The number of mortgages approved for house purchases fell again in September, to just 31,104, making net mortgage lending the lowest for a decade.
The figure, from the British Bankers Association, comes after the Council of Mortgage Lenders had said that the level of gross mortgage lending was also at its lowest for a decade.
The two sets of figures contrast with the much better news that the British economy grew by 0.8% between July and September.
Meanwhil, borrowers are taking out lower house buying loans. Figures from the British Bankers Association showed that the average value of the loans was £142,900, down from £143,500 in August. The average was some £5,100 lower than the average of the previous six months, although 4.1% higher than a year ago.
Net mortgage lending by the major banks, which strips out redemptions and repayments, stood at £1.6bn in September, down on the previous month’s total of £2.5bn and the lowest figure since October 2000.
BBA statistics director David Dooks said: “Demand for new mortgages remains low despite more properties on the market and falling house prices.”
People’s overall reluctance to borrow is also seen in the BBA’s figures for unsecured credit. Repayment of credit card debt is narrowly outstripping the amount of new borrowing. The only reason that credit card borrowing in total rose slightly in September was because of the build-up of interest on existing debts.
Demand for personal loans also continued to fall. New borrowing via these loans was 7% lower in September than a year earlier.
Simon Rubinsohn, RICS chief economist, said: “While last week’s transaction data from the HMRC recorded a small increase in sales activity in September, the BBA figures paint a more worrying picture, with the number of mortgages approved last month slipping to the lowest level since March 2009.
“This widening gap between the two series highlights the continued importance of cash buyers in supporting the residential market’s current challenging circumstances. Significantly, there is no reason to expect finance to become more freely available in the near term and, quite possibly, for some time to come, which points towards the emergence of a new reality in the housing market.
“However, it is not just those working in the residential sector who will suffer in this environment. More generally, people’s ability to move for work is also likely to be affected by ongoing problems surrounding the completion of transactions.
“This influence on economic performance will become particularly important over the next 12 to 24 months as public spending cuts begin to bite and jobs are lost.”
Andrew Montlake, director of independent mortgage broker Coreco, said: “Figures continue to remain gloomy and the expected pre-Christmas bounce has so far failed to materialise. But this is not simply a case of lack of demand. Whilst the fall-out from the Spending Review may make buyers more cautious, it is ever-tightening lending criteria that continues to stifle the needs of many decent borrowers who wish either to remortgage or move into their first property.
“It is a shame there are many who are unable to take advantage of some of the cheapest mortgage products we have seen, or are likely to see, for a long time.”
Jonathan Samuels, CEO of specialist lender Drawbridge Finance, said: “The latest figures from the BBA are a reflection of just how cautious consumers have become.
“Despite falling house prices and some very competitive mortgage products, creating almost ideal buying conditions, borrowers overall are continuing to sit on their hands.
“Demand has been decimated by concerns over the effects of deficit reduction.
“The mortgage market is likely to stay in this limbo until the Spring of 2011 at the earliest, with house purchase approvals consistently low.
“The contrast with professional property investors couldn’t be sharper. Activity levels are rising all the time and demand for finance is stronger than ever. The market, as happened in 2008, is splitting in two.”
House buyers sit on their hands as mortgage levels drop
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Comments
Dearest Jonnie
As it happens I am up Sh1t Creek, which coincidently isn't too far from Canal Street. (I was a hack for "the Grauniad")
Being without a paddle so to speak, on account of a mad witch and her plague of midget trolls, I doth wonder if I might apply for your position.
Admittedly I have very little knowledge about anything and have no idea what a value is, but I do have lots of advice and opinions.
Although the weekly salary is a little less than I am used to I am happy to condescend and take to position off your hands.
Sincerely yours
Gourmand
Look - just go and 'engineer' something, will you? Your caustic rants are unneccessary. You have a job: Estate Agents have a job. Hopefully - and according to you, definitely - your paths never need to cross. And no - I'm NOT an Estate Agent so don't even bother to start...
Bob: Only 20%? You disappoint me. The norm on here is 300%. I evpected better of you. Shocking to see such a lack of ambition in these times...
"Caustic attitude"?? That's rich, coming from you, pal! Check again... you will find the date I quote is 100% correct - and it's from your no-doubt favourite bunch of moaners at HPC! "Forget inflation." - TELL THAT TO THE GOVERNMENT, not me! Sorry if it weakens your little argument. You still haven't answered my question - WHAT THEN?
