MNI China Daily Summary: Monday, August 12

MNI: PBOC Net Injects CNY73.83 Bln via OMO Monday

MNI: PBOC Sets Yuan Parity Higher At 7.1458; +0.45% Y/Y

CHINA PBOC CONDUCTS CNY74.5 BILLION VIA 7-DAY REVERSE REPOS MON

CHINA SETS YUAN CENTRAL PARITY AT 7.1458 MON VS 7.1449

MNI BRIEF: Brazilian July Inflation Up To 4.50%

MNI: BAKER HUGHES US RIG COUNT 588; OIL RIGS 485; GAS RIGS 97

Canada Unemployment Holds Steady While Wages Still Run Hot

EZ/UK Bond Supply Calendar: UK APF Due Next Monday

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

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UK: Housing - Chronic Drag on Growth (1/2)

UK
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  • The UK housing market has proven resilient in the face of aggressive policy tightening by the Bank of England. Although the risks of a major fallout appear contained, the housing market will inflict a chronic drag on growth going forward.
  • Over 500bp of bank rate hiking has not materially impacted mortgage arrears or defaults. This partly reflects the post-GFC drive to squeeze out excesses from the mortgage market, where far healthier LTVs now prevail (>90% LTVs are just 5% of total loans, down from 15% in Q207).
  • Fixed-rate mortgages now dominate, accounting for over 85% of outstanding loans and new business, which has limited the transmission of tighter monetary policy and prevented a sudden refinancing shock.
  • Refinancing at higher rates will, however, impact serviceability with the recent BoE Financial Stability Report warning that 30% of mortgagors face an increase in monthly mortgage costs of £100 or more by end-2026.
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  • The UK housing market has proven resilient in the face of aggressive policy tightening by the Bank of England. Although the risks of a major fallout appear contained, the housing market will inflict a chronic drag on growth going forward.
  • Over 500bp of bank rate hiking has not materially impacted mortgage arrears or defaults. This partly reflects the post-GFC drive to squeeze out excesses from the mortgage market, where far healthier LTVs now prevail (>90% LTVs are just 5% of total loans, down from 15% in Q207).
  • Fixed-rate mortgages now dominate, accounting for over 85% of outstanding loans and new business, which has limited the transmission of tighter monetary policy and prevented a sudden refinancing shock.
  • Refinancing at higher rates will, however, impact serviceability with the recent BoE Financial Stability Report warning that 30% of mortgagors face an increase in monthly mortgage costs of £100 or more by end-2026.