Wednesday, 28 May 2008

Mortgaging down, remortgaging up

The British Bankers Association just released their lending data for April. The numbers provided further evidence of a deeply distressed housing market. The number of mortgages for new house sales fell 35 percent compared to April 2007. However, remortgaging activity made up for much of fall. The number of remortgages increased by 28 percent.

So house sales are down, and people trying to get out of their teaser loans.

8 comments:

aSteve said...

I liked the Reuters report on this...

http://uk.reuters.com/article/personalFinanceNews/idUKNOA73067720080527

"Mortgage approvals second weakest on record"

So, when was the weakest? Last month! So, weakest 2 two months of house sales ever recorded. Maybe longer works too.

Anonymous said...

How long since their records began? I think its only this decade?

aSteve said...

I'm not sure how long the BBA have been keeping records... that would be interesting background... they don't seem to publish a historic series [I wonder why ;)] but there is a longer-series of similar data from the BoE...

http://tinyurl.com/5vv5gw

I have thought the BBA figures would be seasonally adjusted... and the series with the best history that I can find at the BoE is not seasonally adjusted. Curiously, while the shape of the graph is similar, the numbers are somewhat different.

The series above represents the worst cumulative record for 4 months on record... with a 15 year record.

It would be interesting to determine why there is an anomaly with the numbers on the graph... and also to consider long time-frames. I'm particularly interested to determine if we saw similarly weak data during the troubled 1970s. I suspect not.

VADO said...

The remortgaging data is the story. For every one remortgage accepted, at least ten were rejected.

aSteve said...

Do we have evidence for the proportion of rejections? Were 9 in 10 people rejected, or only 9 in 10 applications? There's a big difference. If I had a mortgage and I was coming to the end of my fixed term, I'd be applying to every lender... I'd give up as soon as one gave me a decent deal.

Mark Wadsworth said...

That's not that much actual remortgaging (not withstanding we don't know how many people were turned down) - 90,000 x 12 months = 1 million, out of 10 million o/s mortgages. The only figure that means anything is FTBs, which is down handsomely, as we'd expect.

aSteve said...

Remortgaging is relevant... mostly because almost all mortgage lending over the past 5 years has been on short-term fix deals for between 2 and 5 years... often at very high LTV ratios at the time the mortgage is taken out. The SVR is currently about double the cheapest of the fixed deals... and even the good fixed deals are now very expensive.

If we are going to see a crash, there need to be a good number of forced sellers... and that will only happen when home owners (or BTL owners) are stretched past breaking point.

CWS said...

asteve, I agree. Remortgaging is important, and if people can't roll over their cheap deals, housing supply will increase.