I give up - the late summer/autumn slump is as much to do with worries about the public spending review.
Now that that is out of the way, we only need to wait for Christmas to pass, then New Year, then for the Snow to go, oh, and after Easter and the kids Exams are out of the way, sorry, the Summer Holidays get in the way then don't they - anyway after all of that the market will bounce back - I think.....
Or perhaps the return of the first time buyer might help - what are they waiting for - oh yes their loved ones to pass and leave them some brass......
**********VACANCY********
We are seeking a residential property price expert – the successful candidate must believe they are a complete genius, have no real grip on reality and be able to bounce numbers about that suit their own pitiful salary – the ability to divide any number by 3 will be beneficial.
If you are one of those noisy odd people that think you can shout house prices down and have never called the market right resulting in you having never made money from property and sound like a loner that cruises estate agency websites at night like a closet homosexual cruises Manchester’s Canal Street at a weekend then we want to hear from you.
Salary is £25k which is probably more than you are on now and we will chuck in a voodoo doll of an estate agent so you can satisfy your urges by stabbing pins in it, well at least until your Mum comes into your room with your washing.
…………………………………….can anyone think of a candidate for this one? – Bob, any ideas mate?
Jonnie
Paul - if a house is ludicrously over-priced re its asking price then the amount of deposit needed, base rate are factors in that ludicrously priced asking price and whether someone bothers viewing let alone puts in an offer.
If a house is, for example, 300K asking price when it should be a third less at a realistic 200K, then the deposit the buyer needs will be greater than if the house was on the market for its true value of 200K. The monthly mortgage repayments will thus be more and probably too high for many buyers to even consider viewing.
But...
If the house was on the market for its true value then buyers would need a smaller deposit and also their monthly mortgage repayments will be less - THEREFORE MAKING IT MORE LIKELY THAT BUYERS WILL GO OUT AND VIEW IT AND MAKE AN OFFER.
Gee, this is BASIC economics... No, it is BASIC maths!
I find what you typed hilarious. Can you hear it - I am laughing at you!
LOL!
Paul - What is a 10% deposit on a 300K house?
What is a 10% deposit on a 200K house?
What is the difference between the two?
What would the mortgage monthly repayments, taking the above deposits into account, be on each house at 6% over 25 years.
What is the difference?
This is one of the funniest websites on the internet. I love reading the estate agents commentson here.
Thank you for giving me some really good belly laughs!
Bob - I've been trying to talk down prices for yonks but my rivals are the numpties still overvaluing to get business. I pay the bills and see marketing overpriced property as stupid. The public do not want to pay 4% to 6% for a morgage when base rate is .5% as they see this as lining the banks coffers and just to pi55 off Jo public the banks are overcharging interest and reducing the amount available. 3 years ago rates were base + 2%. Where can a 10% depost or even a 15% deposit buyer get a 2.5% deal? You can put any price you like on a house but no mortgage or lack of confidence in getting one means no buyer. The buyers vote with their feet. So what planet are you on numb nuts.
House prices are crashing. Ony a numpty believes it is due to a lack of mortgages - IT IS BECAUSE OF THE LUDICROUS ASKING PRICES!!! STOP TALKING UP ASKING PRICES AND START TALKING TO YOUR SELLERS TO GET THEM TO TAKE 20% OFF THEIR ASKING PRICES.
You lot are on the road to the job centre - denial is a terrible thing.
LMAO!
Why the caustic attitude?
Forget inflation. Market forces are driving prices down. Even Nationwide today was minus 1.4% non adjusted. If the drop occurs in a relatively short time, inflation will have little effect. I think the average price you quote was actually 1996.
"It is a shame there are many who are unable to take advantage of some of the cheapest mortgage products we have seen, or are likely to see, for a long time.”
Who is Andrew Montlake kidding here. If you have a whacking great deposit of around 40% then it will be bordering on cheap. If you have less than 25% deposit it is not cheap money any more. "...some very competitive mortgage products, creating almost ideal buying conditions"! The man is talking out of what he should be sitting on or is it that he can't sit down because his head is in the way.
Anna Key.
So I take it none of you are actually qualified for the job you do. And you have the cheek to question my qualification. In the real world where I live, Engineers are far more useful than you bunch of parasites.
I hope that warmed-up the PMS.
Ask youself the question, why are EAs so unpopular with the public at large. Do you honestly think you do something useful?
