Wednesday, October 03, 2007

45% Of All Mortgage Debt Borrowed Since 2004 / UK

Scary numbers! The Brits should get used to headlines like this from July. I wonder how the cover will look like when the pain is really starting.....News like this Halifax Sep House Prices -0.6% On Mo, +10.7% YY are showing that the UK is still in the first inning .......

Beängstigend, oder?. Die Briten sollten sich an Schlagzeilen wie diese vom Juli gewöhnen. Bin mal gespannt wie die besonders in UK verbreitete "Yellow Press" das Thema angeht. Sie werden sicher einige Jahre Zeit haben um die Seiten mit wahren "Horrogeschichten" zu füllen..... Die aktuellen Septemberdaten zeigen recht schön das sich die Briten noch ganz am Anfang des unvermeidlichen befinden DATA SNAP: Halifax Sep House Prices -0.6% On Mo, +10.7% YY

Some 45 per cent of the value of all mortgages has been borrowed in the previous three years, according to the department for Communities and Local Government (CLG).

"Housing in England 2005/6" was compiled from 18,386 household interviews - beginning in 2005 – with the results broken down into several key areas.

Trends in tenure
There were 14.6 million owner-occupied properties in England in 2006, constituting 70 per cent of the total, in comparison to 3.7 million social renters (18 per cent) and 2.5 million private renters (12 per cent). ....

And while the growth in homeownership has slowed since the early 1990s, the total number of home owners has continued to grow – up from 9.9 million in 1981 to today's level of 14.6 million.

The social rented sector, however, has been in decline; falling from four million properties in 1999 to the 3.7 million recorded today – this is largely due to tenants continuing to exercise their "right-to-buy".

New households
Finally, the annual average income for a couple setting up a new owner occupied household during 2005/6 was some £26,288.

Owner occupiers
Of the 14.6 million homeowners in England, 5.5 million were first-time owners.

Some 56 per cent of homeowners were purchasing their property with the use of a mortgage, compared to 44 per cent who owned their home outright; of which 29 per cent had successfully paid off a mortgage, 12 per cent had purchased their property at the outset and three per cent had come into their property through other means, for example inheritance.

Interestingly, 45 per cent of all outstanding mortgage debt in England was held in mortgages starting after 2004.

This is partially explained by rising prices in the property market, but also due to longstanding mortgage holders remortgaging in recent years to release equity or simply take advantage of better deals.

The government also finds there are 242,000 households with second homes located in England and 36,000 households with a second property in Wales or Scotland.
A further 211,000 households had a second home outside the UK; of which 34 per cent were in Spain and 23 per cent were in France.

> Probably coincidence that when looking at this chart Spain and France are also in bubble territority...... Here is the detailed survey from CLG/ large PDF

> Wahrscheinlich Zufall das Spanien und Frankreich (siehe Chart) ebenfalls jenseits von Gut und Böse gepreist sind..... Hier alle Fakten der CLG Studie / 200 Seiten PDF

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Anonymous Anonymous said...


I guess it depends on the ability of people to carry the debt while still spending enough to keep themselves and the rest of the economy afloat -- not enough evidence on that one way or the other at this point.

However, I've been to London several times now, and have seen that, at least there in London, housing prices appear to be absurdly high. I am talking about a really crap looking flat, on a busy street (Lärm), posted on the window of a Makler as having sold for 300k GBP. With a note put up by the Makler asking for more such properties, meaning they are not difficult to sell. You are starting to see more articles about how rising property costs are affecting people, fiscally and pschologically. It does seem unsustainable, but -- not to sound like a broken record -- we will see how it plays out...


12:48 AM  
Blogger jmf said...

Moin Eh,

with news from today
UK House Prices Decline For The First Time In 2007
i think the sentiment will shift very soon.

The Makler will soon have problems to unload such properties....

It will be interesting to see if the BOE will "do the Bernanke" and cut today.

But after their credibility bust with Northern Rock i doubt that King will become a total clown.

Regardless of the BOE action it should be clear that we have passed the peak in UK housing.

1:03 AM  
Anonymous Anonymous said...

But after their credibility bust with Northern Rock i doubt that King will become a total clown.

I think he could easily cite some sort of economic imperative argument to justify a rate cut. Everyone knows things change, and changed circumstances may require different thinking and different action. Certainly the media has put out the word on difficulties in the financial markets, so the groundwork has been done.


