October 2006 Archive
Monday, October 30, 2006 
INTEREST RATES GOING UP ON GLOBAL EXCESS OF FUNNY MONEY
Bloomberg.com: Global Cash Glut Fuels Investment Frenzy, Pushing Up Rates
Can't improve much on the title. It's about the international investment which is now running wild on a cash glut described as "lavish" and with the obvious consequence that interest rates MUST go up to control disastrous inflation, apparently according to all but -- the Fed.
Headache approaching?
BBC News: Soaring City bonuses 'hit £8.8bn'
If this isn't indicative of boom and bust economics, I don't know what is. Reminds me of the weeks leading up to the economic 'downturn' in the late 80s, which was greeted with the famous Evening Standard headline, "The Party's Over". Amen to that.
Relentless...How about a 0.5% IR rise!!!
Reuters: Mortgage approvals highest in 2-1/2 yrs
Mortgage approvals hit their highest level in 2-1/2 years in September in another sign this summer's surprise interest rate hike has done little to cool the housing market and paving the way for a hike next week. The Bank of England said on Monday approvals for home loans stood at 126,000 last month, up from 120,000 in August and the highest since February 2004.
House price gains vs. Stock market
Home.co.uk News: House prices thrash stock market rises
In this VI inspired report we are shown just how wild house price rises have been relative to share price rises over the last ten years. Aren't they just saying that HPs are expensive and shares are relatively cheap now and will probably give better returns than property? Quote: "However, prices increases seen in the past decade are unlikely to be repeated in coming years because of affordability constraints. House price growth closer to earnings growth seems a more likely trend." So shouldn't investors should look elsewhere?
Guardian House Price Poll
Guardian Online (this morning): Business Poll
Guardian running a poll in their business section asking if current house price boom sustainable - 84% so far voted NO
UK Mortgage Approvals at 2 Year-High and likely Rate to Follow...
Financial Times: UK Mortgage Approvals at two-Year-High
The number of mortgage approvals in September were at their highest in more than two years, the Bank of England said on Monday, reinforcing expectations its monetary policy committee will increase interest rates to 5 per cent next month. Reports Jamie Chisholm, Economics Reporter Published: October 30 2006 10:37
Stating the obvious. Property is too expensive for many.
BBC: Property 'out of reach' for many
Cutting edge research shows that property is too expensive for many, in fact 17 million people cannot afford to or do not want to buy property.
Mortgage Fees Rocket
Independent: Arrangement Fees: Get the sums right, and it can pay to spend £1,999 on a mortgage
The cheapest home loan rates are carrying ever-bigger price tags - in the shape of vertiginous arrangement fees. For example, a competitive two-year fixed-rate deal from Abbey, with interest charged at 4.45 per cent, now has a £1,999 fee; ditto Birmingham Midshires' two-year fix at 4.49 per cent.
Europe Faces Infection From U.S. Home-Price Fall
bloomberg: Europe Faces Infection From U.S. Home-Price Fall: Matthew Lynn
Oct. 30 (Bloomberg) -- In the last decade, real-estate prices in Europe have moved in one direction -- up. That may be about to change. In the U.S., a booming property market has stalled. Plenty of people think it may be facing a full-scale crash. If that happens, it would be complacent to assume that Europe could avoid the fallout.
These figures are damning...
Firstrung: First rung out of reach for 17 million first time buyers
At least 17 million people in the UK are unable to get on the property ladder, according to research released from Abbey today. Abbey estimates that 17.3 million people are excluded from the housing market, with approximately 7.4 million blaming prices as one of the main reasons.
U.S market trends
macromavens: US plots
I know its the US again but this report is full of data that is comprehensive and well graphed. No opinions so you can make your own and this is from July!
bull market this autumn is just a suckers' rally
The Telegraph: Paulson re-activates secretive support team to prevent markets meltdown
Monday view: Paulson re-activates secretive support team to prevent markets meltdown Judging by their body language, the US authorities believe the roaring bull market this autumn is just a suckers' rally before the inevitable storm hits.
Affordable Housing Protest
World Socialist Web Site: Spanish protests demand affordable housing
500 people demonstrate in Barcelona about unaffordability caused by the housing bubble... I don't know why they don't adopt the wording of our very own Serious Organised Crime and Police Act 2005, Section 132: Demonstrating without authorisation in designated area, (1) Any person who- (a) organises a demonstration in a public place in the designated area, or (b) takes part in a demonstration in a public place in the designated area, or (c) carries on a demonstration by himself in a public place in the designated area, is guilty of an offence ...
House prices up slightly, headed for 5% rise for 2006
Firstrung: House prices up 0.4% in October but could be dented by a flood of potentially over-priced properties coming to the market - Hometrack
UK house prices rose once more in October, a survey from Hometrack has revealed, however, the gain was driven by the continued strength in London's property market. Property consultant Hometrack said house prices rose 4.9 percent year on year, prices were 0.4 percent higher than in September, ( the monthly figures are not adjusted for seasonal factors). The data adds further evidence that August's rise in interest rates to 4.75 percent has not dented overall confidence in housing market activity and commentators will point to the now certain rise in interest rates in November when the MPC next meets.
Looming Consequences of Global Economic Imbalance
Gold Seek.com: An Unstable Dollar Standard
A discussion by a lecturer of the Austrian school of economics, Hans Sennholz, on what may be required to adjust the currency imbalances between the USA and Asian countries and whether or not this adjustment process -- which is predicted by some to be gradual and by others to be catacylsmic -- will drag the rest of the world into ultimate financial crises -- or not. In any case, he says that what happens to the USA economic balance realistically affects all. Big implications for HPC? Place your bets ladies and gentlemen.
