August 2006 Archive
Wednesday, August 30, 2006 
Latest from Mr Conway
Telegraph: Not out of the woods yet
Last Saturdays comment from the Telegraph's economics correspondent writing in the Property section is the usual mix of points of concern to note coupled with a verbal crossing of the fingers.
London housing market now the worlds biggest rip off
Yahoo News: London is world's priciest housing market
LONDON (Reuters) - London has officially overtaken New York as the world's most expensive residential market, a top global property agency said in a report on Thursday.
why buy when can rent
citv news: why buy
House prices are so expensive that their's a house on my road that is so messy and needs everything scrapped in and out the house when the price is £265.000.and to repair the property it will be another 50k so why bother buying the house when you can rent.it's easier and simpler to rent then buy your own house
...It's all looking rosy for more IR hikes!
BBC: Summer sales spree for UK stores
UK retailers enjoyed their strongest sales growth in one and a half years during August, despite the recent rise in interest rates, the CBI has said. Its latest distributive trades survey confounded expectations of a post World Cup dip, with 45% of retailers saying sales were up and 33% reporting a fall. The positive balance of 12% is the best since December 2004 and the CBI now expects similar growth in September. It said stores were doing less heavy discounting and were raising prices.
Conflicting information to the BoE figures this morning..
Firstrung: Moneyextra suffers a drop in mortgage market activity during July
The average value of mortgages completed by AWD Moneyextra customers dropped by 6.68 per cent between June and July to £137,591.65. That's also a fall of 5.76 per cent on the average agreed mortgage value in July 2005 of £145,944.69. The average value of loans completed during the first seven months (Jan-July 06) was £141,797.56
CCJs, do we look bovvered???
Firstrung: Purfleet Essex has the highest recorded level of CCJs
In Purfleet, the town with the worst record - three times the national average - the predominant socio-economic group is single home-owners and renters with pre-school age children. Tilbury, the town in second place, is a port town in the South East. The town has a large proportion of people who are employed in unskilled or semi-skilled jobs at the port.
Investors turn to property
news: Investors turn to property
BLUE collar workers have helped boost the number of Australians planning to buy investment property in the next year, according to Wizard Home Loans.
... onwards and upwards!
BBC - who else!: UK mortgage lending rises sharply
The buy-to-let market has boosted demand for mortgages. The strength of the property market has been highlighted by the latest mortgage figures from the Bank of England. The number of new mortgages approved for house buying, but not yet lent, rose again in July to 120,000 - the highest level since the start of 2006. Approvals have been rising steadily this year and are up 24% on a year ago. Meanwhile the amount of money actually lent on new mortgages in July was £9.8bn, the second highest monthly figure on record.
Will August figures see the impact of the interest rate rise?
Firstrung: Mortgage lending up - BoE
Mortgage lending rose in July, while approvals for new house loans hit their highest since the start of the year, official data showed on Wednesday.
Business leaders seek 'unlimited immigration' from new EU states
The Independent: Business leaders seek 'unlimited immigration' from new EU states
The leaders of Britain's biggest businesses employing millions of people have called on the Government to allow unlimited immigration from Bulgaria and Romania when the two former Eastern Bloc states join the European Union next year. Seems like big business loves the cheap labour and low interest rates
Great article on the increasing desperation of housing VIs
Motley Fool: No Housing Bust Here!
If it's disconcerting that the most prominent housing bulls are, when we're not looking, begging for economic policies aimed at shoring up their crumbling story, then this might be much worse. How about if the last shred of the housing bull story turned out to be untrue? It turns out that the anecdotal evidence for falling prices may be exactly right, because a large number of housing sale prices may be based on fudged numbers. That's right, the last leg of Greenspan's bubble may be collapsing under the weight of farcical accounting, trickery that would get you tossed in jail if you tried it at an American corporation.
House-price fall poses dilemma on interest rate
The Times Online: House-price fall poses dilemma on interest rate
"The housing market has moved from cooling, through slide, into collapse. At least, that’s what many property analysts and economists are saying." "Otherwise, the recession will be deep and nasty." No if and when here, it's happening.
Tuesday, August 29, 2006
US rate decision not unanimous
BBC News: Fed was split over US rate freeze
The Federal Reserve\'s decision to halt interest rate rises earlier this month was not unanimous it has emerged, with hints that hikes could resume. In a decision on 8 August, rates were held at 5.25%, breaking a two-year cycle of rate rises introduced to slow a rampant economy.
More high earning job losses - this time in S East
BBC News: Thames Water to cut 25% of jobs
Thames Water is planning to axe up to 25% of its workforce as part of a major efficiency drive that would see 300 jobs go each year until 2010. One just knows that many of the 1500 will already be drowning in debt!
Statistics estimates that 63,500 hectares of land available for development
Firstrung: One million first time buyer starter homes could be built on existing brownfield sites
Statistics published today from the Department for Communities and Local Government suggest that existing stocks of available "brownfield" land could accommodate up to one million new homes.
Fuel, a problem?
Firstrung: Will we have enough gas to last the winter?
Ofcom, the energy regulator thinks so. Chairman Sir John Mogg said last week he was "much more confident" of the UK gas supply situation this year because the Langeled and BBL pipelines from Norway and the Netherlands will come on stream before the end 2006.
Bank's Bean says cheap goods 'banquet' may be over
The Independent: Bank's Bean says cheap goods 'banquet' may be over
The Bank of England's chief economist Charlie Bean has warned that record oil prices could kill off the era of cheap goods, making it harder for policymakers to keep a lid on inflation. Cheap imports from the Far East and eastern Europe have kept the prices of goods down. In spurring greater competition, globalisation has provided a "favourable tailwind to central banks' attempts to hold inflation down," Mr Bean said at the annual gathering of central bankers in Jackson Hole, Wyoming, sponsored by the Kansas City Federal Reserve Bank. Yet he cautioned: "Winds can be changeable and the process may go into reverse at some point. To an extent this may already be happening .... There is no never-ending banquet under the sun."
US housing in trouble
The Daily Reckoning: US housing in trouble
As somebody who normaly likes to bash Bill Bonner when ever possible, I'm becoming alarmed at the frequency with which I seem to be in agreement with him of late! Anyway, this is Bills latest muse over the US housing market.
Hometrack forecast slowdown
Home.co.uk News: House prices rise in August - but set to slow
The north-south divide in house price growth continued over August. Average residential values in the capital grew by 0.9% over August with above average growth in the South West (0.5%) and the South East (0.4%). In contrast, house prices were static in two regions and up by just 0.1% in three others. Richard Donnell commented: "The divergence in house price growth is largely a result of affordability..." Compounding these trends, the Hometrack survey also highlights longer sales periods in the lower growth regions as well as buyers having to accept slightly larger than average discounts on asking prices. [A VI suggesting price cutting inevitable ?]
Gordon Brown: Economic Stability
FT.com: Tough choices that safeguard stability
These have been a turbulent few months, both in the battle against terrorism and for the world economy. In Britain, we have been at the sharp end of terror alerts and we must remain vigilant against all security threats. Around the world, stubbornly high oil and commodity prices and continued tension in the Middle East have contributed to fears of further inflationary pressure and have threatened growth. In Britain we have faced the second-round effects of those high oil prices on gas, electricity and utility bills. But even during these turbulent months the British economy has been showing a capacity to withstand its share of these global shocks. In every other decade, an oil shock by itself would have threatened a return of the traditional British “stop-go”. But once again our economy is demonstrating the resilience that has given us the longest period of unbroken growth and stability in our history.
Monday, August 28, 2006
Australia market crash: property prices fall 40% in Sydney
Real Estate Newsblog: Australia market crash property prices fall 40% in Sydney
A three bedroom house in Sydney's St Clair sold for just $260,000 at the weekend - down about 42 per cent from its last sale at $450,000 in 2003 in a further sign of the depressed state of the Sydney property market.The Herald checked 16 properties in south-western and western suburbs listed at the weekend and found 60 per cent had prices or had attracted offers at a discount to their last sale price.
Mini-boom to end in the Autumn
Guardian: Property mini-boom 'soon over'
Richard Donnell, Director of Research at Hometrack, expects market sentiment to be dented by the latest rate rise and expectations of future rises over the coming months.
ECB set to raise rates in October
Bloomberg: ECB May Signal Rate Increase in October on Inflation Concerns
The ECB is likely to signal this week that it will raise interest rates by a quarter point in October. Economists also expect another increase by the end of the year, bringing rates up to 3.5 percent in the Eurozone.
Oh we do love to be beside the seaside ...
Sky News: Seaside House Price Boom
Nine out of the 10 most expensive towns are located on the west coast - four of them in Cornwall, three in Dorset and two in Devon. The annual review of seaside towns published by mortgage lenders Halifax puts Sandbanks in Dorset top, with the average house costing £508,337.
Hometrack see a 0.4% rise since July
MSN: Home price rise near 2-year high
Property consultant Hometrack said house prices rose 3.9 percent in August compared with a year earlier, the highest rise since September 2004 when they rose 4.6 percent. Prices rose 0.4 percent month-on-month to average 167,200 pounds, a slight slowing in growth compared to the previous four months when prices rose 0.6 percent each month.
Bank Holiday 'no news' item....
Firstrung: Nude Britannia, 84% of Brits would buy a home next door to naturists
A startling 19.7% of respondents say they have got their kit off outside while at home on at least one occasion, equivalent to around 11 million people. The figures also suggest people are not going to great lengths to ensure nobody sees them, with 21% saying that they have caught their neighbours in the altogether at some point.
House price growth slowing in most UK regions
Firstrung: House prices grow by 0.4% in August as affordability constraints begin to impact - Hometrack
The survey, which tracks residential values across the whole market rather than just areas where transactions are taking place, found that price rises were limited to 30% of the country over August, compared to price rises across 42% of the market in June 2006. This explains the slowdown in the rate of growth over the month compared to June and July.
US Housing crash looms spelling dramatic knock on economic effects for US' trading partners
The Observer: US Housing slump fuels crash fears
Foundering American property market could spark global slowdown worse than dotcom collapse. The downturn in the US housing market will force businesses to slash 73,000 jobs a month in the new year and could be more damaging to the world economy than the dotcom crash, economists have warned.
House price rises to a 2 year high.
Yahoo News: Home price rise near 2-year high
LONDON (Reuters) - House prices rose at their fastest rate annual pace in nearly two years in August, a survey showed on Monday in a sign the Bank of England's surprise interest rate hike this month has not hit sentiment yet.
Sunday, August 27, 2006
BoE official criticises US inflation measure.
FT: BoE hits at US inflation measure
The US Federal Reserve is wrong to focus on core measures of inflation that exclude energy prices, Charles Bean, chief economist at the Bank of England, has suggested. It should focus instead on headline inflation, which is much higher, he argued. Including energy and food costs, US consumer price inflation is running at an annual rate of 4.1 per cent, against 2.7 per cent for core inflation.
UK interest rates to rise further
Sunday Telegraph: The real economy is pushing rates up
Now that inflation is above target, and likely to remain there according to the MPC, it did the right thing and raised rates. And I do not think that is the end of it........... There are ...... vested interests in the City and elsewhere who do all they can to understate the chances that rates will rise.
The UK's economic future looks grim
Sunday Telegraph: Economic Agenda: Why Brown has been imprudent
During years when the economy should have been building up national savings to prepare for the forthcoming demographic drag, the Government has actually presided over a sharp drop in saving and huge rises in borrowing. Economic policy has focused on sustaining growth in the short term, by spending and borrowing, and has squandered the demographic boost that should have enabled more saving to prepare for the ageing population. Far from prudent management, this suggests a short-sighted agenda of going for growth now and leaving the next administration to cope with the consequences of demographic inevitability..........
Economists 'fess up, prices could be going down...
Scotland on Sunday: Cold comfort after heated house prices
HOME owners will today be bracing themselves as higher mortgage bills will begin dropping onto doormats later this week. But there is more gloomy news ahead. House price inflation in Scotland has peaked and the market is heading for a slowdown, according to a Scotland on Sunday survey of property experts.
Nationwide group economist Fionnuala Earley adds that affordability is now stretched to a point where runaway values are no longer sustainable.
