Saturday, 3 August 2013

"Oh yes, there is that too ..."

The society's chief economist Robert Gardner attributed some of the current gains to "a modest improvement in wider economic conditions and modest gains in employment." 
That would be Rob's opinion as to what lies behind "July's monthly house price increase of 0.8 per cent" which Nationwide, Rob's employer, describes as "robust" and "further evidence of an upturn in the housing market".

Any other factors that might be relevant?
He said Government schemes to stimulate mortgage lending were also having an effect in boosting demand.
And ?
he focused on housing supply as he discussed today's data, warning that "the supply side of the market remains constrained" with building activity "subdued".
"In the first quarter housing completions in England were down 8pc compared to the same period of 2012 and around 40pc below the average number of quarterly completions in 2007," he said.
Yesterday, in This is Money

The mortgage market is being driven by the Bank of England's Funding for Lending scheme, designed to push at least £80bn of cheap cash through lenders - with them able to borrow it at a rate as low as 0.75 per cent.

Low rate mortgages could stick around for some time if the Bank of England has its way, with a heavy hint that base rate won't be going up any time soon - perhaps for as long as three years.

Lenders' funding costs

A number of things influence mortgage rates: the price of funding on the wholesale money markets, the cost of getting funds in from savers and also the amount of capital regulators demand banks hold against their loans.

While the Bank of England base rate has remained at a rock bottom 0.5 per cent, banks and building societies had been paying just under 3 per cent rate to attract new cash from easy access savers.

This dramatically shifted with the arrival of Funding for Lending, dishing out funds at 0.75 per cent took the heat off savings deposits and the money markets and while savers suffered, borrowers are celebrating much lower rates.

Whilst today in TiM

Bank of England warns lenders they face £120bn hole in their finances

In a weighty 414-page document the central bank’s stability watchdog the Prudential Regulation Authority laid bare the costs of meeting a new diktat from Brussels. Twenty seven lenders and one building society, thought to be Nationwide, will have to boost their capital by £120billion to comply with the regulations.