There was a small monthly uplift in mortgage lending for house purchase in February, the Council of Mortgage Lender has said. But by volume, they plunged when measured over the year.
There were 32,300 house purchase loans, up 8% from January but 12% down on February 2010.
Of these, 12,400 loans were to first-time buyers – an uplift of 13% from January, but 11% down on February 2010.
There were 19,900 loans to home-movers, up 6% from January but 12% down over the year.
First-time buyers in February typically borrowed 80% of the property’s value.
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Comments
@rantnrave
You said ... "One might conclude that the purpose of current UK economic policy is to benefit the heavily indebted: government, banks, business and mortgagees. Meanwhile, savers and those with capital tied up in property pay a heavy price."
Current UK economic policy is to try to inflate the debt away - gently, without anyone noticing too much - over the next 10 years or more.
The only way capital values (in property) can be protected is with ever increasing debt being taken on by new entrants to the market. This isn't going to happen again for a generation or more.
For many people the 'capital' people are 'losing' in their properties is not real anyway. It's only real when you sell up and move out of the market or downsize. Until then it's just a daydream - but a daydream against which millions of people borrowed billions of pounds over the last 13 years. And, as we can see, without that incessant growth in debt - we have no growth in the economy.
So, inflation it is then.
How many mortgages have you underwritten in that 41 years?
Dom
Only been doing this for 41 years so just getting used to the idea.
Whats your qualification?
Re Dom's First Post - The following is an excerpt from the latest Home.co.uk release which is out today:
...
HOME PRICES FALL FURTHER BEHIND INFLATION
Year-on-year (YoY) asking prices have fallen further, consolidating the downward trend. Corrected for the effect of inflation (RPI ex. housing) the annual fall is much worse at around 7%. The loss on capital invested in the typical UK home (£184,950) is around £14,000 per year. ...
Inflation: The theft by stealth of capital in property. Since April 2008 UK property has no longer been a safe store of capital value (i.e. the time when house prices no longer kept up with inflation).
The average asking price for England and Wales in February 2008 was £244,315. The current value of the property in terms of Feb 2008 pounds invested (corrected for asking prices changes and non-housing inflation over the 3 year period) is £193,891. This represents a loss on capital value of £48,364 or just over £16,000 per annum. This figure represents the cost to capital (in terms of 2008 pounds) of owning UK property outright (i.e. a cash purchase in Feb 2008). The loss in today’s less valuable pounds is around £55,563. However, often this loss in capital value is not noted. Today’s nominal value of the same hypothetical ‘average UK house’ is £225,579, hence the nominal loss, due to asset price depreciation, is much smaller at around £19,000 over all three years. ...
One might conclude that the purpose of current UK economic policy is to benefit the heavily indebted: government, banks, business and mortgagees. Meanwhile, savers and those with capital tied up in property pay a heavy price.
@MW
I just pick sensible ones that pay a solid dividend circa 5% pa, any capital growth is a bonus. I've really been loading up over the last few years and have actually seen massive capital growth. Which is nice.
There's nothing to stop you using leaverage to buy anything you want. It doesn't just have to be property. And anyway, it's not so clever when prices are falling. All that borrowed money working against you! That incidently is why I don't spread bet.
I'm not saying shares good, property bad. What I am saying is that its all about timing. Property is over-priced so I wont be buying for some time. Shares have been extremely cheap so I've filled my boots. This will change and I'll invest differently.
@Dom
I hope you're good at stock picking. The stock market, is valued about the same now as it was 13 years ago.
In the intervening period, under the great stewardship of the economy by his eminence, the ghost of Kirkcaldy, as well as nicking £5 billion a year from our pensions - the stock market yo-yoed but, on the whole, has not gone up.
So, money poured into property and broke the banking system. I wonder how long it will be before money pours out of property and into the stock market.
The great thing about property investing is, of course, the leverage. All that borrowed money working for you! The fact that it effectively destroys the economy seems to have evaded some people.
Just think what would have happened if all the buy to let investors over the last 13 years had invested in business - instead of property. No banking crisis, no 'generation priced out of home ownership', no 'nothing for young people to do but pay high rents' - people with lower mortgages having money to spend in the economy creating demand and jobs.
Wow, sounds great doesn't it? Wonder if we'll ever get a government that realises pouring masses of borrowed money into the residential property market is, in fact, a surefire way to destroy an economy.
