30 Jul 2012

Mortgage Lending

Below is a chart from the Bank of England showing the growth in mortgage lending. Unfortunately they only publish the figures and nothing much in the way of commentary.

I think the slop of this line is interesting in many ways. It shows that from 1996 to 2004 the rate of growth was accelerating - each year the % growth was about points higher.  At it's peak the amount of lending in 2004 was 16% higher than 2003. Remember that during this time the price of houses was increasing exponentially. So the acceleration may well reflect each borrower borrowing more, rather than more borrowers.

What caused the dip in 2005? We all know what happened after 2007.

Another interesting point is that at no time has the growth in lending been negative. And even now lending is growing about around 0.6%. This is presumably because our population is increasing and people are still wanting to get onto the property ladder.

However also recall a post I did a couple of weeks ago on the impact of demographics. Baby boomers are not buying bigger houses any more. If anything they are down sizing. As Harry Dent says in the interview, "housing is not going to come back, because baby boomers are done buying houses."

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Keep is seemly & on-topic. Thanks.