down' into the general money supply.
The credit strangulation of SME's and individuals is as bad as ever!
Labels: Business, Consumer Credit Law, credit cards, credit crunch, Debt, Economy, House prices, housing market, money supply, Money System, pump priming, Quantitative Easing, UK government
Government Loans for First Time buyers
Those self serving suits from around Threadneedle Street who we saw exposed in Channel 4's excellent documentary on non-executive banking directors, have been racking their brains recently on how to get the first time buyer market moving.
Laughing into their cafe crappe they must be rubbing their hands in glee that the public furore has shifted onto their erstwhile employers - the MP's of Westminster or as Sky TV would have us call it 'The Rotten Government'
So on the back of the Speaker Bashing, the Government in the guise of Lloyds TSB has today launched a new first time buyer mortgage product called- ‘Lend a Hand’ (who thought of that?) - offering 95% loan to value (LTV)
‘Lend a Hand’ or 'Cop for Your Kids' as it is soon to be known, which is obviously aimed at the middle classes with kids still at home, offers first time buyers a 95% loan to value (LTV) mortgage by taking a legal charge on a savings account belonging to their parents, grandparents, rich friends or anyone else willing to cough up the dough to get the kids a place to live.
The new product is a fixed rate mortgage at 4.39% for 3 years, and is nearly £100 a month less than the industry average 90% mortgage rate at 5.98%.
Hmm - isn't the base rate currently 0.5%?
Lloyds are still looking for a 25% deposit but they are allowing this to be made up through a combination of a minimum 5% deposit by the first time buyers and the remainder from the parents or backers savings account.
For example,on a £100,000 property, a 95% LTV mortgage of £95,000 is provided by Lloyds TSB at a three-year fixed rate of 4.39% with a £995 fee. £5,000 is provided by the first-time buyer as a deposit for the property, £20,000 is provided by parents, grandparents or friends and held in the Lloyds TSB ‘Lend a Hand’ savings account earning a fixed rate of 3.5% for 42 months.
Why couldn't they offer the rate Tax-free like an ISA if they really want to encourage people to get involved ?
So what are the multiples of salary limits and can the first time buyer really afford the mortgage repayments?
Furthermore Insurance Blogger is amazed that the Government thinks that there are lots of people have got £20 grand to spare during the current credit crisis and recession, plus a possible further five thousand on top if they really want their kids out the house?
At least Lloyds TSB isn't allowed to sell
mortgage payment protection insurance at the point of mortgage sale any more! Granny's pension wouldn't stretch to that!
Labels: credit crunch, Gordon Brown, House prices, housing market, mortgage, mortgage payment protection insurance, nationalisation
House Prices tumble as sales dry up
New data from Royal Institution of Chartered Surveyors (RICS) has shown that house prices have fallen to a 30-year low over the last 3 month period and the number of surveys fell to the lowest since it began in 1978, with sales declining from 11.5 to 10.9.
RICS believe it is the lack of
available mortgages which is overwhelming the market. However, they believe that sales would start to rise again now that more sellers are assenting to drop their asking price.
And with the Bank of England slashing interest rates by 1.5% , bringing borrowing costs down to 3%, there have been some serious efforts to avoid a deep recession and hopefully these actions will help to enhance sales.
However, Britain’s largest bank, the Nationwide, believe that house prices will continue to fall over the next few years.
Here we agree with the latter, and despite the drop in interest rates, believe a recovery in the housing market is still a long way off, with the inevitable repossessions and falling house prices to beyond 30%, eventually fuelling a recovering economy in 2011, just one year prior to the London Olympics.
Labels: House prices, housing market, mortgage
Nationwide gives false hope to housing market prices
U.K. house prices dropped 1.7% in September compared to the same point a year ago, according to data compiled by the Nationwide Building Society.
The monthly fall means that house prices fell 12.4% on annual basis, thought to be a direct knock on effect from ongoing turmoil in the mortgage market.
The average house price now sits at £161,797 a fall of £2,857 from last months average of £164,654.
Nationwide's Chief Economist, said:
“House prices fell by 1.7% in September. This brings the price of a typical house in the UK to £161,797, 12.4% less than at this time last year.
House prices have now fallen for eleven consecutive months, but the monthly rate of fall has been almost unchanged in the last three months.”
“The less volatile three-month-on-three month series has also barely changed for the last three months, after accelerating in the first half of the year. This may suggest the beginning of some stabilisation in the pace of house price falls."
Insuranceblog is inclined to strongly disagree with this analysis from Nationwide.
House prices in the middle bracket of 250000 to 500000 have dropped in most cases 25 to 30 percent in order to sell.
In fact ask any estate agent and they will tell you that it is only those who bite the bullet that sell.
The problem with the whole housing market is that this mid-sector price range is the most bound, with owners hanging onto unrealistic valuations and prices.
Unrealistic owners are refusing to drop their prices because many paid over the odds in the first place. In some cases a 30% drop would put them in negative equity.
A 30% adjustment in the market downwards would be a realistic correctional target in order to see liquidity and movement in this mid-sector, which is the only solution to the current credit crunch crisis.
When it happens - watch Nationwide eat their words!!
Labels: credit crunch, House prices, housing market, Nationwide
