Hi Paul

“Mortgage approvals still falling”

Your linked piece shows them up 20% since last month.

Still falling only if you are *very* selective in your use of figures.

“The Government has agreed targets for lending with banks, but has allowed them to fall way short with impunity. Time to employ some sanctions with teeth.”

Source?

According to figures banks reported by the BBC last week, lending to businesses is above target, and to small companies only marginally below target.
(http://www.bbc.co.uk/news/business-14416078)

Respectively £100bn in the first half vs a target of £190bn.
And £37.4nb vs a target of £76bn.

Do you have any supporting data? Personally – and apologies for being blunt – I think you need a new dead horse.

Considering that house prices are still higher than is affordable for first time buyers as a ratio of earnings to prices, the last thing the long term economy needs is higher house prices.

It’s good short term politics to have higher house prices, but its damn stupid long term economics.

Yes quick lets force house prices yet higher…!

Driving a greater share of GDP into the hands of bankers…

The young further into debt…

And start building the foundations for an even bigger asset bubble…

What could possibly be wrong with that…!

What we actually need is more houses to push prices & rents down to more affordable levels and stop the transfer of wealth that is driving the equality gap!

“However, an end to house prices falling is a necessary condition for the revival of consumer demand, which in turn is needed to encourage firms to invest.”

No. Rising house prices do not really make homeowners richer as when they sell their home they need to buy a new more expensive one. Its an illusion and we should not encourage a return to unsustainable MEW consumption based upon it.

“The banks are clearly determined to replace their pre-recession profligacy with excessive parsimony.”

This is a good thing for the speculative house market but a bad thing for business.
Cheap housing is good for those that do not (yet) own a house.

@4

“Cheap housing is good for those that do not (yet) own a house.”

Cheap housing is good for people that own houses as well…

Let’s say some first time buyers buy a flat worth £250k.

The crash hits and it looses 1/3 of its value, disaster you might think.

But that 1/3 price drop makes the £600k house that the very same couple will be buying further down the line when they’ve got a family £200k cheaper.

So actually over their lifetime they’ve just become £150k better off.

Sorry, my maths looks bad there…

Should have been £150k not £250k for the first property.

We need to be absolutely clear that the government’s plans for private credit allocation are going disastrously wrong. If only the government could allocate credit better, we could get our way out of this mess.

To that end, if household lending does tick up, can someone please remember to do one of those posts about how Osborne is transferring public debt into private debt, and that he’s just pumping back up the credit bubble, etc etc ad nauseum?

In fact, thinking about it… shares in Lloyd’s and RBS are an absolute STEAL at the moment. Really, HM Treasury should buy up the rest of those banks and then start running them directly (what’s a few extra £bn on the deficit?).

What’s the worst that could happen?

‘House prices’ is a synonym for ‘housing costs’. Housing is an absolute basic that everyone needs. So when you encourage house prices to rise, you’re encouraging the cost of living to increase.

A high cost of living has many social impacts. It increases inequality and means high levels of welfare spending are needed just to keep everyone with a basic standard of living. It turns ordinary people into wage slaves just to make ends meet – that’s good news if you think hard work is virtuous, but bad if you think life should be about more than working, and has big impacts on the quality of family life.

High house prices also creates high levels of dependency on banks. That’s what gives bankers a lot of the wealth and power that they currently enjoy at our expense. Why do we encourage everyone to be in tens, nay hundreds of thousands of pounds of debt to bankers?

The only other people to benefit from high house prices are the people already at the top of the property ladder – mansion owners, multiple homeowners, landlords. As EdS showed, people only part way up the ladder actually gain when house prices fall.

I can’t understand why anyone of any liberal- or left-leaning persuasion is happy with this situation. So let’s welcome falls in house prices and mortgage lending. It’s the first step to rebalancing our society away from the elites and towards ordinary people.

The next step is to get housebuilding back onto the agenda. Increasing the supply would get prices back to affordable levels, as well as creating much-needed jobs.

And finally, we need to shift taxation away from labour and onto property values (or even better land values). That way it’s society the benefits from the value increases that society creates for property owners.

As a first time buyer with a substantial deposit, banks are falling over themselves to lend to me. I will not buy a house until they reach fair value of 1x deposit and 3x average earnings or below. This is about £120k. Average prices are currently £165k. Another 25-30% to fall before I will even consider it.

If you have no deposit and below average income and want to pay the asking prices, the banks are doing what they should have been doing all along, and saying “get the hell out of my office and come back when you’ve got a 25% deposit”.

@ 7 Peter

Please re-read what you’ve written then hit yourself about the head a few times.

“government’s plans for private credit allocation”

“If only the government could allocate credit better”

Last time I checked it was not the governments job or even right to allocate private credit.

Though by your very statements I can tell that you believe big brother knows best and we should have a command economy.

Of course history tells us with too many examples to count that governments are pretty shocking when it comes to allocating capital, not least because it becomes a tool to buy votes.

Not enough mortgage approvals to keep up house prices?

Have a thought for the poor banks. They have all this compensation to pay out for mis-selling Payment Protection Insurance:

The banking industry has abandoned a legal fight over the mis-selling of payment protection insurance (PPI).

The British Bankers’ Association, which fought the case, said it would appeal after losing a court challenge against new rules on mis-selling.

Barclays said it had set aside £1bn to pay compensation, and HSBC £269m, while RBS added £850m to the £200m it had already paid or provided for.

Last week, Lloyds Banking Group made a £3.2bn provision for possible claims.
http://www.bbc.co.uk/news/business-13330858

@Tyler. I see my attempts are sarcasm are falling flat as usual. At least I tried.