It’s kind of funny how you can pick things up anecdotally and then see official figures confirm your suspicions. In August we saw a good number of draw-downs, I called a few friends in other brokers to see what was happening with them and they said the same thing, bumper numbers (albeit by 2010 standards they are still horrific).
The high savings rate has translated into a higher level of repayment/prepayment on mortgages, in our annual prediction we said that lending would sit still or drop for this very reason, but that may yet prove mistaken if the trend continues.
2010 is the first time I can remember ever having a flipped season, normally nothing happens in the summer, the action is all in spring and autumn. However, the thing that every other broker said [and this goes for our firm too] is that August wasn’t necessarily ‘busy’, rather it was the flow through of all the constipated pipeline of the first half of the year. That isn’t exactly a beautiful connotation but it is a fair one. The paralysis in lending can be seen in the IBF mortgage figures as well as the Central Bank flow of funds figures, they all point toward credit contraction and the summer was merely a time when the deals from the first half of the year closed as opposed to being a ‘busy time’.
The problem now is that people will trumpet this as a sign from above that we have turned the corner when in fact we have not, prices still have a way to go before they fully resolve, the conundrum is to pay a higher price now and fix your cost, or to pay a smaller price at a higher cost (in terms of mortgage rate), or to stay out of the market totally. In any case though, and this is from the coal face, lending didn’t suddenly jump over the summer, it was just an example of all the lending that was building up from January onwards occurring in tandem.