Thinking of buy-to-let? Do the sums
The Guardian: Thinking of buy-to-let? Do the sums
If something looks like a bubble and smells like a bubble, there's a good chance it may be a bubble. Figures out last week showed a renewed frenzy of buying in the buy-to-let market, an area of the economy that is flashing warning signs as never before.
Lock stock, is HPI over?
Firstrung: Lock, Stock and two smoking barrels, the Firstrung newsletter 26/08/06
No prizes for guessing the biggest property news story of the week, yep, that's right, Rightmove's confirmation that asking prices had fallen in spectacular fashion inside a month. The 'swing' was a jaw dropping 4.5%, from +1.6 to -2.9%. Unprecedented in terms of Rightmove's reports...
co-buying RIP
Firstrung: Stranger danger, why co-buying is a non starter
The Firstrung view remains steadfast, if this is genuinely the only method by which you believe you can buy, then begin to question your own motives as to why you wish, or need to buy. Perhaps you need to examine the warning signals, if you cannot afford it, then don't buy it, or more importantly do not buy into the hype surrounding the message of home ownership at any cost.
Another factor propping up UK house prices?
FT.com: London top homes draw world billionaires
More than 51 per cent of homes worth more than £2m sold in the last year have gone to overseas buyers from Russia, the Middle East and elsewhere, according to figures from Knight Frank, the agents. (Bet they don't pay tax here either!). The data help explain how London prices have soared in the last year while the rest of the UK market has stagnated as a result of affordability issues and interest rate fears.
Anyone here want to desert Blighty?
Times: 10m want to quit 'over-taxed' UK
According to the Times, one in five Britons — nearly 10m adults — is considering leaving the country amid growing disillusionment over the failure of political parties to deliver tax cuts, according to a new poll. This somewhat biased article seems part of a campaign to reduce tax. I'm sure there are many other reasons for wanting to leave such as house prices, loss of traditional communities through immigration and the weather.
Incoming chickens!
Guradian: US housing slump fuels crash fears
The realisation that the crash will dispose of certain ... elements .. of the economy of the USA is starting to bite. But were those jobs really legitimate? Would these jobs have ever existed if the wild excesses of the housing market had not been allowed in the first place?
House-price fall poses dilemma on interest rate
saturn956: Sunday Times
THE R word is back. The housing market has moved from cooling, through slide, into collapse. At least, that’s what many property analysts and economists are saying.
Saturday, August 26, 2006
Thirty grand deposit now needed to buy for the first time
Firstrung: First time buyers against a 'property brick wall' due to lack of affordability
Over the past ten years, the rise in house prices has been so pronounced that accessibility is almost 300 percent worse than in 1996 and currently as low as the weak levels experienced in 1980.
Poll of 'experts' revealing?
Firstrung: Reuters 'straw' pollsters view house prices as ten percent over valued
The Reuters news agency recently surveyed 29 economists for their views on British house price inflation, questions were tabled such as; whether current house prices are overvalued and the likelihood of a correction in the coming year. Naturally amongst those surveyed there would be a degree of caution, particularly amongst those directly employed in the industry.
Mortgage Debt becoming more expensive
Guardian: What can turn those 'best buy' mortgages bad
Mortgage companies are manipulating "best buy" tables by offering seductive low-rate deals - and then hitting homebuyers with huge arrangement fees. Just last week, Halifax launched a highly competitive 4.49% two-year fixed rate - but with a massive £1,499 arrangement fee.
Banks bolting the stable door - but where's the horse?
FT.com: Surge in bad debts forces lenders to tighten criteria
Banks and loan companies have been tightening up their lending criteria for unsecured loans as they become concerned about rising bad debts and the growing numbers of Individual Voluntary Arrangements (IVAs) that allow consumers to walk away from debt.
Friday, August 25, 2006
Nice broad round-up of the current situation on IRs
Firstrung: It's been a bad week for the US property market
"Central bankers today look suspiciously like Santa Claus. They provide more booze and nibbles when the party starts to run low. They nurse bubbles like doting grandparents."
...A bit more detail on the Consumer Spending story
Reuters: Consumers power economy
Consumer spending powered economic growth to its fastest rate in two years in the second quarter, keeping alive expectations interest rates will rise again in the coming months. The figures provide further evidence some the economy is growing strongly and mean Chancellor Gordon Brown is almost certain to beat his budget forecast for growth of between 2.0 and 2.5 percent for the full year.
Why UK should be worrying about falling US house prices
Scotsman: Why UK should be worrying about falling US house prices
HOUSE prices are always a hot topic of conversation. For the past few years, they have just gone up and up, which has made everyone with a property very happy. But now and again, someone throws in a hand grenade: is the housing market headed for a crash?
Will the UK house price slowdown turn into a crash ?
The Scotsman: Why UK should be worrying about falling US house prices
"HOUSE prices are always a hot topic of conversation. For the past few years, they have just gone up and up, which has made everyone with a property very happy. But now and again, someone throws in a hand grenade: is the housing market headed for a crash? ........"
You can always rely on the Great British consumer!
BBC: Consumer spending lifts UK growth
Don't bother clicking the link, this is the whole article. Consumer spending lifts UK growth A rise in consumer spending helped the UK economy grow at its fastest rate in two years, Office for National Statistics figures have confirmed. Gross domestic product (GDP) grew 0.8% between April and June, leaving growth 2.6% higher than the same time in 2005, unrevised from first ONS estimates. A 1% jump in household expenditure, as well as an acceleration in service sector growth, drove the increase. In contrast, output from production industries weakened to fall 0.2%. That compared with growth of 0.8% during the previous month.
Rebates disguise falling US home prices
New York Times: Home for Sale, by Anxious Owner
Deal sweeteners are playing an increasingly important role in supporting home prices. From large national home builders to individual homeowners, many sellers are offering thousands of dollars in perks, including straight cash, so they do not have to slice deeply into asking prices. But these discounts are almost entirely missing from the statistics on new-home prices reported by the government and on existing-home prices reported by the National Association of Realtors. As a result, home prices may now be falling, despite what the official numbers show, many economists say.
US house sales down, sparking recession fear
Daily Telegraph: Falling house sales add to recession fears
Those who fear the US is on the verge of recession were given fresh ammunition after fresh data on the housing market showed new home sales tumbled more than 4pc last month.
First time buyers out of the ball park
Home.co.uk News: First-time buyer needs over £29,000 savings
The average first-time buyer must now save three quarters of their income to get a foot on the property ladder, new research has claimed. In its first accessibility index the Royal Institution of Chartered Surveyors found a first-time-buyer couple must save 74% of their take-home pay to find the £29,200 needed to meet the upfront costs on a typical home, including the deposit and stamp duty. Anyone surprised?
UK Economic Growth on the Increase
Bloomberg: U.K. Economy Grows the Most in 2 Years on Spending
The U.K. economy grew at the fastest pace in two years in the second quarter as consumer spending rose at more than three times the rate of the previous three months.
Thursday, August 24, 2006
Is (US) economy headed to a soft landing?
USA Today: Is economy headed to a soft landing?
Er, no, according to a growing number of voices Stateside: '...there is a small but growing minority of economists who warn that the downturn could be severe. New York University professor Nouriel Roubini gives 70% odds of a recession by year's end. Merrill Lynch analyst David Rosenberg puts the chances of a recession at 40% to 80% in the coming year, based on models and market conditions. A recent Blue Chip survey of economists pegged the risk at 27%, up from earlier estimates.'
America's house-price bubble spells trouble
The Economist: What's the Hissing Sound?
A slowing, perhaps even falling, housing market spells trouble for the American economy
Speed Dating Madness
Reuters: Speed dating event to come to aid of first-time buyers
This is some crazy madness... meet your perfect co-owner in just four minutes......!!!!! I quote "And -- unlike those looking for love -- HouseDates does not aim to bring together people for long-lasting partnerships....'It's really just about getting a foot on the ladder -- not a long-term commitment'." What is a 25 year mortgage then, if it is not a long-term commitment.....?
Prices of electrical goods to rise
Neowin: LCD TV and monitor prices on verge of rising
Cheap electrical goods seem to be a key element of keeping the 'official' inflation figure low. However even that 'get-out' now looks as though it is about to end. '...prices will likely continue upward despite added capacity.' Although a US based news article the supply chain is the same.
We're all being conned!
Telegraph Business: CPI controversy fuelled by rising inflation
The controversy surrounding the Consumer Price Index (CPI) has taken a new turn as the Office for National Statistics said its measure of inflation fell last month, despite electricity and gas prices rising at the fastest rate in over 26 years. Figures from the ONS have also shown that it is understating the effect of higher utility bills on the overall inflation number. The amount of weighting given to gas bills in its inflation calculations has risen by only 17pc since 2003 while the actual cost of gas bills has rocketed by 64pc. Paul spotted this article first... TC
The mortgage that just keeps on taking
MoneyWeek: Why Tesco is the Bank of England's next big worry
Kent Reliance Building Society has now released the ultimate mortgage for today’s debt-laden generation - the mortgage that you never have to pay back...Purchasers can pay interest-only until the day they die, and then pass the debt onto their children - or perhaps a lucky friend.
Soft Landing or Crash
Times Online: Slowing house prices will help crush inflation
Has the Fed engineered a soft landing or is this the start of something more severe for the housing market?
It's all the governments fault again, those generous builders aren't in it for massive profits
Firstrung: Smartnewhomes.com calls for 'government re-think' on housing policies
"Our campaign is calling on Government to take into consideration demands for particular types of housing. Young families are continually struggling to find suitable and affordable homes to meet the needs of their growing household and current Government planning policy does not address this demand.
FTBs in Ireland, 20% are 'non Irish'...
Firstrung: One in five first time buyers in Ireland are non Irish
According to recent reserch from the Irish Mortgage Corporation, Asians now top the ranks of non-Irish nationals buying their first home in Ireland. The findings are based on mortgages completed by the independent mortgage broker in the first 6 months of 2006.
Forget about your pension Dad, I need a house
Firstrung: First time buyers expect 'as of right' parental contributions when buying for the first time
First-time buyers take it for granted that they will get parental assistance in order to get onto the property ladder, according to research from Abbey. Not only do many first-time buyers live at home for a considerable time in order to save money, but parents are expected to give generously from their savings to help out financially, and even lend a hand when moving in.
More large scale job losses - Manchester this time
BBC News: Northern Foods to shed 690 jobs
This on top of HP sauce factory moving to The Netherlands with 120 jobs gone from West Midlands.
House Prices on the rise in Oz
Sydney Morning Herald: House prices still nudging up
House prices are still on the rise in Oz, according the Australian Bureau of Statistics, just published today!
More Inflation pressures building!
Telegraph: Price of food and drink will soar, experts predict
On top of soaring fuel bills, petrol prices and council tax, retail experts issued a warning yesterday that the cost of food and drink was about to go up sharply. Supermarkets are expected to pass on higher prices to customers after a combination of poor harvests and the rising cost of global commodities such as orange juice and coffee. Drink up: The cost of orange juice is expected to rise by up to 25 per cent over the next few months. The cost of food has been rising substantially this year. The British Retail Consortium said food prices went up in July for the third month in a row. In the 12 months to July, food inflation was 3.2 per cent compared with the overall inflation rate of 2.4 per cent.
Wednesday, August 23, 2006
America's housing party is over
The Economist: Gimme Shelter
Now that America’s housing party is over, how bad will the hangover be? AMERICA’s housing market has banged its head on the ceiling; now investors and homeowners are wondering how soon—and how hard—it will hit the floor.
US housing slowdown
BBC News: New sign of US housing slowdown
Sales of previously-owned homes were down 4% in July from a month before, a bigger fall than analysts had expected. Successive interest rate rises have taken the heat out of the market, with sales of new homes also falling. Federal Reserve chairman Ben Bernanke said recently he believed the market was headed for a "soft landing".
First time buyers over-stretched
Home.co.uk News: Are stretched first-time buyers misskimping?
Nearly half of first time buyers would only be able to meet their mortgage repayments for six months if they lost their regular income tomorrow....One in 20 admit they would have to sell their house in this event.
Negative equity in Oz
Sydney Morning Herald: Home owners find equity a spent force
The stagnant property market has taken a toll on a favourite Australian pastime: converting bricks and mortar into cash. The boom in equity withdrawn from housing and used to boost superannuation, bolster share portfolios and buy cars, overseas holidays and plasma televisions has petered out, a report by the Reserve Bank says.