We could flog houses to each other on the internet.
WOW!, Mr Trailertrash - what you describe as the "excellent news" that prices fell by a whopping £340 is a welcome blessing indeed to those who are still FIFTY GRAND short of affording their first home, innit? But lets take this further. You obviously like figures, so you should be able to keep up with me on this one. Lets say you are talking to the happyrenters of this world, who await this houseprice armageddon with baited breath so they can make a killing on the market. At this rate, by your reckoning they should feel like becoming happyowners at about the same time as those who have to wait to be able to afford to have their own roof over their heads - by mid-2024, according to my reckoning of the above "excellent news" you refer to. Ah well - something for them to look forward to I suppose... Don't forget, though - at the current average rental figure of £1073 pcm, assuming a growth of 3% per annum, they will have spent £233039 in rent - money that could have paid off a huge chunk of the house in the first instance. Best made plans and all that, eh...? ;0)
"(Property Match)sell houses without having to put an ounce of work into it" ...
His site or his job? Both seem apparent!
Nothing secret about it. For FTB's it a hope that home ownership will cost them less. For people like property match its a hope that people can use his second rate website and sell houses without having to put an ounce of work into it.
Today Nationwide HPI was -0.7% and Land Reg -0.2%
Unbelievable this excellent news is not worthy reporting on this site.
Ray: "You uniformed idiot!"
Firstly, whilst I agree with you wholeheartedly, please be respectful of the fact that every village has an idiot - "Boggles" must just be surplus to requirements where he lives; as well as being eminently overqualified!
Secondly - did you omit 'in' from the word "uniformed" - or is is Officer Boggles you refer to? ;0)
Thing is, wooden top, that they just don't get it at all - do they? I have NO DOUBT at all in my mind that each and every one of this type of poster on this site, HPC, etc, have secret agendae for house prices to tumble. A lot of wannabe hobby investors hoping for BOGOF, if you ask me! Their gain: others' pain. WOW - that's helping the situation, innit? ;0)
Rosalind you may have to start getting up earlier, it seem your wonderful site is now a target for anti-agents "to have a go". Such a shame.
So buyers will wait till prices drop further .... h'mm what happend to the saying most buyers are sellers. Try convincing a seller to wait while their property drops in value!
Looks to me more like an increasingly common case of all three, Jonnie mate!
I think we have an epidemic on our hands, people! ;0)
nick57nick: I thought this deserved to be brought up to the top, instead of languishing near the bottom. You say "People aren't buying as they know the average price will drop from 160k to 90k in about 2 years time."
Hmmm. Okay... lets assume - I mean pretend - for one minute (everyone is allowed to think they are right ONCE in their lives...)that prices DO fall back to April 1999 levels.
[ As an aside, and not really relevant to my post - but that of course would assume ZERO inflation in 11 years, which we ALL (even you...) know simply doesn't happen. Let's be kind, and allow those nasty houseowners a whopping 3% inflation per annum to fill their unworthy boots with. Taking into account such a criminal amount of profiteering means that the 'actual' value you suggest, adjusted accordingly, would be equivalent to November 1982 levels (£66,500 average price.) ]
Back to the post...
My question to you, nick57nick: Then what? What happens next?
The floor is yours...
Thankyou to those who alerted me to the highly offensive comment, which is now deleted. I am extremely grateful to those who help us keep this site monitored. Jonnie is quite right about me logging on about 7.45am most mornings!
Lovely, lovely – good evening and welcome to the normal mix of odd balls, common sense speakers and estate agent haters – although with you lot (the haters) im at a bit of a loss on the fact that you dislike us so much but are on an estate agents web site at this time of night……………………although I knew a lad once that was always horrid about fat girls but ended up marrying our size 18 secretary so maybe your closet agent lovers?
Anyway – a predictable turn out all we need now is the gorgeous and witty Ms E Hassan to pop up with her usual topical and thought provoking comments and we shall have a full house.
Oh, one last thing – That C.U. Next Tuesday comment Boggles made about us won’t be taken down until tomorrow morning when Ros logs on about 07.45 – Boggles, did your Mrs run of with and agent or are you one of us just being silly or are you really just a sad berk with naff all else to do?……………..I know its one of them mate, go on , tell us
Jonnie
Rosalind,
Thie Boggles type lanquange is very bad for our profession.
Please sort it!
You uniformed idiot!
