View more on these topics

Letters: Use of seasonally adjusted figures in lender press releases is misleading

Star letter: Use of seasonally adjusted figures in lender press releases is misleading

Last week’s Halifax house price index press release was shamefully misleading. One of its three bullet points said: “House prices grew by 0.9 per cent between November and December,” which is not what its data shows.

The data shows a fall of 1.1 per cent in December. The increase of 0.9 per cent is a manipulated figure, or ‘seasonally adjusted’, to use the technical term.

Although the table on the last page of the press release admits the figures are seasonally adjusted, there is no reference to this earlier, which is unacceptable in this age of transparency.

Nationwide also uses seasonally adjusted figures for its press release headlines but makes clear they are seasonally adjusted and shows the actual figures in its press release, whereas to find Halifax’s actual figures one has to delve into a spreadsheet on the Lloyds Bank website.

It is instructive to compare December’s actual and seasonally adjusted monthly figures from the two lenders because both indices are broadly designed to measure house prices on the same basis and timescale (actually about a week’s difference as Nationwide closes its figures just before the end of the month).

Nationwide reported an actual fall of 0.4 per cent and a seasonally adjusted increase of 0.2 per cent. Halifax reported an actual fall of 1.1 per cent and a seasonally adjusted increase of 0.9 per cent.

Thus, for its idea of seasonal adjustment, Nationwide increased the actual figure by 0.6 per cent, but Halifax did so by a massive 2 per cent.

Although a difference in the two lenders’ actual figures is understandable, it is hard to think of a logical reason for such a big difference in the amount of seasonal adjustment, which is as high as 1.4 per cent, a figure larger than the movement in prices in most months.

The lenders like to call the actual figures “not seasonally adjusted”, as if manipulating the figures should be considered normal.

If the seasonal adjustment process was robust, one could reasonably expect both lenders to make a similar adjustment. The fact that they use different methods, which some months result in very different figures, highlights why the focus should be on actual numbers. After all, although activity in the market varies throughout the year, buyers and sellers both know that, and prices are affected by many other factors as well.

If the logic of seasonally adjusting house price indices was applied to something really affected by the seasons, perhaps we should seasonally adjust the reporting of temperatures. Reported summer temperatures would then be reduced and winter figures increased, resulting in a fairly stable temperature being reported every day.

Ray Boulger, John Charcol


Ban on non-advised sales helps clients as well as brokers 

I read with interest the article by Genworth’s Pad Bamford, who says brokers are in the driving seat in their relationships with lenders.

I argued long and hard for a ban on non-advised mortgage sales. To my surprise and delight, the MMR delivered something that I passionately believe in.

The ultimate beneficiaries are not brokers – although we deserve the recognition and rewards this will bring – but the clients, who will get the right advice for the biggest financial transaction they are ever likely to undertake.

Name and address supplied


Panic over oil price fall is unnecessary and unhelpful 

Mortgage Strategy last week reported that a continuing fall in oil prices could lead to an increase in swap rates, and therefore fixed rates would rise. Alan Cleary made the same point in his column.

But do we need to panic about swaps? Even with oil prices at a low of $45 a barrel, five-year swap rates were around 1.45 per cent recently. A year ago with oil at $110 a barrel, five-year swaps were at 2.2 per cent and we were very happy with product pricing at that point.

Let’s keep a level head and talk about useful aims rather than fear.

Chris Hulme



Analysis: We need an MMR for consumer credit

Increasing numbers of borrowers have been unable to get a mortgage of the size they would like since the MMR was implemented last April, mostly due to stringent affordability checks.  So how can it make sense that, the very next day after obtaining a mortgage, someone could run up debts, potentially of tens of thousands […]


Webb seeks evidence on pension impact on borrowers

Pensions minister Steve Webb has asked mortgage lenders for evidence on whether paying into a pension makes a borrower a better credit risk. Webb met the Council of Mortgage Lenders and Association of Mortgage Intermediaries in December after Mortgage Strategy’s sister title, Money Marketing, reported that some lenders take pension contributions into account when assessing […]


Caption Competition – 21 January 2015

Can you put the boot into your nearest and dearest to win a delicious box of Hotel Chocolat milk chocolates? Submit a witty caption for the photo above and you will be automatically entered into out prize draw. Remember, the funnier it is, the more likely you are to win. What are you waiting for? […]


News and expert analysis straight to your inbox

Sign up