Is Britain Too Expensive
MSN MONEY: Is Britain Too Expensive
Article that talks about real cost of Britain and Inflation. Perhaps general people are seeing that inflation is here.
Even Neo-Labour is in debt up to its eyeballs
Telegraph: Labour loaned £28m in three months
The Labour Party was lent more than £28 million between April and June this year, figures released by the Electoral Commission have shown.
Has the Australian house price crash started?
MoneyWeek: Has the Australian house price crash started?
Rising interest rates across the world are starting to have a more painful impact on global housing markets. In the US yesterday, the country’s largest luxury house builder, Toll Brothers, reported that its third quarter profits fall 19% - the first decline in four years. The group also slashed forecasts for fourth-quarter earnings - unsurprising, as the number of unsold new family homes in the US is currently at an all-time hig
Top housebuilder turns mildly bearish ('cos they can't lie to The Stock Exchange
The Times: House price surge tailing off, says Persimmon
CONCERNS that Britain’s house price “mini-boom” is running out of steam were fuelled yesterday as Persimmon, the country’s biggest housebuilder, sounded a warning that prices will not rise much further this year. The caution over the state of the housing market from the homebuilder came just days after an influential survey from Rightmove, the property website, suggested that asking prices fell in August for the first time in months.
Utter Utter Madness
Daily Mail: The Mortgage that Never Ends
Here is a scheme that passes the debt to the kids, and the property to the lending institution. When things get this desparate then surely the end is nigh.
Blow some more air into the bubble....
Telegraph.co.uk: First steps on the property ladder
Winston Churchill once wryly observed, "Saving is a fine thing. Especially when your parents have done it for you." Antonia and Alexander Faust, sister and brother from East Sheen, Surrey, are unlikely to disagree with that, as their parents, Jane and Andreas, are giving them the not insubstantial sum of £47,000 for the deposit and building works on their first home, a £250,000 two-bedroom flat in White City, west London. Lucky Antonia and Alexander........
Tuesday, August 22, 2006
Doom Doom Doom
The Daily Reckoning: Inflation upheavals
Gloomy view from the U.S by the right wing 'crack pot' Bill Bonner. 'Bullion Bill' compares the hypainflation of 20's Germany, with what he sees as being the likely future for the U.S. Everyone knows what emerged politicaly from the economic ruin of Germany, but could the US be heading the same way? Some might ask, if anybody in the U.S would notice a rise in fascism, after all, what is the difference between Fascists and Neo-Cons besides a possible differing of opinion upon the jewish question?
Debate over 120,000 new homes in Kent
BBC News: Housing plans build Kent passions
Any discussion about the future of Kent and the preservation of its character tends to boil down to one central issue: housing. The subject inevitably polarizes opinion and often pits business interests against community ideals. One man caught in the middle of the debate is Nick Sharp, site director of Kent Science Park.
Downbeat on House Prices
Firstrung: "I still don't think house prices will crash, but there's something in the air that makes me nervous."
There were a number of uncharacteristically downbeat pieces on the property market spread across the weekend press. And this is another!
BBC in complete denial of housing market downturn
BBC "News": Persimmon upbeat on house market
True to form, the BBC has rurned a blind eye to the coming housing market chaos, and instead reports on Persimmon's rising profits for the "first half of this year". The number of completions has risen sharply too - but only because of their acquisition of Westbury. Desperate means call for desperate measures, I guess.
City Expect another rate rise before year end
TimesOnline: Expectation of rate rise grows in City
More than two thirds of city economists believe the Bank of England (BoE) will raise rates before the end of 2006.
More signs of trouble from down under
Sydney Morning Herald: Life in the red
Another reality check article from Australia. "You think life's pretty good. Your job is steady, interest rates are relatively low - at least for the time being - and you own your own home."
At the top of a slippery slope...?
The Times: House prices fall as higher rates bite
The Bank of England’s decision to raise interest rates earlier this month is already having an impact on the housing market, according to the latest survey of asking prices. Rightmove, the property website, reported that prices are down 1.6 per cent in August indicating that the mini boom in house prices could already be over.
Monday, August 21, 2006
Banks target Polish workers
Daily Mail: Banks target Polish workers
Major banks in the UK are starting to recruit Polish-speaking staff and specifically tailor products for Poles after identifying them as a "major growth area". Barclays, HSBC and Lloyds TSB are "attempting to improve life for Britain's Poles", who have traditionally faced a tricky task opening bank accounts to start them off in British financial life. - It's so nice to see the banks taking an interest in our new guests wellbeing and not as a new source of borrowers to increase their profits (and perhaps prop up the market ?). I'm sure lots of UK borrowers feel "indebted" to the banks for the way they have improved their lives also.
Oil price climbs again
BBC News: Oil rebounds on Iran uncertainty
Oil prices rebounded on Monday from two-month lows as concerns reignited over Iran's nuclear programme. Iran has said it will not suspend uranium enrichment, a key demand of an international proposal aimed at resolving the nuclear program row.
Are we following the Aussies?
Sydney Morning Herald: Housing crash puts sellers in debt crisis
A THREE-BEDROOM brick-veneer house in St Clair sold for just $260,000 at the weekend - down about 42 per cent from its last sale at $450,000 in 2003 in a further sign of the depressed state of the Sydney property market.
Crocodile tears for the FTB - and no mention of the dip in prices
BBC "News": First rung
This is the property news today for the BBC, not the dismal Home.co.uk or Rightmove figures. Emma Koubayssi joins presenter Lesley Curwen to explore the best way to get her toe on the bottom rung of the property ladder. In other words, this silly girl is thinking of jumping on the property ladder in the Gorbals, Glasgow. She persuades herself that an interest only mortgage is the one for her, no mistake!
True rate of UK inflation is 10%
Daily Mail: Inflation for middle classes 'runs at 10pc'
Living costs for the middle classes are rising at more than four times the official rate of inflation, an economist warned yesterday.......
House prices falling
Daily Mail: House prices slip back £3,400
THE property mini-boom in the South of England, which has driven up prices across the country, is running out of steam, according to one of the most optimistic house price surveys. The interest rate rise, higher bills and the August lull have contributed to a drop in asking prices The latest figures released by property website Rightmove ............
House Prices head south
Home.co.uk News: Housing market runs out of steam
The housing market has ‘run out of steam’ with prices falling by 1.6% in August, according to property website Rightmove’s August index out today. Yep that's Rightmove!
Have house prices peaked for 2006?
MoneyWeek: Have house prices peaked for 2006?
There were a number of uncharacteristically downbeat pieces on the property market spread across the weekend press. Since the beginning of the year, the pundits have been itching to proclaim the return of the boom, with prices in London apparently leading the way. So why the sudden change in tone? Well, after this month’s “shock” rise in interest rates, the estate agents are getting edgy. “If we keep saying that house prices are rising, the Bank of England might hike rates even further,” they imagine to themselves. “And that could - gasp - damage the market.” To our minds, it is nothing less than rank self-delusion for property pundits to imagine that the rash of half-baked little surveys they churn out will make any difference to the mindset of the Bank’s interest-rate setting committee - which is after all, meant to be targeting inflation, rather than house prices. But still, you can rarely accuse an estate agent of thinking far beyond their next sale. And surprise, surprise, just as we said would happen last week, the data on the property market has taken a sudden downturn…
Spectre of negative equity haunts Sydney property market
Sydney Morning Herald: Housing crash puts sellers in debt crisis
Negative newsflow is clearly rising in the Australian market. Auction clearance rates in Sydney are hovering around 48 per cent since the recent interest rate rise, but plummeting property prices have meant many vendors are confronting negative equity, where they owe more on the property than it is worth.
Music to my ears
Guardian: After the mini-boom, property prices are dropping at their fastest rate in two years
House prices "now falling at their fastest rate for almost two years" Mr Shipside added: "Activity in the property market virtually stopped dead after two successive rate rises in 2004 and took a year to recover. Prices are now cooling off and require no further intervention from the Bank." But then he would, wouldn't he.
At last!
guardian: thinking of BTL? do the sums first
An enlighteningly honest and sensible article. About time we came across a journo with some sense. This could represent the start of a change in attitude of the media, which could be a significant thing.
Is this the leaf turning?
Yahoo Finance: House price rally peters out
Or is it just another blip?
Is this the *real* start of the downturn? Or another false dawn?
Bloomberg: U.K. House Prices Drop Most in Nearly 2 Years, Rightmove Says
*U.K. House Prices Drop Most in Nearly 2 Years, Rightmove Says* Coming from the usually bullish RightMove this may at last signal VI acceptance that the market has peaked. ``Prices have passed their peak for 2006,'' Miles Shipside, commercial director of Rightmove, said in a statement. ``With the market cooling, and signals from the Bank of England that interest rates may move up again, sellers may have to reduce their price expectations.''
Sunday, August 20, 2006
Think before you bet on buying to let
Scotsman: Think before you bet on buying to let
BUY-to-let investing is booming, according to the latest figures from the Council of Mortgage Lenders, as more people than ever gamble on the housing market in the hope of securing their financial future.
What we always suspected!
Telegraph: Inflation is 10pc for middle class
The "real" rate of inflation hitting middle-class households is as high as 10 per cent - more than four times the Government's official rate, it is claimed. Economists are warning that the Consumer Price Index (CPI), the benchmark measure of inflation, is "meaningless" to millions of consumers, who have been victims of staggering rises in the cost of energy, council tax and school fees over the past 12 months.
Brown fiddling the unemployment figures ?
The Business Online: The real unemployment figure in Britain today
The Chancellor has never been honest about the true nature of British joblessness. Now he has been rumbled' THE number of people claiming out-of-work benefits in Britain has hit 5.29m, more than three times as many as are officially unemployed,
Brown fiddling the inflation figures ?
Sunday Telegraph: Inflation is 10pc for middle class
The "real" rate of inflation hitting middle-class households is as high as 10 per cent - more than four times the Government's official rate, it is claimed. Economists are warning that the Consumer Price Index (CPI), the benchmark measure of inflation, is "meaningless" to millions of consumers, who have been victims of staggering rises in the cost of energy, council tax and school fees over the past 12 months.
The Great Australian (British?) iIlusion
The Age: The Great Australian illusion
Why house prices are bad news for most people.
Behold what awaits us!
The Sydney Morning Herald: slump hits home
This article is 6 months old, but for those of us who believe that the Australian economy/property market, may provide clues as to where we are heading, then this is a valuable and scary insight. Not only are there clues as to the direction of our own economy/property market here, but for those who take an intrest in the political agenda behind the 'global economic mirricle', there are quite clear (and familiar) social policy concequences evident too. The 'unfortunate circumstances', and 'tough decisions' that Nation States seem to be left with as a result, are worthy of note.
Telegraph getting Nervous
Telegraph: Word on the Street
The bubble only bursts when the last bear turns bull...and this article fells that has happened with Capital Economics falling into bull camp.It then outlines some possible triggers for the crash.
Record profits for banks and yet savers lose out
Times: Savers lose as home loans rise
More than 30 banks and building societies have put up their mortgage rates in the last fortnight, some by more than the Bank of England interest rate rise, while all but a few have so far failed to pass on the benefits to their savers.
What the Lord giveth, the government taketh away
Telegraph: Byers calls on Labour to scrap inheritance tax
Stephen Byers, the former transport secretary and a leading Blairite "outrider", claims that the tax, which brought in a total of £3.3 billion last year, is "a penalty on hard work, thrift and enterprise".
How negative gearing can become a problem for all...
The Age: Landlords bring their losses to the masses
NEGATIVE gearing of rental properties is rapidly eroding tax revenues, with the Australian Tax Office reporting that net losses claimed by rental investors jumped 50 per cent in 2004-05 to $3.9 billion.
Ex-transport secretary doesn't want to pay inheritance tax
BBC News: Byers wants inheritance tax ended
He told the Sunday Telegraph removing the tax would allow Tony Blair's successor to show New Labour's middle class electors had not been forgotten. They've forgotten FTBs so why should they not forget older home owners? Because Stephen Byers is one of them!
Final warning given...........
SCMP: Why the housing boom is coming to an end
The Souch China Post gwarns wealthy expats that this may be their last chance to off-load their investments in the west with a sound summary of why we are in this mess..............