This post has been removed by site admin
Nick57nick
Our boss is a Chartered Engineer by profession, makes him very good at selling property. In this office we all have a degree, whoop de flamin' doo!
I can mention a good few fatal engineering cock-ups!
Unless you a CHARTERED engineer you are just an Engineer of some sort with a useless degree.... why am I bothering ... long day, PMS, be warned!
Degrees prove one thing: qualifications are awarded far too easily these days...
People aren't buying as they know the average price will drop from 160k to 90k in about 2 years time.
Hiya wardy ;0) I know - but it makes for an 'interesting' afternoon...
Profession - Hahahahahahahahahahahahahahaha....deep breath....hahahahahahahah.
I'm an Engineer with a degree.
That's a profession.
Percy - you couldn't be further from reality. You just keep pointing at the porcelain, like you're supposed to. I'd hate you to get stiffed for your comments ;0)
Profession - that's a good one!
Yes Mr Propertymatch, remember your role in the proprty business, don't dare tell the truth or PeeBee will be cross. Heaven forbid that the market might take a tumble. PeeBee then won't be able to afford a new Beemer or a circa 1987 city boy double breasted pin stripe suit.
Why are so many of those who post detrimental comments on this site so jealous of the Estate Agency profession!
your wasting your breath with him Pee Bee. This guy has no clue whatsoever.
Mr PropertyMatch: "Well said, Don." Are you for real?? Don advocates NOT buying and you agree with him. Remind me again of your role in the property business - no, actually - remind YOURSELF instead! With every post you dig yourself deeper into the brown and sticky.
Well said Don.
Its the buyers that decide prices - not sellers, who simply might like to do that. Market price - remember?
"...either way a lot of you are going to be looking for new jobs and with the magic words 'estate agents' on your CVs I can't see the offers rolling in." Pray tell, Don - which industry is fortuante enough to have you in its' midst?
ANYONE who buys a car - new or second hand. Yet no-one ever thinks that's strange...! Thanks, Ray, for touching on that earlier. One of my oldest arguments!
Who on earth is going to buy something today if they think it's going to be cheaper tomorrow... and cheaper the next day etc etc. The market looks set to fall or at best stagnate, either way a lot of you are going to be looking for new jobs and with the magic words 'estate agents' on your CVs I can't see the offers rolling in.
As for the 'very competitive mortgage products' whose offering them? The Bank of LaLa Land?
Okay - here we go again. A property is worth what someone is prepared to pay for it - yes? Right. If someone owns a property, thinks about selling it, but no-one will pay what the owner wants/needs/whatever, then the owner generally doesn't sell - agreed? Right again. So - Mr/Mrs/Ms/Prefer-not-to-say is left sitting in a property that they paid 'x' for, is now worth 'y' - but will one day again be worth 'x' and thereafter 'x'-plus. You still with me in agreement on all of this? The point of all this? Simply that those who own will continue to own - nothing lost, nothing gained. You only 'lose' if you sell and the market will pay less than when you bought. Those that want/need to sell will do so out of necessity. They will lose - but probably gained in the past and will no doubt gain again. Worst case scenario - they have a roof over their heads that has cost them a few bob - but at least they were dry, safe and secure against the elements and the undesirables of this world. I REALLY don't see why their 'old reality' is so bad. Please enlighten me...
The old reality? You mean the millions whose 'wealth' relies solely on house prices being pushed up by increasingly insane levels of lending and taxpayer support? I think that right now "their say" consists of: D'oh!
"The new reality is going to take longer to filter through to some people obviously." The new reality - I like that. I'll make it my phrase of the day, methinks! ;0) Quick question - what about the MILLIONS who prefer the OLD reality? Don't they get a say in this...?
Stick with your existing agents. At least then you'll get a warm feeling from having it on the market for £50k more even if nobody can afford to buy it.
The new reality is going to take longer to filter through to some people obviously.
PropertyMatch.
In todays world there is also a 'cost' to the Seller. Anyone who has bought in the last 5-10 years probably has a substantial mortgage so there is a level that they CANNOT go below, whatever a 'purchaser' can afford.
It is acknowledged that there is a real problem with the market but Supply & Demand will sort it out - eventually!
However, 'moneylenders' lend on an always depreciating asset, like cars and require minimal deposits - it is the deposit for houses that in the main is the greater problem at the moment?
P.S. Bringing back HIP's would do nothing.