Is this what they call a spring bounce? Prices hit a ceiling then rebound savagely downwards?
Since the late 90's, the average number of mortgage approvals per month was roughly 100,000. This has dropped to about 30,000. That's not my definition of sluggish or ground to halt, more like fallen off a cliff and broke both legs. EA's will need to encourage realistic pricing or start looking for a new career.
Paul - you seem rather sensitive about the resi property market. Are you a top of the market buy to letter by any chance? But anyway your analysis is very flawed. The banks are 'not lending' because they have no balance sheet. I went to see one recently on the corporate lending side and he admitted that their commercial property portfolio was so hopelessly misvalued (too high) that their appetite for new lending to commercial or residential was virtually zero. What all you 5 buy to let properties with no equity guys also forget is that banks are also terrified of the American example. UK house prices have defied gravity THUS FAR I grant you. But with 90% of borrowers on floating rate debt at some point soon there is going to be a reckoning. What banks realise (that you don't) is that serviceability doesn't matter at all once negative equity gets big enough. Property has fallen 40% in Ireland and 35% in the US (the two countries that most closely resemble the UK). People are posting their keys back to the bank in the US not because they cannot afford the mortgage but because they arent stupid. If your property is in negative equity of 30% or so what the hell is the point of paying the mortgage. You call Dom a nitwit (or something) but you should remember when you look at your BTL portfolio that a house with no equity is just a rental with debt .... sobering eh?
@rantnrave
I refer only to 'speculators' of all types, large or small.
@Ray - I agree that throwing around figures of 50% falls doesn't add much to a discussion.
Why though is the assumption that those wanting falls are wanting to sell high as well as buy low? What's wrong with buying a property for use as a home - why does it always have to be an investment?
If I were to sell high, then I assume that means all other properties have increased by a similar % in price and unless I am downsizing, I am in no better position (actually, a worse one, since I will need to borrow a higher nominal figure to purchase a bigger property).
@Dom
As an obvious speculator in any commodity you have a vested interest i talking down property prices - or any other price for that matter. Many others on this site do the same thing, saying property prices are over 'valued' by as much as 50%. One must realise what they want - buy cheap sell high. I have nothing against speculators but that figure is wishful thinking. Good luck to them but in my view a more balanced market is in sightt. ;o)
@Paul
Ah, so it's those naughty banks again and nothing to do with property being over-priced. As an EA (with qualifications in?) you are of course much more qualified than they are to judge an able applicant.
If only they'd get back to lending ridiculous income multiples to any numpty who walks through the door eh?
Not sure who all these buy to letters are. Yields have been poor for a while. That's why I reckon 5 years till I get back in.
Lending is plunging Dom because lenders are making it so difficult for borrowers. Things like spiking the web application forms to stop any applications being completed. Saying a perfectly able applicant who the previous week could afford a mortgage and then changed properties as a vendor pulled out, decided to take less on another property and put more deposit in at the same price as the one before and then got told it fails on affordability. This is just two of many who have in essence been refused a mortgage by manipulation and deception. They then report record low levels of mortgage applications so is it a surprise?
Go back to your comodities you dimwit and stop making foolish ill informed comments on the property market where clearly you are just way out of your depth.
No wait a minute - should I make comments on the comodities market? I dont think so, I will stick to what I know. Anyway the rentals and buy to let market is good and its not regulated so much easier to borrow money but then I would not expect you to know that.
Stick to your business and us agents will stick to ours.
'First-time buyers in February typically borrowed 80% of the property’s value.'
Were I bullish on property i'd take heart that the average LTV has risen from 75% to 80% over recent months.
Other than that, pretty pish-poor figures whichever way you look at them. There's an awful lot of cash buyers looking to protect their savings from inflation and low IRs; question is how long can they keep propping up the market.
@wardy
Ooh get her. Who are you, the net police?
Have another read, my comment was much more relevant than yours. Tell me, why do you think that lending is plunging? I'd love to hear your analysis.
Maybe you should go and comment on a stocks and commodities website then?
Of course they have. Fewer people are interested in buying property at todays inflated asking prices. When prices fall (either nominal or in real terms due to inflation) to more affordable levels, then volume will return. Property is currently very poor value for money.
As an investor I have been buying stocks, commodities......in fact anything but property for the last 3 years. I can see it being another 5 before I buy property again.