Saturday, August 19, 2006
Falling Uni numbers ... la la la, I'm not listening
Indepedent: Read property at university: your tutorial starts today
Buy a house for your child to live in at university and you could make a first-class profit, says David Prosser
Borrow, borrow, borrow
Daily Mail: Mortgage borrowing tops £30bn in a month
Soaring house prices forced homeowners to borrow more money last month than any July since records began. The booming home loan market is fuelling fears that interest rates could go up for the second time this year...... ...He said the rise was being fuelled by 'a strong appetite' among borrowers for remortgaging in an attempt to cut their monthly repayments...
Why Interest Rates Are Rising
BBC News: Q + A: Why are interest rates rising
Interesting article that explains why global interest rates are rising and why it wont be a flash in the pan event, it also mentions directly how central banks have woken up to the fact that property value to earnings ratios are wrong.
Credit crunch in small business community
Firstrung: Business failures continue to increase - Equifax
The rise in the number of businesses with a zero credit limit and therefore unable to obtain new finance to support their business has gone up by nearly 3 per cent compared to the same period in 2005.
FTB summit welcomed by A&L
Firstrung: First time buyers 'summit' welcomed by Alliance and Leicester
Perhaps it's just the Firstrung team that see the irony of using the word summit to describe the 'Tory initiative' in relation to the plight of first time buyers; summit = peak, perhaps a suggestion that prices must come down from an unsustainable height?...
Friday, August 18, 2006
Distorted record July budget surplus
BBC News: Record July budget surplus for UK
The UK Treasury had its highest July budget surplus on record - but the figures were skewed by a string of one-off factors.The surplus stood at £8.4bn, £4.3bn higher than at the same time last year.
Borrow, borrow ... forget you have to pay it back tomorrow !
The Times: Mortgage lending continues buoyant
Mortgage lending remained robust last month as the housing market's summer resurgence showed little sign of cooling, figures showed today.
Facists of the World Unite
Torygraph: Unchecked immigration is putting Britons out of work
Unchecked immigration is putting Britons out of work, and apparently it's all those low paid immigrants that have fuelled the housing bubble...
Boring, boring Mervyn!
Independent: MPC is ensuring that Mr King won't achieve his 'boring' ambition
In his best-known aphorism, Mr Mervyn King said it was his ambition to make monetary policy "boring". By this he meant that a central bank's actions were likely to be most effective if they conformed to a widely understood policy framework.
Mortgage millstone for millions of OAPs
Daily Mirror: OWE APs
MIILLIONS of homeowners are reaching retirement age with the millstone of a large mortgage still hanging around their necks
Mervyn talking sense again, why does noone listen?
Bloomberg: U.K. First-Time House Buyers Dwindle, Threatening Blair's Boom
"Clearly, in the long run, the market requires first time buyers to come in and provide base demand,'' Mervyn King said at an Aug. 9 press conference in London." There is a great deal of uncertainty about the sustainability of the present level of house prices relative to earnings or incomes.
US homeowners still using homes as cash machines
Reuters: US consumers still extracting wealth from homes
Many U.S. homeowners continue to take cash out of their homes even as mortgage rates climb and home sales slip, helping to brace the economy, economists said. This year, Americans who refinance their mortgages are expected to draw $257 billion of wealth out of their homes, according to mortgage finance giant Freddie Mac. That's $13 billion more than the refinancing cash-out seen in 2005 - the hottest year of the recent housing boom.
China raises base rate
Reuters: China raises interest rates by 0.27 pct point
China raised interest rates on Friday in the latest of a series of tightening steps aimed at slowing a boom in credit and investment that risks destabilising the world's fourth-largest economy. The People's Bank of China, the central bank, said on its Web site (www.pboc.gov.cn) that it had ordered an increase of 0.27 percentage point in commercial banks' benchmark one-year deposit and lending rates.
Roundup of the various banks reactions to the rate rise
Money Extra: Mortgage/savings rates - Who has done what
Two weeks on from the Base Rate increase financial data provider Moneyfacts notes that only half of UK mortgage providers have announced changes to their SVR (Standard Variable Rate), with some of the big players on the high street, namely Woolwich (Barclays), HSBC and NatWest, still to decide on mortgage rates.
Eurozone inflation 2.5% for June
BBC News: Eurozone inflation falls in July
Inflation in the eurozone eased to 2.4% last month but economists said the move would not stop policymakers from raising interest rates again soon.
BTL lemmings go bonkers
Home.co.uk News: Landlord lending leaps to record levels
Buy-to-let borrowing set new records in the first half of the year, with lenders advancing 152,500 loans, worth £17.5 billion. Incredible!!
Global House Price Crash??
Home.co.uk News: Risk of global house price crash falls away
Knight Frank have recently released the second quarter 2006 results of their Global House Price Index which they claim to be the first serious attempt to analyse pricing trends in residential property across the world on a standardised basis every quarter. The main finding is that global house price growth has continued to slow from the recent peak reached in 2004 and overall 18 out of the 30 countries covered have seen price growth slow over the last 12 months. Average global house prices stood 8.5% higher at the end of June 2006 compared to the same period 12 months earlier, the index shows.
Thursday, August 17, 2006
Good ol' politicians
Guardian: Cameron proposes expansion of right-to-buy
A little bit of extra supply to help tip the balance?
Privileged remain privileged
Guardian: City bonuses reach record £19bn
City back handers are on the up.
Another shock - not!
Guardian: Powergen reveals energy price hike
So that's one sixth of the entire adult population that face higher bills. Bring it on.
I'm not surprised
Guardian: Surprise fall in spending
Why is it that when consumer spending was flying, no-one considered it a reason for a rate hike, but now it's fallen off a bit lazy journalist retards are spouting that it means the bank won't be able to raise rates again?
Norway raises base rate to 3%
Norges Bank: Norges Bank increases the interest rate by 0.25 percentage point to 3.00 per cent
Norges Bank’s Executive Board decided today to raise the sight deposit rate by 0.25 percentage point to 3.00 per cent with effect from 17 August 2006. The interest rate on banks’ overnight loans is also being raised by 0.25 percentage point.
City bonuses up again but will this affect property?
SKY News: City Bonuses Soar 16%
Bonus payments in the City are reported to have climbed 16% to a record £19bn - equivalent to the UK's entire annual transport budget. The figure is claimed in The Guardian newspaper which has analysed data from The Office for National Statistics.
Retail sales fall in July and June figure is revised downwards
SKY News: High Street Sales Falter
Retail sales in British shops unexpectedly fell in July for the first time in six months and it could defuse calls for further increases in interest rates. The Office for National Statistics said sales volumes fell by 0.3% last month compared with expectations of a rise of 0.2%. June's rise was also revised lower to 0.7% from an initially reported 0.9%.
When will the buy-to-let bubble burst?
MoneyWeek: When will the buy-to-let bubble burst?
Minutes from the Bank of England’s August interest-rate setting meeting revealed nothing that we didn’t already know. Gordon Brown’s new man on the Monetary Policy Committee, David Blanchflower, is - surprise, surprise - a dove. He was the only one of the seven-strong committee (it’s two members down at the moment) to vote against a rate hike. Mind you, you can’t expect a great deal of sense from a man whose crowning academic glory is a piece of research that proved that having more sex tends to make people happier. Doubtless the two new MPC members who join in October - both Treasury appointees - will also be doves. But with six members actually worrying about inflation, that still leaves the odds stacked in favour of a rate hike. And that’s bad news for all those new buy-to-let landlords who have jumped on the bandwagon since the start of this year…
Why bankruptcies are set to rise even further
MoneyWeek: Why bankruptcies are set to rise even further
It's a week or so old, but here's MoneyWeek commenting on the BBC's debt diary woman...
Re-arranging the deck chairs on the Titanic
Telegraph: Govt. to tackle debt mountain
No-one takes government 'initiatives' very seriously any more, but, anyway, here we go again... - Why does it take two years to introduce a simple tweak to the national curriculum?
Wednesday, August 16, 2006
Bank discussed quick U-turn on rates
The Times: Bank discussed quick U-turn on rates
The Bank of England's Monetary Policy Committee (MPC) voted 6-1 to raise interest rates to 4.75 per cent earlier this month but the dovish tone of the minutes of their meeting today raised doubts over another rate rise this year."There would be time to reverse any increase should that prove necessary once the medium-term paths of demand growth and inflation became clearer," the minutes said, outling the thinking behind the rise............. Well now, that's reassuring to know.
HPC USAwide
USA Today: Job losses lead to drop in home prices
The loss of manufacturing jobs helped drive down home prices in 26 metro areas between April and June compared with the same period last year, the National Association of Realtors said Tuesday. Gosh, who'da thought?
Buy-to-let borrowing hits new record
BBC: Buy-to-let landlords borrow more
There is now 767,000 buy-to-let mortgages which account for 8% of all current home lending. During the first six months of this year borrowing by buy-to-let landlords hit new records.
Are we surprised?
BBC News: Bankruptcy rate forecast to rise
The number of people going bankrupt is expected to rise sharply in the next three years, according to a government report on personal debt.
BTL -> like a lamb to the slaughter!..
BBC News: Buy-to-let landlords borrow more
New mortgage borrowing by buy-to-let landlords hit record levels in the first half of this year.
Integrity of CPI questioned again
Telegraph: Inflation 'hitting the old hardest'
The cost of living for pensioners is rising more than 50 per cent faster than the official inflation rate, experts claimed yesterday. According to Alliance Trust, inflation for over-75s was 3.7 per cent, while for those between 65 and 75 it was 3 per cent.
Something must have ruffled the BOE feathers.
BBC News: Bank voted 6-1 for rate increase
The Bank of England's rate-setting committee voted by 6-1 in favour of raising interest rates to 4.75% earlier this month, minutes have shown.
Unemployment rises to 5.5%
National Statistics: Labour Market Statistics - August 2006
The unemployment level was 1.68 million in the three months to June 2006, up 92,000 (~6%) from the three months to March 2006 and up 243,000 (~20%) from a year earlier.
Estate agent admits market could slow
Daily Telegraph: Housing market at risk if rate rises continue next year
Christopher Sporborg, chairman of estate agency chain Countrywide, has warned that the housing market could slow if the Bank of England continues to raise interest rates next year.
Tuesday, August 15, 2006
Last orders for cheap credit
MSN: Why now is the right time to remortgage
Recent BoE figures show that we withdrew £12.51 billion from the value of our homes in the first three months of this year. With the recent 0.25% IR rise, this article asks if this the beginning of the end of easy credit? And if so, why remortgaging now should become an increasingly attractive proposition.
US house market 'at 15-year low'
BBC News: US house market 'at 15-year low'
Optimism among US house builders has fallen to its lowest level in 15 years, the latest sign that a once booming market has now slowed sharply.
Do you think the BBC and RICS are best friends?
BBC News: House prices still accelerating
House prices are likely to rise even faster in the coming months, says the Royal Institution of Chartered Surveyors (RICS).
China still the world's factory
BBC News: China's industrial output soars
China has seen its industrial output surge in July compared to a year earlier, official statistics show. Industrial output was up by 16.7%, the National Bureau of Statistics said, with strong increases in iron ore, steel products and coal. While the rise is below June's annual growth of 19.5%, analysts still predict strong growth ahead.
Inflation remains above the governments inflation target
BBC News: Inflation eases slightly in July
Inflation fell marginally to 2.4% in July, but the figure remains above the government's 2% inflation target. The Consumer Price Index (CPI) dipped from 2.5% in June, according to the Office for National Statistics (ONS). The headline rate of Retail Price Inflation (RPI) remained unchanged at 3.3%, the ONS said.
Barratt, U.K. Homebuilders May Fall Further on Higher Rates
Bloomberg: Barratt, U.K. Homebuilders May Fall Further on Higher Rates
Shares of nine of the 10 largest UK homebuilders have fallen since the Bank of England unexpectedly raised interest rates this month. The decline may have further to go if U.S. housing companies are any indication.
Average graduate debt up 5%
BBC website: Student debt 'averages £13,252'
Student debt 'averages £13,252' Although the rise in graduate debt was slower than in previous years, 62% of graduates still left university owing more than £10,000 apiece.
