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Improving UK Mortgage Lending Feeding the House Prices Bounce

Interest-Rates / UK Interest Rates Jan 12, 2010 - 01:12 AM GMT

By: Nadeem_Walayat

Interest-Rates

Best Financial Markets Analysis ArticleThis analysis forms part of a series that aims resolve in an accurate UK interest rate forecast for 2010 which follows in depth analysis and forecasts for UK inflation and economy.


LIBOR / Base Interest Rate Spread Analysis

The below graph shows UK Mortgage lending for House Purchases and Equity Withdrawals

The Government and Bank of England have succeeded in their primary objective of increasing both the supply of mortgages and lowering the interest rate burden on borrowers so as to bring the UK house price crash to a halt, which suggests that in terms of supply, the credit markets are starting to return to a LOW NORMAL state.

UK house prices have now risen by nearly 10% from the March lows as a consequence of unprecedented measures such as near zero base interest rate, mortgage banks arm twisting to limit repossessions and £200 billion of money printing. All of which leave the governments coffers empty and the Bank of England with little ammo to fire at future crisis which therefore suggests that the Bank of England should start to focus in the near term to tepidly begin to unwind the ultra loose monetary policy by starting to gradually raise interest rates though without wanting to unravel the work done so far in stabilising the banking system which therefore is suggestive of small step spread out rate increases as the Bank of England adopts a cautious wait and watch attitude for any negative impact before each subsequent rate rise.

UK Interest Rate Forecast 2009

The UK interest rate forecast of early December 2008 for 2009 forecast that UK interest rates should decline to 1% (from 3%) by early 2009 and remain there into the second half of 2009.

Forecasts for UK Inflation and Economy 2010 and Beyond

The below are the concluding forecast graphs from in depth analysis for UK inflation and economy that build towards the UK interest rate forecast for 2010 as well as the inflation mega-trends ebook. To receive the final analysis and forecast in your email in box, ensure you are subscribed to my always free newsletter.

UK Inflation Forecast for 2010

UK Economy GDP Forecast for 2010 and 2011

Source: http://www.marketoracle.co.uk/Article16417.html

By Nadeem Walayat
http://www.marketoracle.co.uk

Copyright © 2005-10 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on UK inflation, economy, interest rates and the housing market . Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 500 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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