Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
S&P Stock Market Trend Forecast to Dec 2024 - 16th Apr 24
No Deposit Bonuses: Boost Your Finances - 16th Apr 24
Global Warming ClImate Change Mega Death Trend - 8th Apr 24
Gold Is Rallying Again, But Silver Could Get REALLY Interesting - 8th Apr 24
Media Elite Belittle Inflation Struggles of Ordinary Americans - 8th Apr 24
Profit from the Roaring AI 2020's Tech Stocks Economic Boom - 8th Apr 24
Stock Market Election Year Five Nights at Freddy's - 7th Apr 24
It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- 7th Apr 24
AI Revolution and NVDA: Why Tough Going May Be Ahead - 7th Apr 24
Hidden cost of US homeownership just saw its biggest spike in 5 years - 7th Apr 24
What Happens To Gold Price If The Fed Doesn’t Cut Rates? - 7th Apr 24
The Fed is becoming increasingly divided on interest rates - 7th Apr 24
The Evils of Paper Money Have no End - 7th Apr 24
Stock Market Presidential Election Cycle Seasonal Trend Analysis - 3rd Apr 24
Stock Market Presidential Election Cycle Seasonal Trend - 2nd Apr 24
Dow Stock Market Annual Percent Change Analysis 2024 - 2nd Apr 24
Bitcoin S&P Pattern - 31st Mar 24
S&P Stock Market Correlating Seasonal Swings - 31st Mar 24
S&P SEASONAL ANALYSIS - 31st Mar 24
Here's a Dirty Little Secret: Federal Reserve Monetary Policy Is Still Loose - 31st Mar 24
Tandem Chairman Paul Pester on Fintech, AI, and the Future of Banking in the UK - 31st Mar 24
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

UK Repossessions Hit 40,000 as Housing Mortgage Meltdown Continues

Housing-Market / UK Housing Feb 24, 2009 - 12:58 PM GMT

By: Nadeem_Walayat

Housing-Market Best Financial Markets Analysis ArticleThe Council of Mortgage Lenders reports 40,000 repossessions for 2008. My original forecast for 2008 was for some 75,000 repossessions therefore 40,000 for 2008 is a surprisingly much lower figure than expected with possible reasons as follows:


1) The government has imposed greater responsibility on lenders to demonstrate that they have explored alternatives to repossessions.

2) Nationalisation both whole and part has put the banking sector on the defensive and more responsive to government pressure to make repossessions less likely.

3) Deep interest rate cuts coupled with more government pressure to pass on rate cuts means home owners are able to meet mortgage interest payments.

However in the face of a recession that is forecast to see GDP contract by 6.3% which is at a rate not seen since the Great Depression, with stagflation expected to follow thereafter, all that these measures will do is to delay the inevitable housing bear market.

For 2009, the CML is forecasting 75,000 repossessions which is on par with that of the early 1990's housing bust. However as we have seen with the 2008 numbers, government intervention could / should result in a lower tally as the market is increasingly artificially supported through liberal amounts of Quantative Easing aka money printing, therefore my forecast for the number of repossessions for 2009 is 70,000 which is 5,000 less than the CML forecast.

UK Mortgage Lending

On a positive note mortgage lending as reported by the BBA rose by £1.3 billion to a total of £497 billion outstanding for January 2009 data. Similarly the number of mortgages approved for house purchases and equity withdrawal also ticked higher, though as the below graph illustrates the improvements have got a long way to go before they reach the heights of the housing bull market.

BBA statistics director, David Dooks, put a bullish spin on the data: "The high street banks' mortgage lending is still seeing double-digit annual growth, albeit in a much slower market. Lower borrowing costs and falling property prices have underpinned demand at these lenders, who are providing over two-thirds of all new mortgage lending. There is only limited demand from households for unsecured credit, while a fall in their deposits in January reflects a tendency to draw on cash or to move into alternative financial products.

"Lending to non-financial companies rose after two monthly falls, with modest increases in several industrial categories, while finance for other financial companies reversed the year-end fall in lending."

However the point that many have missed is that to get a small turnaround in the housing market the government have committed tax payer liabilities to the tune of more than £1.2 trillion, that is more than twice the total amount of all bank mortgages outstanding as reported by the BBA.

It would have been cheaper for the government to pay the interest on everyone's mortgages which would amount to about £3 billion per month and therefore stop virtually all repossessions than take on £1.2 trillion of banking sector liabilities, which just goes to show how crazy the current situation has become.

UK House Price Crash Pauses

The rise in UK house prices during January 09 brings a pause to the house price crash that is now into its 18th month as the above graph illustrates as per the updated house price forecast that covers the trend into 2012 which projects for a total drop from peak to trough of 38%.

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

Copyright © 2005-09 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 250 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.

Attention Editors and Publishers! - You have permission to republish THIS article. Republished articles must include attribution to the author and links back to the http://www.marketoracle.co.uk . Please send an email to republish@marketoracle.co.uk, to include a link to the published article.

Nadeem Walayat Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in