Welsh Wisdom
BBC News: Morgans Shout
The BBC gives airtime to a cynical gent who gives a down to earth view on what really is going on in the housing market put into an historical context. However, he is Welsh.........:)
UK manufacturers hit by rising oil prices
FT: UK manufacturers hit by rising oil prices
A spike in the price of crude oil helped push manufacturers’ raw material costs higher last month, according to official data released on Monday. However, the report also showed that inflationary pressures were being contained by industry’s difficulty in fully passing these increased costs on to its customers.
Monday, August 14, 2006
Oil price falls, but for how long?
SKY News: Oil Slips Back On Truce
Oil fell to $73 a barrel as a UN-brokered truce took effect to end fighting between Israel and Hizbollah. The move eased concern about supply from a region that pumps a third of the world's oil.
20% Increase on bread, Inflation starting to go out of control
Guardian: Heatwave will put 4p on a loaf, warn Britain's biggest millers
Inflation's increasing every day now on our day to day goods. Now we see an increase in bread prices, a worldwide shortage of vegetable and palm oils due to usage with biofuels - causing margarine price increases and almost anything that uses oil in the manufacture of foods ie. chips, pizza's. I hate to think what inflation will be when these are counted into the inflation figures. Its not looking good for the rest of the year.
House price inflation slowed sharply in London
BBC News: Slowdown hits house price growth
House price inflation in the UK is slowing, official government figures have shown. The Department for Communities and Local Government (DCLG) - formerly the ODPM - said prices rose by 5.2% in the year to June, down from 5.6% in May.
Euro interest rates to rise again ?
BBC News: Germany's economy picks up speed
Germany's economy grew at its fastest rate for five years between April and June boosted by higher domestic demand....... Analysts said the data reinforced the chances of a European rate rise, as it follows a recent upturn in France.
Nonsense
Guardian: Millionaire Britons to rise to 1.7m
Surprise surprise - some unnamed 'experts' reckon we're all going to be millionaires if we all buy property. Absolutely no justification or even valid reasons for these 'expectations'. The Guardian is really going downhill.
Factory gate inflation at 2.8%
National Statistics: Factory gate inflation rises to 2.8%
In July, output price annual inflation for all manufactured products fell to 2.8 per cent. Input price annual inflation fell from 11.2 per cent in June to 9.7 per cent in July.
When the US sneezes - will we catch a cold?
Telegraph: Bearish Wall Street analysts predict a fall of up to 20pc
A clutch of Wall Street's top technical analysts have turned starkly bearish on the US equity markets, predicting a fall of up to 20pc in main indices over coming months.
Monday morning, pulled a sicky? Boo, just look what you're costing...
Firstrung: Sickness and asbsence costs 13 billion
Work shy? Why bother when we're all property millionaires eh? Note that journalists are way down the list of absentees, how about over worked directors of new start companies? One day off in 30 months....this report would have been better had it cited the most common reasons for 'sickies'...food poisoning, It wasn't the ten pints of lager, it was the kebab what did it!
When renting is a better idea
MSN Money: When renting is a better idea
The continuing positive propaganda about buying a home can be so incessant that it can be hard to accept there are times when renting a property is a better option than buying one...
Sunday, August 13, 2006
Times' David Smith backpedalling
Times Online: Bank experiments with a 5% solution
David Smith proves again that he is even more out of touch than usual in his outlook of the economy. His appraisal of economic conditions is consistent - just consistently wrong. He seems to be trying to warn the Bank of England not to raise rates too much, or his house will fall in value. Let's hope they're not stupid enough to listen.
Interest only mortgages could turn nasty
MSN Money: The most dangerous mortgage in the world?
Are you sitting on a mortgage time bomb? Just like a packet of cigarettes, mortgages now come with a health warning: your home may be repossessed if you cannot meet the repayments. However, some mortgages are more dangerous than others and the interest-only mortgage has the potential to be particularly nasty.
Drip, drip, drip - mainstream press is turning bearish
Daily Telegraph: Word on the street
There are 2 sections - ignore the first, all about Russians buying up posh places, although he does finish this bit by commenting that it will have no impact on house price stats. The interesting bit is the lower section, after the bullet point, about the interest rate rise. At the end he concludes, "The message is quite clear: prices cannot be allowed to keep rising at their current rate of more than 5 per cent a year or the chances of a crash will multiply." Like Fionnuala Earnley at Nationwide, I think Conway is another economist employed by a VI who is just aching to throw off the bull outfit and show his true bear colours...
Money News
Independent: Money News: Homeowners warned: expect another rise in interest rates
Homeowners should brace themselves for a further hike in interest rates this year after a stark inflation warning from Mervyn King, Governor of the Bank of England. Mr King said "inflation [was] likely to be volatile" and expressed his "great uncertainty about energy prices". These remarks were interpreted by financial markets and analysts as meaning that another rate rise - probably 0.25 percentage points - was needed sooner rather than later to keep the lid on the cost of living. Many economists, in-cluding those at the invest-ment manager Investec, now predict another rate rise by November.
Gordon Brown
Telegraph: This painting is 'Expulsion and Killing of an Enemy'. What does it tell us about Gordon Brown?
It might have been expected that a senior politician once described as "psychologically flawed" would take great care when choosing the works of national art he borrowed to decorate his walls. Yet the paintings, sketches and cartoons chosen by Gordon Brown to hang at the Treasury and his official residence at 11 Downing Street appear to provide a fascinating insight into the darker side of his character.
Interest Rates & Inflation
Sunday Herald: Economic comment
The publication of the Bank of England’s Inflation Report last week gives us a better understanding of where it thinks inflation and, by implication, interest rates are likely to move over the next two years. The Bank expects inflation to return to its target in 2008, but only if interest rates follow the path implied by market expectations. The market has priced in another one and perhaps two additional rises in base rates over the next 12 months.
Roger Bootle: Economic agenda
Telegraph: Fair stands the wind for Britain?
When I started writing these columns almost exactly six years ago, the hot topic was the oil price and the consequences it might have for inflation, interest rates and economic activity. Plus ça change! People were worried then because oil had just reached the heady level of $30 a barrel, compared with $76 now. Interestingly, interest rates were 6 per cent, compared with the current level of 4.75 per cent. But last week's quarterly Inflation Report from the Bank of England raised a few spectres. Is the economy about to enter a darker period?
Interest Rates. What the Experts think
Telegraph: Have Britain's interest rates peaked?
The first increase in a year surprised the City. Are there more in the pipeline? Robert Watts asks the experts Mervyn King, the Governor of the Bank of England, paved the way for further interest rate rises last week. The Bank's latest Inflation Report, published on Wednesday, strongly suggested that this month's rate rise - from 4.5 per cent to 4.75 per cent - was the first of a series, rather than a "one-off tweak". King suggested that there was a "50:50" chance of inflation rising above 3 per cent, one percentage point above the Bank's 2 per cent target rate. If that happens he will be obliged to write a formal letter to Gordon Brown, the Chancellor, explaining the situation - something that has not been necessary since the Bank took control of monetary policy more than nine years ago.
Mortgage Rates
Independent: Mortgage rates are edging up, not going through the roof
Just when British homeowners had settled into a comfortable pattern of rising house prices and consistently low mortgage rates, along comes a quarter percentage point hike in the base rate and horror stories of property repossessions and record bankruptcy levels. Some 8,140 properties were repossessed in the first half of 2006, compared with just 4,620 for the same period last year - up 76 per cent - the Council of Mortgage Lenders (CML) said.
Saturday, August 12, 2006
Nationwide ups borrowing rates
Guardian: Nationwide puts up its lending rate by 0.35%
Nationwide building society yesterday raised its standard lending rate by 0.35%, the first big bank to increase its base rate by more than the 0.25% increase announced last week by the Bank of England.
More rate rises in store for US?
BBC News: US consumers spend more in July
US shoppers showed more willingness to spend in July - pushing retail sales up at the quickest month-on-month rate seen since January. The Commerce Department said sales across the country had jumped 1.4% since June, with electronics and household appliances in demand.
Steady as she goes for Japan
BBC News: Japan pegs interest rate at 0.25%
Japan's central bank has held its key interest rate at 0.25% - a month after it scrapped its zero rate. The Bank of Japan had said it would only increase rates gradually, having not lifted them for six years prior to last month's decision.
Era of low rates over, says Oz bank boss
Daily Telegraph (Australia): Days of low rates are 'over'
There is no guarantee that Australia can continue its unbroken 15-year run of low interest rates and solid economic growth, outgoing Reserve Bank governor Ian Macfarlane warns.
Bigger bills from Nationwide
Daily Mirror: Loan bill goes up
Biggest building society hikes up rates for half a million borrowers
More going bust
Daily Mirror: More of us going bust
Personal bankruptcy has soared as people struggle to cope with rising bills and credit card debts, figures reveal.
Acadametrics latest take on the 'robust' market for the 'pink devil'
www.ft.com: London house prices continue to set pace
‘’The enormous increase in prices at the pinnacle of the London property market has been fuelled largely by international buyers. At this level, it is the world economy, not the Bank of England which is the main influence on price,”
HPC in the news again
Guardian: First-time buyers tempted by offers of huge loans
An article about high-risk lenders being prepared to offer 5x income to FTBs, however, it's good to see that there's a note of caution tacked on the end.
Finally, some sense on EU immigration
Guardian: Reid pushes for ban on next wave of EU workers
Plans to deny Romanians and Bulgarians full rights to work in the UK are being considered by John Reid. Both countries join the EU in January and the potential influx of workers is causing divisions in cabinet.
Lenders out of control
Telegraph: Parents step in to help young climb on the ladder
Now that the kids have run out of money, the desperate mortgage lenders are trying to get their parents to throw their savings down the drain. New schemes can add the income of parents or other close relatives to that of the first-time buyer when calculating the size of mortgage available. Madness!
Friday, August 11, 2006
House Prices feeling the Heat
Home.co.uk: House Prices Feel The Heat
After three consecutive months of minor rises, asking prices in England and Wales were knocked back by 0.6%, according to the latest Asking Price Index report from Home.co.uk. Such price cutting behaviour underlines the highly price sensitive nature of the current housing market. Buyer affordability constraints are again creating sufficient downward pressure on prices to force sellers to discount their asking prices.
The next epic debt diary installment!
BBC News: Debt diary: Payment deadline
My home visit from the debt counsellor, acting on behalf of Kensington Mortgages, is very strange. I simply hand him the latest copy of my budget, how I plan to make token repayments and still find money to live, and he copies this down onto a form. He asks how I got into this situation and I explain that I am a freelance worker and my client terminated my eight month contract early when I told him that I was pregnant, and that put me in considerable financial difficulty.
BofE will say it's not their fault
Bloomberg: Bank of England Drafts First `Dear Gordon' Note:
Spoof draft of how a letter from Mervyn King to Gordon Brown might look. "Frankly, it's your own fault. If you'd let ME pick all of the economists for the Monetary Policy Committee, the external members wouldn't have been able to gang up on us in 2005 and get their way with that ridiculous interest-rate cut."
Stricter controls needed on credit
Telegraph: Shopping is out of control
According to a survey, women would rather buy shoes than pay their bills while one in ten women spend more than £1000 on shoes alone each year. A friend of a friend had run up debts of £36 000 by the time she was 21 and had spent all of the money on clothes.
House prices static in May, June & July
FT.com: London house prices continue to race ahead
A buoyant London market helped push annual house price inflation to 5.4 per cent in July, according to the FT house price index. However the market as a whole may have started to cool of late. There was no month-on-month change in prices in May and June and only a 0.2 per cent increase in July.
Property sales rise by 40%..... (well, according to Estate Agents)
National Association of Estate Agents: Sales up by 40% on same period last year
Results from the July housing market survey conducted by the National Association of Estate Agents (NAEA) revealed continued strength and confidence in the market. * Sales up by 40% from July 2005 * Asking prices continue to rise * First time buyer share of the market remains steady * Lettings Market remains strong * Rents rise * All factors point to stability NAEA President, Charles Smailes, comments: “Things are looking up for the wider housing market. The market is clearly stable and the continuation of a reasonable supply of properties coming on to the market bodes well for the future ... the market crash that some have predicted is looking less and less likely.” http://www.naea.co.uk/uploaded_photos/news/JulyhousingmarketFinal.doc
Thursday, August 10, 2006
Inflation? What inflation?