In todays world there is also a 'cost' to the Seller. Anyone who has bought in the last 5-10 years probably has a substantial mortgage so there is a level that they CANNOT go below, whatever a 'purchaser' can afford.
It is acknowledged that there is a real problem
but 'moneylenders' lend on an always depreciating asset, like cars and require minimal deposits - it is the deposit for houses that in the main is the greater problem at the moment?
I don't think the equations is quite so simple as that. As recovery takes hold, interest rates will rise, hitting those holding on by their fingertips due to the rate cut, boosting repossessions. Falling house prices in a period of growth are not unknown after a bubble pops, think 70s, late 80s-early 90s.
Mr Property Match: "Why don't we organise a proper debate on the issues, and find solutions..." Simple answer, Sir, is that you have nothing workable to bring to the table; we have no influence on the course of events; and NOTHING we can do will make the public do what we wnat. The quicker you learn that, the better - although having failed to do so after 30-odd years in the business I guess that is beyond you by now... THe market is the market. We either work with it, to the best of our abilities (and in the best interests of our clients first and foremost), or we get out and stach shelves or flip burgers. Me - I'm sticking with it. I love a challenge - and I certainly have never experienced more challenging times in MY 30-odd years in the business!
You and the agents, are doing yourselves and your clients, great harm by crashing the housing market in successive cycles; instead of re-pricing to current market values.
Actually, I even think that vendors have abetter idea of the value of their houses than most agents do.
Dear property match.
I am thinking of selling my home. Please could you market it for me at a price within the affordability bracket of the bloke that sells the big issue down the road. Three established estate agents have valued it £50,000 more than you but I trust that your website will ultimately get me the most amount of money. Please do not market my property on any of the large property portals, in fact please spend as little as you can. Don’t bother with things like v-tours floor plans or brochures as I don’t think they work. I look forward to my first viewing.
Many thanks.
Oh, please! "Leaving things to continue as they are, without agents providing accurate market valuations..." This from someone who advocates vendors valuing their own homes for sale purposes!
Simples!
I think its you agents who are in cloud cuckoo land, not me.
Why don't we organise a proper debate on the issues, and find solutions - not just force a decision that favours the status quo.
Borrowers arent borrowing as much because banks are not being as accommodating with their criteria but also because they havent saved the neccessary 10% deposit minimum now required . Also if they have only just saved that ammount , what incentive is there for them to put it into an obviously depreciating asset?????
No need to panic everybody as GDP has gone in the right direction by 2% over the past 6 months!!! Were well and truly out of woods and on the road to recovery.
If you believe all the spin prices will stop falling, buyers will come back to the table in droves and the private sector will start employing again and this will all have been "just a bad dream".
Someone here is in cloud cuckoo land where the state controls everything.
The tighter things become, the more the banks and lenders will tighten, seeing an increase in deposits required. As prices drop people will have less equity. Even less will be able to move. Countries like Germany and France are recovering because for decades they have been mainly rental markets with lower for sale prices. As such recovery funds have gone into supporting business, nlike the UK where good businesses are being starved.
More Government intervention is not what is needed. The details of house prices are already out there for all to see. If a Vendor chooses to ignore the facts then there is no law against that! The removal of HIP`s has meant the return of the "speculative vendor" i.e. one who will sell but only if they get the price they want, in other words more than their property is worth. There is no law against being ambitious on price. The over valuing of property by Estate Agents to gain instructions is as old as the ark.
The way to counteract this is not to offer more and better mortgage products. Its to re-assess the way initial market appraisals are done by estate agents.
Asking prices need to moderate in line with the genuine affordability of current buyers.
The need for the Government to intervene in the workings of the housing market is abundantly clear as estate agents refuse to address this.
Its about providing individuals with better house price information. Armed with this, they could make better informed decisions about buying and selling residential property.
We therefore urge the Government to focus in on this area now that the Land Registry makes price information on all sales publicly available. There are opportunities to make better use of this information, starting with the way estate agents do market appraisals.
Leaving things to continue as they are, without agents providing accurate market valuations, is surely not an option in today’s world?
Dont forget we have a generation of people who only see owniung a property as the same as owning their own "cash machine" from which they will make/take loads of money. The good old days when a person purchased a property simply to live in it and enjoy are back and if they make some money when they eventually sell then thats a bonus, not a right. Changing ones mentality about home ownership is half the battle.