Mortgage lending – the real figures, not the spin

Mortgage lending – the real figures, not the spin

10:58 AM, 16th May 2011, About 13 years ago 2

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Red arrow shooting down a graphThe true state of the housing market is revealed by blowing away the smoke and breaking the mirrors that expensive PR erect to deflect the truth.

The Council of Mortgage Lenders, the industry voice for all the UK’s largest banks and building societies, bravely states that remortgaging is up for the first quarter of 2011.

That’s fine, but the real statistic is mortgage lending is down year-on-year for first time homeowners remortgaging, buyers and movers.

The latest from the CML table omits the March 2010 data, but here is a reconstructed mortgage lending table for the past three years taken from the CML’s own statistics:

Council of Mortgage Lenders loan statistics

What these statistics really show is that loans to buy homes are down year-on-year, but remortgages are still lagging behind the figures of March 2009, when around 39,435 loans were agreed, worth about £34.9 billion, and bear no relation to those of March 2008, which shows a massive drop in mortgage lending across the board.

Any statistician will confirm that three sets of data are the minimum to plot a trend – this reconstruction plots those figures.

“The CML expects remortgaging to remain muted, both because of attractive reversionary rates automatically cutting in for many borrowers as they come out of their existing deals, and because of reduced remortgaging opportunities for those with reduced levels of equity as a result of falling house prices,” said the CML commenting on the latest release.

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20:33 PM, 16th May 2011, About 13 years ago

Hope I haven't got this wrong, but I think your percentage changes appear to be incorrect on the change v March 2009, March 2010, these comments are based on the data that you have supplied above for March 2009 and 2010.

The correct % changes are below.

Mar-11 37800 5.4 33900 4.1
change from march 2010 -16% -14% 21% 17%
change from march 2009 22% 35% -15% -18%

Looking at the value and number of house purchases it seems to me that in 2009 the housing market was recovering from CC concerns, but now job security concerns since new government has been in place has restrained movement/ liquidity.
On the remortgage values the good value offered by standard mortgage rates at SVR versus available deals has restrained people from remortgaging every few years and using their home as a cashpoint = good behaviour imho. Also their houses won't have gone up in value anyway, so remortgaging may simply not be an option anyway coupled with security and prospects mentioned above.

I'd be interested to know if you agree?

Mark Alexander - Founder of Property118

21:01 PM, 16th May 2011, About 13 years ago

I will get the figures checked, otherwise I generally agree with the points you have made.

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