Telegraph Online: Why shock tactics could backfire for 'Mr Boring'
Pap from Edmund Conway [Telegraph Online Business Economics] which suggests there is no need to increase the UK's interest rates because worsening global conditions will trim inflation for us without consumers and home owners taking a hit. Reasopns given are: anticipated decline of the US' economic conditions; the ECB's decision to raise rates will reduced European growth, higher Sterling will hurt exporters to our overseas markets; and the impact upon the consumer and home-owner. Seems dodgey to me.
The global economy means UK house prices are not wholly dependent upon interest rate rises.
Indy Online: Robert Barrie: Why we must not read too much into house prices, fascinating though they are to many
There's a correlation, not a causal, relationship between consumer spending and house price inflation. The correlation between house prices and interest rates is likewise dubious. If you want an idea of where UK rates might be going in the coming months, look beyond our own shores, but a rise in rates does not necessarily mean a house price crash.
So, there are no problems with debt then Mr King
Indy Online: Bank raises spectre of fresh rate rise:
Mervin King: "With bankruptcies at record levels and the big banks reporting sharp rises in bad debt provisions, the Governor [of BoE] admitted there were "serious problems". But he said this did not affect the economy as a whole and it was a matter for the Government and the borrowers. "The vast majority of household debt, 83 per cent, is secured against housing," Mr King said. "There are no obvious signs of distress in repayments in that area."
Another 250,000 homes in the south-east anyone?
Times Online: No longer a green and pleasant land
London and the South East are suffering the worst of the drought, but the effects are beginning to sweep northwards after 21 months of below average rainfall and the hottest July on record.
Was Dick Whittington right?
Times Online: Head up West, have a night on the town — and pay through the nose
LONDON has leapfrogged Hong Kong and New York over the past three years to become the world’s most expensive city in which to live, a survey of 71 cities by global investment bank UBS yesterday revealed.
Wednesday, August 9, 2006
Sorry Chaps - There's an alternative View ...
Money Week: What next for UK house prices?
MoneyWeek's Brian Durrant puts forward very believable arguements that the Housing Market will not be crashing. Fundamentally, stagnation or sluggish growth will occur for a number of factors, including (but not limited to) immigration, higher household formation and supply shortages. He doesn't debate the future of interest rates to a great extent - I wonder why?
Firther rate trises on the way
Telegraph News: Inflation projections raised
The Bank of England expects inflation to rise this year by more than initially expected, raising expectations of another interest rate hike this year.
Government CPI figure to pass 3%?
Financial Times: King warns inflation could exceed 3%
Bank of England governor Mervyn King said on Wednesday there was a high probability that consumer price inflation could spike higher in the remaining months of the year, with the possibility it could touch or go above 3.1 per cent.
My goodness - FTBs earn a lot
thisismoney.co.uk: £30,000 income for first home
Figures released by the Council of Mortgage Lenders show that 39,500 first-time borrowers took out a loan for their new home during June - 14% more than in the previous month and 3,500 (10%) more than a year ago. However, single new homeowners are being priced out of the market due to the need to earn more than £50,000 in London and almost £30,000 elsewhere.
Halifax increases mortgage rate
BBC News: Lenders move to up mortgage rates
Halifax, the UK's biggest mortgage lender, has become the latest bank to increase its mortgage rate. The bank's standard variable rate will rise from 6.5% to 6.75%, equivalent to a £15 a month increase on a £100,000 repayment mortgage.
More rate rises on the way?
BBC News: Bank hints at further rate rises
The Bank of England has hinted that UK rates may have to rise further in coming months in order to keep inflation on target at 2%.
Have the Fed tipped the US into recession?
TimesOnline: Fed high wire act looks increasingly hazardous
Fears are raised that after 17 consecutive rises in US interest rates the Fed may have tipped the US into recession. After 5 years of robust growth the US economy has decelerated sharply. The consumer has been relying on the steep increases in their housing equity in the past five years to keep up their frenetic pace of spending. But with house prices flat or falling and mortgage rates moving higher, the consumer will need to increase savings and curtail consumption.
Jobs under threat in Newscastle
SKY News: Insurer Closes Up Site
Insurance giant Zurich has announced proposals to reorganise its operations in the UK, affecting more than 700 workers.The Swiss-based group said it planned to close its customer contact centre in Newcastle, where 505 people are employed.The company said a consultation process had already begun with the affected staff.
Tuesday, August 8, 2006
Fed keeps rates on hold...for now
BBC News: US Fed ends cycle of rate hikes
US central bankers have held the country's key interest rate at 5.25%, breaking a two-year cycle of rate hikes introduced to slow a rampant economy. The news brings relief to millions of consumer and business borrowers, but the Federal Reserve said it was still worried about rising prices and wages.
FTB? Line on the left, one cross each!
Dorset Echo: House prices rise another six per cent
PROPERTY prices in Dorset jumped by six per cent between April and June - and continuing price inflation seems to be squeezing out first-time buyers. The price of an average house in the county hit £238,911 - up from £224,853 in the same period last year.
Sterling supplants Yen in reserve currency preferences
Financial Times: Interesting Times for Sterling?
News on the surge of Sterling, citing Middle East billionaire effect on the UK economy, and predictions that the currency may surpass the 2.05; or plummet to depths a la 1992 if the Fed raises again. Anbody's game.
Rental guarantees aren't all they seem
MoneyWeek: Rental guarantees aren't all they seem
Rental guarantees are great, aren’t they? Many investors would certainly think so, tempted by developers’ assurances of an agreed level of return on a property. But as many analysts are at pains to point out, they’re as likely to act as deep cloud cover for hidden charges. That’s because developers will have to recoup their generous offers somehow. (This article was formally subscription-only)
Industrial output dips by 0.1%
SKY News: UK Output In Surprise Dip
Britain's industrial output fell unexpectedly in June because of maintenance in the oil and gas sectors. The Office for National Statistics said it dipped by 0.1%, leaving it 0.7% lower than a year earlier. Economists had been predicting a rise of 0.3%. Manufacturing out put was also weaker than expected, rising by just 0.1% in June, against forecasts of 0.2%.
House price crash in Ireland first?
Firstrung: House prices may crash in Ireland - IMF
The IMF said: "Bank credit to property-related sectors has grown rapidly and now accounts for more than half of total bank lending. Household debt as a share of household disposable income rose to about 130% in 2005, among the highest in Europe."
First time buyer RIP - Direct Line
Firstrung: Second properties versus first time buyer homes, apocalypse now or for future generations?
Annual growth in the number of second properties will outstrip that of first-time purchases over the coming decade. By 2015 the number of second properties will reach 3.3 million, a rise of 664,000 or 25 per cent. In contrast, fewer than 300,000 first-time buyers will enter the market annually by 20152 - this represents a 17 per cent decrease from today's figures (364,300).
Supersize me !
The Times: Supersize your mortgage!
Homebuyers are being offered huge home loans in exchange for a slice of the profits when they sell their home, under a deal launched this week. Do you want fries to go with that ????????
Land Registry HPI
BBC News: House prices near £200,000 mark
The price of an average home in England and Wales is now nearly £200,000, according to the Land Registry. In the April to June period the average house price in England and Wales was up 7.71% on a year ago to £199,184. In addition, the number of home sales jumped by 24% compared with last year, the registry said. Last week, the Bank of England raised interest rates in a bid to quell inflation and some analysts think this move could cool the housing market.
Monday, August 7, 2006
It never rains but it pours
Telegraph Online: UK industry weaker than expected
The Office for National Statistics said that overall industrial output fell 0.1pc in June from May, leaving it 0.7pc lower than a year earlier. Economists had predicted a 0.3pc rise on the month but the ONS said the new figures would shave only 0.02 percentage points off the 0.8pc preliminary estimate of GDP growth in the second quarter. Manufacturing output was also weaker than expected, rising by just 0.1pc in June against forecasts of a 0.2pc increase. That left factory output 0.9pc higher than a year earlier.
Affordable housing in a world of rising costs
The Times: Affordable housing in a world of rising costs
A nice little exchange going on in "The Times" letters to the Editor about house prices. Some interesting points raised.....
More properties now sold at auction
Home.co.uk: Big increase in buying property by auction
A big rise in the number of properties being sold at auction suggests repossesions are on the rise.
Good time to take a holiday to the US?
BBC News: Sterling heading for $2 barrier
The shock rise in UK interest rates last week has sent the pound jumping higher against the dollar and other currencies, a trend that may continue. Sterling rose more than two cents to $1.91 on Friday, a 15-month high.
BP's shutdown of largest US oilfield leads to price rises
SKY News: Oil Price Rises Again
The price of oil jumped again after BP's indefinite shutdown of the biggest oilfield in the US. BP said on Sunday it was shutting down the Prudhoe Bay field in Alaska, cutting production by 400,000 barrels per day, or 8% of US domestic oil output. The closure was due to the discovery of severe corrosion and a small spill from a Prudhoe Bay pipeline.
The Homeless, not enough of a big issue
Firstrung: Homeless need a 'champion' in each region
Another creeping indicator of the miracle economy going 'off rails' could be the recent spike in homlessness, particularly amongst the most vulnerable (although the figures pale in comparison to 1992), or is it more a general indicator of a 'shift' in society?....
Three buyers for every property?
Firstrung: House sale 'fall throughs' currently at 26% - Yourmove
Only 633,000 properties are currently on the market in the UK, a figure that has remained broadly stable since the beginning of the year. Buyers are out numbering sellers by over 2.5 to 1.
Record increase in house hunters points to further price rises
The Independent: Record increase in house hunters points to further price rises
Figures published today show that a record number of potential house buyers outnumbered sellers by a margin of more than two to one last month - suggesting that prices could continue rising despite last week's interest rate rise. Hmmm - maybe they have registered anticipating a nose dive in house prices......
Tell me something I don't know
Guardian: The hangover after too much punch
Nice to see someone equating over-indebtedness with sensitivity to IRs, and some nice numbers: "The number of people going bust has reached record levels; the figure is on course to hit 100,000 this year for the first time." And that's BEFORE IRs went up!!
Houses at risk as rate of personal insolvency jumps
The Times: Houses at risk as rate of personal insolvency jumps
FEARS that the surprise interest rate rise this week could tip thousands of debt-laden households over the financial brink were stoked yesterday by figures indicating that one person is buckling under the strain of excessive borrowing every five minutes. I'm lovin' it....
Denmark raises base rate
MSN Money: Danish Central Bank Raises Key Rates
Denmark's central bank on Thursday raised its main lending and discount rates a quarter-point, to 3.25 percent and 3 percent, respectively.
Priced Out in Norwich
Norwich Evening News: Young petition MPs for action on housing
Young professionals struggling to afford property in Norwich are being urged to lobby their MPs and demand action. A new campaign group which is calling for action from the government to make property more affordable wants prospective homeowners in Norwich to be at the forefront of their campaign.
Sunday, August 6, 2006
Housing
Sun-Herald (Australia): Home buyers ready to swoop
Vendors risk longer sale times and a drop in house prices as Sydney's real estate market prepares for "all hell to break loose" later this year, an industry expert has warned.
Is chaos an adequate description?
Firstrung: The rise in; repossessions, bankruptcies, IVAs, arrears, unemployment...what more is required to added to the overall chaos?
The number of properties taken into possession by UK mortgage lenders has risen to the highest level in five years, figures released by the Council of Mortgage Lenders has revealed. This information crystalises a week of bad news were the level of IVAs and personal bankruptcies reached alarming levels.
Will this be the week referred to as the 'tipping point'?
Firstrung: First time buyers, the week in focus 31/07/06 - 06/08/06
The Firstrung team had yet to witness such a spectacular week of news and events as this week, particularly in relation to those looking to get onto the first-rung of the ladder.
South Africa raises interest rates aswell
Reusters: S.Africa c.bank raises repo rate to 8.0 pct
South Africa's central bank raised its key repo rate by half a percentage point to 8.0 percent on Thursday, in line with expectations, warning that the country's inflation outlook had deteriorated "moderately". Reserve Bank Governor Tito Mboweni told a televised press conference that the CPIX inflation rate targeted for monetary policy was expected to breach the upper end of its 3-6 percent target range for the first two quarters of 2007.
