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Trading Lessons

Collapse in UK Mortgage Lending

Housing-Market / UK Housing Dec 01, 2008 - 05:26 AM GMT

By: Nadeem_Walayat

Housing-Market The Bank of England announced that UK mortgage lending collapsed in October, falling to the second lowest figure since records began at just £459mln, down 70% on the month and only 6% of the October 2007 levels which followed the collapse of Northern Rock Bank in Sept 07. The data continues to suggest that bank lending continues to tighten despite the £500 billion bank bailout of early October.


The actual record low in mortgage lending of £176mln occurred in August of this year as the mortgage market came to a halt following speculation that the Chancellor, Alistair Darling is about to suspend the Stamp Duty tax charged on house purchases in an attempt to stabilise the housing market. The few buyers that were in a position to proceed with home purchases delayed completing contracts or pulled out altogether and led to a collapse in the level of market transactions for the month, thus contributing to the squeeze on sellers, estate agents and other housing market transaction beneficiaries.

UK house prices as measured by the Halifax now stand 16% below their peak set in August 2007. With my forecast for a 15% fall in house prices now fulfilled (22nd August 2007 - UK Housing Market Crash of 2007 - 2008 and Steps to Protect Your Wealth), the updated in-depth analysis to cover the house price trend over the next 2 to 3 years is well underway and due for imminent publication, to receive this in your email inbox subscribe to our always free newsletter.

The governments response to the crash in the UK housing market and economy falling off the edge of a cliff has been for ever more drastic panic measures, first came Septembers ban on short selling of banking stocks, followed by the £500 billion budget busting bank rescue in October, then the panic interest rate cuts bringing the base rate down to 3%, and most recently the emergency VAT cutting budget, now speculation is growing as discussions are leaked that Britain is moving towards joining the Euro as alluded to by the European Commission President Jose Manuel Barroso whilst speaking on French TV and radio Sunday:

"I'm not going to break the confidentiality of certain conversations, but some British politicians have already told me, 'If we had the euro, we would have been better off',"

"I don't mean to say that it will be tomorrow and I know that the majority in Britain are still opposed, but there is a period of consideration under way and the people who matter in Britain are currently thinking about it"

Recent analysis highlighted that Britain is on the fast track path towards bankruptcy that will see real liabilities eclipse £3.2 trillion by the end of 2010. However I concluded on a number of initiatives that could help Britain avoid bankruptcy that is associated with a collapse Bankrupt Britain Trending Towards Hyper-Inflation?

The UK housing market forecast is due for an imminent update, subscribe to our always free newsletter to get the scheduled analysis in your inbox on the day of publication.

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

Copyright © 2005-08 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 the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 150 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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