1:30 AM  
Anonymous Anonymous said...

Meine Vorstellung: I would be surprised if the BoE did not cut rates. I think the rise of the GBP, which is very strong e.g. vs the dollar, gives them room for that. It would be easy to justify, and after seeing the effect of the Fed rate cut on US markets (if not so far on the economy), it'll be difficult to resist doing the same.

Wir werden sehen.


1:37 AM  
Blogger jmf said...

Moin Eh,

add the ECB to the mix and we have a "konzertierte Aktion"....

If this happens today at noon i know why i miss the Deutsche Bundesbank.

Not the worst time to be bullish on gold.....

1:47 AM  
Blogger jmf said...


4:54 AM  
Anonymous Anonymous said...

From Reuters:

All told, the stock market is underpinned by powerful factors. U.S. equities appear cheap relative to many asset classes, especially since Wall Street has been a laggard in the global equity rally over the last several years. And now that many oil-exporting countries are flush with cash, they've been putting that surplus money to work in higher-yield securities in the United States.

Financial stocks are -- again -- broadly higher in Europe.


5:23 AM  
Blogger jmf said...

Mahlzeit Eh,

this comment is just priceless....

"And now that many oil-exporting countries are flush with cash, they've been putting that surplus money to work in higher-yield securities in the United States"


I have just stopped watching the ECB press conference after the opening word from Trichet.

They expect for the rest of 07 and the beginning of 08 a inflation rate over 2,1%.....with pressure to the upside..... Good to know that they are vigilant ....


I still think that the next CPI numbers at the end of the month could be the trigger for a "correction".

5:44 AM  
Anonymous Anonymous said...

Deutsche Bank: A 'Remarkable' Rebound

Here is a good example of what the bulls have been saying about the nature of global banks: their revenues and profits are increasingly diversified, so that losses--even significant losses in one area (in this case, fixed income), are offset by gains elsewhere.


6:39 AM  
Blogger jmf said...

Moin Eh,

too bad that they failed to say that the profits from Deutsche came mainly through one time items like a tax refund and their sale of a large New York property......

That makes it somehow diversified...... :-)

6:48 AM  
Anonymous Anonymous said...


I guess we'll find out the details on Oct 31. If DB's earnings turn out to be primarily due to one-time events like asset sales and tax credits, then it might also be reasonable to assume the writeoffs will also be one-time events, or at least much smaller going forward. Those genius bankers ought to be smart enough not to make the same mistakes zweimal, oder?

Still, the financials are performing well, and it remains to be seen if 'quality of earnings' type issues will surface later.

I'm having a hard time seeing a bear market develop with the financials doing so well.


7:15 AM  
Blogger jmf said...

Moin Eh,

at this point it makes no sense to bet against the market.

Almost every comment our data-point is viewed as positive or "better than expected"

I´m still waiting for the trigger and i´ll place my bets probably just in front of the US CPI release.

In the meantime i am tempted to buy gold on the dips ...

The markets in general and the dynamics are fascinating.

But i have the feeling the longer the central banks are trying to "manage" asset prices the worse the outcome will be.

The ECB action from today leaves me speechless. Nice to see that Trichet is vigilant when they are missing their only goal to keep CPI under control (it´s another question why they have a target of 2% when they are committed to price stability....) during the next 6-9 month (as they have admitted today)

Always good to watch the action and not the bla bla :-)

I´m getting sentimental and am daydreaming of the good old Bundesbank.... ;-)

7:32 AM  
Blogger jmf said...

Bank of England "other assets" rise 2.9 bln pounds

The latest weekly figures from the Bank of England show the central bank may have lent a further 2.9 billion pounds ($5.9 billion) to Northern Rock . The "other assets" line of the central bank's weekly balance sheet rose to 23.81 billion pounds from 20.9 billion pounds. Economists have said loans to the troubled mortgage bank would likely appear in the other assets line, which normally holds relatively steady but had grown by close to 8 billion pounds over the previous two weeks.

7:38 AM  
Anonymous Anonymous said...

Good thing the Euro and Pound are near record-highs vs. the $ .... BoE and ECB are whistling by the graveyard ...

12:22 PM  
Anonymous Anonymous said...

The latest weekly figures from the Bank of England show the central bank may have lent a further 2.9 billion pounds ($5.9 billion) to Northern Rock.

Keeping NR alive long enough so that it can be given away to some vulture fund I guess.


12:47 PM  

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