Buy to let sees more nails in coffin
Firstrung: Buy to let witnessing shake out under new legislation
The changing scene in the rental market has led to a sharp increase in ARLA membership. The number of lettings offices belonging to the Association of Residential Letting Agents jumped from 1715 to 1815 during the first six months of the year. This is the greatest single period of growth since the introduction of the Housing Act '88 and it is set to continue with new applications coming in at a rate of 30 a month.
The softening up process begins
Daily Telegraph: Nine out of 10 of us believe our home will fare better than the rest of the market over the next year. Smug indeed, and plain silly to boot.
Economics is mostly about perceptions and expectations. One tiny interest rate change and everyone is suddenly talking about things going pear-shaped. Although his contract probably requires him to end on a more positive note, by that time his message is clear - be prepared for your home to fall in value, whoever you are, wherever you are. \r\n\r\nGreat to see the grand opera of life following the tried and tested format.
Time to get biblical: the day of debt reckoning is nigh
Observer: Time to get biblical: the day of debt reckoning is nigh
For now, housing market demand exceeds supply. Prices are rising by 8 per cent annually. Whether the market can withstand a further interest rate hike is a tight call.
Saturday, August 5, 2006
Huge increase in estates paying inheritance tax
SKY News: Inheritance Tax Piles Up
The number of estates paying inheritance tax rose by 72% over the five years to 2003/04, new figures have revealed. According to the Halifax, some 30,451 estates in the UK were liable to pay tax, with a further 22% rise to 37,000 expected by 2006/07. The increase follows a 179% boom in property prices since 1996.
The gullable lose out again
Guardian Online: Landbankers on the back foot
One of Britain's biggest landbanking operations, Land Heritage (UK), has suspended operations, leaving question marks over £7m paid by 700 investors who bought small plots of farmland from the company. The plots were sold to investors on the basis that they were likely to be granted planning permission - and potentially make huge profits.
Figures biggest since 90s crash
Daily Telegraph: Britons go bust at the rate of one per minute
One person is falling victim to insolvency every minute of the working day and home repossession applications show the biggest rise since the early 1990s housing crash
Dangerous mortgages are a sign the market has peaked
Times Online: Supersize your mortgage!
Morgan Stanley offers mortgages up to 7 times single salary on the basis that when the house is sold, they get a slice of the profit! The mortgage is a fixed 2-year at 5.69% but this will become a tracker at 2.5% above the London Interbank Offered Rate, (UK LIBOR). I like the quote at the end "“It could exacerbate the first-time buyer problem. It will support that end of the market in an artificial manner, because Advantage will make a play on affordability ... " All this has echos of the deal at the Bramley Stoke developed in the early 1990s - which became know as the Soney Broke development by the Media. Interestingly the article below this report was titled "Personal Insolvencies Soar" ...
Now Even the Daily Mail has caught on ...
Daily Mail: Thisismoney: Rate rise threat to house market
The rotten rag, the Daily Mail, has finally caught on that a small increase in Interest Rates will have a larger impact then before. "Possession orders jumped 56% to 21,997 during the first quarter of this year." However, the quote I like best is "Homeowners have been forced to take on nearly £1 trillion of mortgage debt due to rising house prices, according to the Bank of England." Sorry - who forced these people to take on massive debts?
Britains Are Mortgaged To The Hilt
Daily Mail: Britains Are Mortgaged To The Hilt
The levels of repossession threats have not been higher since the early 1990s when a record 75,500 homes were snatched back by banks in a year.
Friday, August 4, 2006
Bad debt around every corner
Independent Online: Barclays bad debt level hits £1bn
Barclays has been forced to set aside more than £1bn for the first time after its bad and doubtful debts doubled, the bank revealed yesterday, as more of its customers failed to meet repayments on credit cards and personal loans.
Does this mean that the Fed will pause raising interest rates?
BBC News: Jobless rise as US economy slows
US unemployment rose last month for the first time this year, providing further evidence that the economy is slowing. The US economy added 113,000 new jobs last month, fewer than expected, and this pushed the jobless rate up to 4.8% from the 4.6% reported in June.
Rate rise upsets those with a vested interest
FT: Borrowers hit after interest base rate rise
Had to force myself into a wry smile with this one. Paul Smith, chief executive of Haart estate agents said, “The current economic situation is not strong enough to justify a rise in rates. This could significantly dampen activity in the market.”
More And More Young People Want To Move Overseas
Place In The Sun: Twice As Many People Want To Move Abroad In Near Future Says Poll
More people are planning on moving abroad in the near future - twice as many as in 2003. And worringly, it is young people who most want to move because of high property prices and the general cost of living. This too will have further consequences for an ageing population.
Britain's debt crisis deepens
TimesOnline: Personal insolvencies soar
Figures for the three months to June show that personal insolvencies are up 66% from the same period a year ago. With the Bank of England raising interest rates yesterday and most lenders recording sharp growth in bad debts it will l be interesting to see whether this is just the tip of the iceberg and the start of the unravelling of Britain's huge debt will ensue or is it simply that Individual Voluntary Arrangements (IVAs) have become fashionable and a "get out of jail free" card from over-indebtedness?
Why the US housing market faces a credit crisis
MoneyWeek: Why the US housing market faces a credit crisis
A piece on why adjustable-rate mortgages - similar to interest-only mortgages in the UK - are a time-bomb waiting to blow up the US housing market.
How will the interest rate hike affect house prices?
MoneyWeek: How will the interest rate hike affect house prices?
MoneyWeek were among the few commentators to get it right on yesterday's rate rise - here's what they reckon it means for house prices.
Personal bankruptcies this year could reach 100,000
SKY News: Record Numbers Bankrupt
Figures just released show a record number of people in England and Wales went bankrupt between April and June. The number was 26,021 - the highest ever and well above the 15,645 for the same quarter last year. Individual Insolvencies Graph on HPC
Why yesterday's rate rise helps the first time buyer
Firstrung: Is the first-rung now further out of reach for first time buyers after the 0.25% rate rise?
Lenders will still offer discounted rates and incentives to new borrowers, irrespective of rate rises. In fact the subsidised rates for FTBs are likely to increase in volume as lenders increasingly target the FTB market. This could result in the FTB having an advantage over and above current borrowers.
Further interest rate rises on the cards for Europe
RTE Ireland: ECB warns more rate hikes are likely
Jean-Claude Trichet of the ECB says progressive withdrawal of monetary accommodation remains warranted.
Analysts predict personal insolvencies will top 100,000 this year
BBC: Bankruptcies set for big increase
Major banks are increasing their bad debt provision as personal insolvencies exceed 100,000 which is 3 times the total before the law changed 2 years ago.
Debt Diary: Part 5
BBC: Debt diary: Repossession threat
More moaning from the delightfully stupid Ms Sayara Beg. "I have decided to put my buy-to-let property on the market. I realise now after several months of trying to negotiate with my creditors, and with the birth of my child due, I need to take drastic action. I had hoped that the property would be my pension but it looks like I will be back to square one"
Thursday, August 3, 2006
Fed...Cause and Effect
Gold Digest, Earthlink: 'Oh Dear' & 'The 1973 Reflux'
What happens when you add a global system financed by a ponzi scheme of money? The domino effect caused by the Fed will eventually reach these shores and beyond. Interestingly, these two articles nail both the cause and effect for a doomed depression...not only for house prices but with everything else...save yourself! Effect...http://www.gold-eagle.com/gold_digest_05/stott072706.html Cause...http://home.earthlink.net/~lrgoldner/blowout.html Enjoy
VIs nervous after interest rate "shock"
In2Perspective: Reaction to "surprise" interest rate rise
Various VI responses to interest rate rise...can these people really believe it was "unnecessary" for the BoE to raise rates?!!
Big debt write offs for Barclays
BBC News: Big jump in bad debts at Barclays
Barclays has reported a 37% rise in half-yearly profits to £3.6bn but rising provisions for bad debts have knocked its credit card business. Profits at Barclaycard dropped 14% to £297m as overall charges relating to the writing-off of debts rose by 30%.
Can't buy here, then buy abroad...eh???
Firstrung: First time buyers should avoid the gamble of buying abroad
Amongst all the exotic schemes to have emerged during the past five years buying abroad as an FTB is surely the craziest. Yes, yes, an anecdote can always be dragged up highlighting "student nurse Molly who invested in Bulgaria two years ago, made 20K, then put the profits into a 'home-buy' shared ownership scheme flat which has gone up in value by 10K.." Now here's a thing, just who is Molly selling to? That's right, more British expats playing the house price inflation game of 'spoof', what happens when we stop exporting this nonsense?
Interest rate rises, you can't please everyone all the time..
Firstrung: Yourmove and Assetz comment on interest rate rises
Assetz and Yourmove give very quick responses to the interest rate rise, these companies could be considered, by the cynical bunch on HPC, to have vested interests....
ECB raises the base rate by 0.25% to 3.0%
BBC News: ECB raises interest rates to 3%
The European Central Bank (ECB) has raised interest rates by a quarter of a percentage point to 3% on Thursday to target inflation. With inflation in the eurozone at 2.5% over the past three months, well above the bank's 2% target, most analysts predicted the rise.
Australia headed for recession.
NZ Herald: Australia headed for recession, warns academic
"So in effect, one dollar out of every six that a household has to dispose of has now to be paid simply to pay the interest payments on mortgages,"
Interest rate surprise?
BBC: UK interest rates raised to 4.75%
Well, no surprise for those that guessed it this way.
BoE raises interest rate!!
Bank of England: Bank of England Raises Bank Rate by 0.25 Percentage Points to 4.75%
The Bank of England's Monetary Policy Committee today voted to raise the official Bank rate paid on commercial bank reserves by 0.25 percentage points to 4.75%.
Birmingham Chamber of Commerce urging people not to panic!
Birmingham Post: No need to panic if rates increase
Mounting speculation that the Monetary Policy Committee (MPC) of the Bank of England will tomorrow raise interest rates has prompted Birmingham Chamber of Commerce and Industry (BCI) to put out a 'don't panic' plea.
Rate rise predicted for ECB today at midday
BBC News: ECB expected to up interest rates
The European Central Bank (ECB) is expected to raise interest rates by a quarter of a percentage point to 3% later on Thursday to target inflation. With inflation in the eurozone at 2.5% over the past three months, well above the bank's 2% target, most analysts predict the fourth rise since December.
Dodgy shortcuts first time buyers should avoid
MoneyWeek: Dodgy shortcuts first time buyers should avoid
First-time homebuyers have never had it so tough, and they are resorting to bolder schemes to get one foot on a rung of the ever-ascending property ladder. Two-fifths of them are holding down two jobs, says Bradford & Bingley building society, 42% are receiving help from their parents to buy their first property and 43% have even thought about giving up buying altogether. So it comes as little surprise that nearly half of 18 to 29-year-olds surveyed in a recent YouGov poll plan on buying abroad. But is this really a sure-fire way of getting something of value to your name? (This article was formerly subscriber-only but is now free).
UK rates 'to hold steady at 4.5%'
BBC News: UK rates 'to hold steady at 4.5%'
Deceived a little by the title? Yes, so was I. The BBC thinks that if it shouts hard enough, it might just come true. Someone should tell them that they are not Fox News. I laughed when I heard Breakfast News exclaim "the price we pay for borrowing may go up today". No mention of increased savings returns then ... ?
House price inflation up?
BBC: House prices nudge higher in July
Halifax show 0.2% HPI for July. Not a lot in real terms!
Defaults explode in California
Firstrung: Mortgage defaults rise 67% in California in the last quarter
Mortgage defaults in California rose more than 67 percent during the second quarter, compared with the same period last year, the result of slowing annual home price gains, a real estate research firm said Wednesday.
Repossession lawyers warn of spectre of rising unemployment
Firstrung: Solicitors warn of rising unemployment
Solicitors Moore and Blatch, who specialise in assisting lenders who experience difficulties with their customers who find themselves in arrears pending repossession action, has warned lenders to be alert to the rising number of unemployed people.
Debt Statistics updated
Credit Action: Debt Statistics compliled 1st August 2006
At the end of June 2006 the total UK personal debt was £1,228bn. The growth rate remains strong at 10.3% for the previous 12 months which equates to an increase of £100bn. Total secured lending on homes passed £1 trillion (£1,000 billion) in May 2006. In June 2006 it was £1015.9bn. This has increased 11.0% in the last 12 months. Total consumer credit lending to individuals in June 2006 was £211.6bn. This has increased 7.3% in the last 12 months.
