Wednesday, 16th Jan 2008
The new year kicked off with soothsayers painting a somewhat depressing picture for 2008. Bank of England figures released on Friday show the mortgage market’s hangover from 2007 is refusing to subside. New mortgage approvals fell again with just 83,000 approvals in November - the lowest monthly figure since 2005.
No immediate panacea seems in sight as the Bank’s fourth quarter 2007 Credit Conditions Survey, also published this week, indicates the squeeze will continue, if not worsen, in 2008.
Concerns about tightened credit conditions persist and lenders are seemingly increasingly reluctant to doll out loans to homebuyers. Depressingly, arrears too look set to reach record levels.
The pessimism is too much for the IMLA, however, which warns that such speculation is actually feeding a spiral of worsening sentiment. Executive director Peter Williams says some positives could be in fact be taken from the Bank of England’s report.
Williams notes demand for secured loans remains buoyant, with demand for buy-to-let and non-prime loans in fact exceeded expectations.
He says: “This suggests that despite the uncertainty of the credit squeeze and the consistently negative tone of the media, British consumers are still confident enough to want to borrow.”
The CML meanwhile says it is unsurprised by the gloomy talk and says it expects the market to be slower in 2008. While it has held back from talk of a culling season ahead for providers, it says the supply-side funding constraints risk tipping into a potentially significant reduction in consumer demand.
It points out the default rate on secured loans has not proved as bad as lenders had feared three months ago. But says that the level of loss has been higher than expected where defaults have occurred.
The Land Registry provided a small ray of hope with figures showing house prices in England and Wales rose 0.6 per cent in November. Commentators however noted Land Registry statistics represent just completed sales rather than agreed prices, with the recent picture bleaker than its figures bear out. The overall picture remains of a slowing market for 2008.
As for the Government, any hope of starting 2008 without further Hip controversy fizzled out within hours of New Year’s. A select committee of MPs criticized the Government for failing to introduce Hips on time as promised. The MPs say the reason for the lack of qualified inspectors was because the government failed to sufficiently back the scheme, saying: “There were not enough inspectors because CLG first watered down and then repeatedly delayed the introduction of Hips.”
With all the troubles lenders have experienced in the past half a year, all eyes remain fixed on the potential for a shake-up in the market. Alliance & Leicester shares were on the up after talk of a takeover bid by Banco Santander.
Meanwhile, away from the heady world of market gossip and intrigue, the Association of Mortgage Intermediaries announced to the world its concerns on the RDR. In its published formal response it warns of regulatory “read-across”. It says regulatory intervention would only be welcome in the event of market failure and where justified by robust cost-benefit analysis.
Source: http://www.moneymarketing.co.uk/cgi-bin<.br>/item.cgi?id=156185&d=340&h=341&f=342
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