Wednesday, August 2, 2006
A few days old but heh!
BBC: Pakistan springs shock rate rise
Pakistan has announced a surprise interest rate increase of half a percentage point, as higher oil and commodity prices feed inflation. The State Bank of Pakistan said that its main borrowing cost will rise to 9.5% from 9% on Monday. It is the first time interest rates have risen in 15 months.
Everyone else is doing it!
BBC: Australia raises interest rates
Australia's central bank has raised interest rates by a quarter of a percentage point to a six-year high of 6% to combat inflationary pressures. The move by the Reserve Bank of Australia was widely expected, and comes after inflation hit 4% - topping the bank's 2-3% target.
Luxuries, such as life insurance, being avoided
Firstrung: Life insurance is as
Sales of term assurance, which pays out on death, are normally steady throughout the year, typically with only modest volumes of seasonal fluctuation: the popularity reflects the low cost of this core insurance for homeowners with families. "This is not so much a tail off as a catastrophic slump, and you have to wonder how people are going to cover key outgoings such as the mortgage payment in the event of the worst happening," said Moneynet chief executive Richard Brown.
Please Uncle Tom, be wrong.
Guardian: Shop prices surge
Not a suggestion that commercial property prices are flying high - but a sign that high energy prices are perhaps feeding through to the high street. Much more evidence than usual to sway the MPC to a rate raise - assuming that is that they don't do their usual 'turn up with a crate of lager, tell a few jokes, laugh about how much they get paid and announce no change before waving goodbye and promising to be more constructive next time'
Yet more BBC editors' opinions dressed up as facts
BBC News: Q&A: Rising bad debts
"The higher rates go, the more people are likely to opt to become insolvent. The doomsday scenario is that so many people go insolvent as to cause what is called a credit crunch - where the banks, to protect their own finances, cut back on lending severely, sending the economy into a downward spiral." And why is a lending cutback a bad thing? Because it will send BBC editors' house prices into a tailspin!
Sharp rise in bad debts for Lloyds but they're still coining it in
BBC News: Bad debts trim Lloyds TSB gains
Lloyds TSB, Britain's fifth biggest bank, has reported a rise in profits despite a sharp increase in bad debts. Pre-tax profits rose 4% to £1.78bn ($3.3bn) for the first half of the year, helped by strong cost controls.
220 jobs to go at Cookson in move to Poland
SKY News: Jobs Go In Poland Move
Industrial materials firm Cookson Group is to close two plants with the loss of 220 jobs. The factories at Goole and Worksop are being closed with the work transferred to Poland. Some jobs will also go at the firm's UK headquarters in Barlborough.
Eurotunnel to go bankrupt
BBC News: Eurotunnel awaits court decision
Eurotunnel is set to find out whether a French court will grant it bankruptcy protection after it failed to reach a deal with creditors. Eurotunnel has been struggling to reach a deal with creditors to reduce its debt mountain of £6.2bn ($11.5bn).
800 jobs to go at Powerhouse
SKY News: Electrical Shops To Shut
Powerhouse electrical stores across the country have been closed with workers sent home after being told the firm is being put into administration. Staff were "devastated" after hearing they would be made redundant, said Usdaw, the union which represents them.
CPRE is peddling myths about increasing housing supply
BBC News: Housing threat to green belt land
A selfish and one sided view of the negative effects of increasing the housing supply over time. The anonymous BBC editor wades in with their own opinion dressed up as fact by labelling the efforts to increase housing stock as "a threat" to the environment. The articles correct title should actually be "CPRE environmental claims ridiculed", but it's the BBC, and it's their editors own "investments" that would be under threat from this.
Buy v Rent
Colourful Radio: Buy v Rent
I'll be on www.colourfulradio.com tomorrow after 10am with Karen Morgan giving the true picture. Do listen in and, if anyone can, please record for posterity and put it on HPC
Builders downing tools, laying off
Firstrung: A third of builders experiencing a downturn in activity
Workload and employment in the building industry during the second quarter of 2006 showed a decline for the third quarter in succession, according to the Federation of Master Builders' latest state of trade survey. This is the first time since 1999 that the spring quarter, usually a period of seasonal increases, has shown a decline.
First time buyers are a drain, just as well they're nearly non-existent then...er...
Firstrung: First time buyer singletons are a drain on services and resources
One-person households are the biggest consumers of land, energy and household appliances in England and Wales - with men between the ages of 35 and 45 being the worst offenders, according to research out today. The study says the current rise in solo living, combined with the group's increasing affluence and consumption, is likely to cause a consumption crisis.
Under Pressure...dun, du, du, dun, dun...
MoneyWeek: Why the Bank of England should raise interest rates
Interest rates are continuing to rise across the globe. With inflation above forecasts in most countries, it’s no surprise that central banks are getting twitchy. The Reserve Bank of Australia raised the country’s key interest rate this morning. It now stands at 6%, the highest it’s been in nearly six years. The European Central Bank is seen as almost certain to raise rates this week, to 3%. But even though UK inflation is well above the Bank of England’s target level, a majority of economists still expect the key rate to remain at 4.5% when the Bank announces its latest rate decision tomorrow.
Wall Street rattled by talk of another rate rise next week
TimesOnline: Whiff of inflation sends Wall Street into retreat
Wall streat shares retreated abruptly yesterday as data which provides a key gauge of core US consumer prices grew at its fastest pace for four years.
Mixed data makes tomorrows decision by the MPC uncertain
TimesOnline: New data raises pressure on rates decision
The article does not use the word "stagflation" but does mention manufacturers input costs rising at their fastest rate for 18 months but manufacturing returned worse than expected figures. The July snapshot of industrial conditions from the Chartered Institute of Purchasing and Supply (CIPS) showed activity in the recovering sector dropped back last month. The article states that the house price inflation figures released yesterday by the Nationwide which indicated fastest pace of growth in house prices since December 2004 may add some weight to a rate rise.
Could free banking be a thing of the past?
MSN Money: Is this the end for free banking?
A leading UK high street bank has warned that the reintroduction of charges for current account and credit card holders is “inevitable”, sparking concerns that free banking in Britain could soon be a thing of the past.
The well paid impotents
Guardian: House price rise adds to pressure on Bank to increase rates
Unfortunately the BoE stated some time ago that house prices were not their concern, as they are employed to control inflation. Mind you, they've done naff-all about inflation, so maybe they'll have a pop at the housing market instead?
Concerns over aussie house prices after rate rise
Daily Telegraph (Australia): House Prices To Tumble
Homebuyers across Australia might be better off delaying their home purchases into the New Year as house prices fall following today's rise in interest rates.
Bank of Australia raises base rate to 6.0%
TerraNet: Australia hikes interest rates to six-year high
Australia's central bank raised interest rates by 25 basis points to a six-year high of 6.0 percent in an effort to head off inflationary pressures in a booming economy. The widely-anticipated move by the Reserve Bank of Australia (RBA) board came after the headline annual inflation rate hit 4.0 percent following a surge in the June quarter, well above the bank's target range of 2.0-3.0 percent.
Australian home loan defaults on the rise.
The Age: Surge in home loan defaulters
THE number of Victorians being sent to the wall by their mortgages has jumped dramatically, with home-loan defaults up a massive 50 per cent this year.
Tuesday, August 1, 2006
Bank of Australia appoints new boss
BBC News: Australia picks central bank boss
Australia's central bank has appointed a new head as the country faces quicker price growth and speculation that interest rates may have to be raised. Glenn Stevens, who was deputy governor of the Reserve Bank of Australia (RBA), will take over from Ian Macfarlane who is to retire in September.
More interest rate rise in store for Japan?
BBC News: Japanese land prices bounce back
Japanese land prices increased for the first time in 14 years in 2005, in another sign the world's second largest economy is continuing its recovery. Prices had fallen since the "bubble economy" burst in the early 1990s.
More supply for the BTLs
Guardian: Wimpey first half profits up 25%
The housebuilding company George Wimpey today reported a 25% rise in first-half profits as it built a record number of houses
Antisocial BTLers
guardian: Landlords boosting house prices
Can house prices march ever onwards solely on the back of BTL? More and more people are forced to rent as BTLers push prices out of reach, so why not? Good reason to organise a national 'non-payment of rent month' protest.
Aussie interest rate looks set to rise again
theage.com.au: HBOS Australia expects interest rates to rise
HBOS Australia chief executive David Willis expects the Reserve Bank of Australia (RBA) to raise interest rates Wednesday. "Our view would concur with most of the market that we'll have a rate rise tomorrow," Mr Willis said. "I guess the market to a certain extent will be looking to whether we'll have another one for the 2006 year."
Will the sun shine for Curry's?
Guardian: Currys to stock solar panels
Electrical retailer Currys is about to add a new item to its usual array of washing machines and other white goods - solar panels. Customers who want to keep up with Tory leader David Cameron, who plans to install a wind turbine on his roof, can pick up solar panels at three London branches of the high street store, in Fulham, Croydon and West Thurrock.
120,000 mortgage approvals in June
BBC News: Mortgage approvals rise in June
New mortgage approvals reached 120,000 in June, official figures have shown - the highest level for five months. The Bank of England (BoE) said that approvals were 3,000 higher than May's figure, although total new mortgage debt was slightly lower in June.
Homes as pensions? The numbers don't crunch
Firstrung: The simple reason why your home makes a bad pension
UK property is more expensive than it's ever been - but it seems that people still can't get enough of it. UK mortgage approvals rose at the fastest pace for five months in June. 120,000 loans were approved for new house purchase. But credit card spending was barely changed during the month. And borrowing on personal loans and overdrafts was also weaker than in recent months. In fact, unsecured lending growth was the lowest it's been in 12 years.
Nationwide - the full report
Firstrung: House prices warm in July as temperatures soar - Nationwide
Interesting theory on the sustainability of HPI due to the increased demand from the rental sector, who can afford 'en-masse' the rent to pay the BTL landlord mortgages?...Anyhow, the report is here in full together with apdf link to the Nationwide press release...
Why banks are turning away UK borrowers
Moneyweek.com: Why banks are turning away UK borrowers
UK property is more expensive than it’s ever been – but it seems that people still can’t get enough of it. UK mortgage approvals rose at the fastest pace for five months in June. 120,000 loans were approved for new house purchase. But credit card spending was barely changed during the month. And borrowing on personal loans and overdrafts was also weaker than in recent months. In fact, unsecured lending growth was the lowest it’s been in 12 years. So is this a sign that British consumers are sensibly tightening their belts – or just that they are finally reaching the limit of their ability to spend?
HSBC calls for regulation of companies offering advice to those in debt
TimesOnline: Bad debts take shine off record HSBC profit
As bad debts soar at HSBC the bank calls for companies that offer advice to those in debt be more heavily regulated. The chief executive of HSBC's Dyfrig John said, "We believe that IVAs and bankruptcies . . . are sold inappropriately in some circumstances.”. Of course financial institutions would never offer financial services "inappropriately in some circumstances” would they.
Doubts raised over durability of consumer recovery
TimesOnline: Credit card weakness may signal flagging recovery
Credit card borrowing is at its lowest level for nearly 12 years. The decline may indicate a consumer preference for cheaper borrowing against the value of their homes but economists argue that the decline may be an indication that Britain £1 trillion personal debt burden may be weighing them down. However with retailers indicating that consumers are returning to the high street it may suggest that consumers are buying goods against the value of their homes.
Practical advice about repossessions from The Observer
The Observer: How to avoid becoming a repossession statistic
In 2005 business information service Datamonitor estimated that 9.1 million people were refused credit by mainstream mortgage lenders, leading to a rapid growth of sub-prime lenders. In the same year the numbers of county court judgments and mortgage arrears also hit record highs.
Profits and bad debts rise for HBOS
BBC News: HBOS profits up on cost controls
The UK's fourth-largest bank, HBOS, has reported a 17% rise in half-year pre-tax profits to £2,654m ($4,947m), boosted by cost controls.
Nationwide propaganda continues
BBC News: UK house prices 'pick up' in July
House price growth picked up in July and the overall market remains "fairly buoyant" according to the Nationwide. The building society's latest housing survey found that prices rose by 0.8% last month, up from 0.3% in June, pushing the annual growth rate to 5.9%.