Sunday, October 29, 2006
Banks throwing money at FTBs
This Is Money: Lender offers over 7.5 times income to mortgage borrowers
Pretend you are a mortgage broker and plug your details into this calculator here. Depending on your income, and the interest rate available you can be offered anything up to 7.53 times income. Fantastic? Ludicrous? Criminal? You decide. The calculator is hosted by First National, part of GE Money. Fascinatingly, GE's blurb contains the following: "An interest-only mortgage must be backed by an adequate investment vehicle." Ah. So that means that out of the 30 per cent of their income that remains after paying the mortgage interest bill, this couple needs to find money sufficient to invest in a vehicle that will produce a lump sum to pay off their £376,506 mortgage capital debt. Good, prudent advice from GE Money. Question is, what would that leave them to eat?
"Never, never never ever...
Times Online: Getting at the cash in your buy-to-let
...sell an investment property" That's what the salesman said at a free property investment seminar I attended.....I won't mention the companies name.....but it certainly wasn't a company called "outside lane". "Did you know that equity release is a tax loophole....a sort of untaxable 'directors dividend'" he also said. Well here we have a company promoting such wise words and all at the bargain price of 6.75% componded. You can almost here the VI community now: "If we can only persaude the crowd to hold at whatever cost, the house of cards might prevent toppling"
House prices aren't overvalued after all
Sunday Times: House prices just keep on flying
A round-up of the past year's housing market and some predictions for the year ahead. Lombard Street Research predicts rises of 12-14%, despite bank rates rising to 5.25%. Low interest rates and high population growth (partly immigration) to blame. Read it and weep. No mention of any counter-arguments, such as the fact that in most areas it's actually cheaper to rent than to buy....
Wage inflation creeping up
The Telegraph: Wages everywhere are rising too fast
Across the economy, though, wages are now going up too fast. In fact, it could well be wage inflation – and in particular a nasty pay round in January – that sparks real concern about inflation more broadly. And over the coming six months that could force interest rates up to levels that cause real pain.
Soldiers to avoid council tax...
Firstrung: Council tax exemption for armed forces
Soldiers on the frontline duty in Iraq and Afghanistan will not have to pay council tax under plans to be unveiled in the New Year according to the Daily Mirror. Chancellor Gordon Brown has apparently ordered officials to work out the cost of the move, which is backed by Tony Blair.
Beware botched jobs done by mates
Firstrung: First time buyers and home improvers gamble by getting friends and family in on the job
A generation of first-time buyers is in danger of risking quality and safety by cutting corners when it comes to home improvement. Research published today shows 218,000 (58%) of new UK homeowners admit to calling in friends and family to do work such as electrical, roofing or plumbing jobs on their home rather than calling trained professionals. This puts homeowners at risk of botched jobs, wasted cash and even injury - not to mention ruined friendships
Oh - Rich Homes Owners Get Hit - Sad ...
Torygraph Online: Council tax to soar 300% for homes in nice areas
I almost cheered when I read this. How often have I had to put up with my property owning friends boasting how rich they are and how clever they are to have earned this wealth by ... sitting on their bottoms and doing nothing. “I’m currently paying just over £1,000, but in 2007-8 my bill is going to go up to nearly £4,000,” said Mr Kelly. “I get by on a civil service pension of £100 a week – how am I supposed to afford it?” Well, clearly you need some financial education because no civil servent I know will retire on a pension of £100 per week. (And I have to work with the idle lot). Secondly, Mr Kelly has "benefitted" from the increasing value of his home, so YEP - you get to pay for that benefit. So, SELL up and ADD to the list of factors required to precipitate a HPC. Golly: Raising the burden of tax upon the rich is a new concept for this Glubberment. Some friends only bought their home in the SW because it was what they could afford, have bored me for years. They are on the financial edge and this could push them over. I wonder how many others are in this boat.
Saturday, October 28, 2006
Speech About Long Term Interest Rates.
Bank Of International Settlements: WHY HAVE LONG-TERM INTEREST RATES BEEN
Why have long-term interest rates been so low? Is the Global Interest Rate Cycle beginning to turn? This is a bit above my head but interesting regardless.
Banks continue to prey on the foolhardy
Guardian: Lenders increasing mortgage amounts
Two more mortgage lenders are increasing their lending multiples. Bristol & West and Bank of Ireland Mortgages (both part of the Bank of Ireland group) will now lend a single applicant up to 4.5 times his or her income - previously the standard "multiple" was four times income, and let couples borrow four times their combined income. In some cases they will even let a couple earning £60,000 between them get a loan of up to £270,000.
Coming to a country near you !
Independent: Housing slump hits US economy growth
Growth in the US economy slowed to its weakest pace for three years over the summer, according to official figures that triggered a drop in share prices across the world. The slowdown was driven by a slump in the housing market. The report showed that spending on new housing contracted by 17.4 per cent, the biggest annual decline for more than 15 years.
Quick! Last chance to get on the Titanic
This is Money: The soaring cost of your home
Rocketing house prices have left the average British home costing 187% more than it did when the property market began its recovery a decade ago. The cost of homes in Britain has leapt by 187% since 1996. A new report by Halifax showed that the average UK house price has risen from £62,453 at the start of 1996 to £179,425 now – rising by 10.6% a year.
House prices boom in last decade
BBC News: House prices boom in last decade
Economic growth since 1996 has fuelled house price increases averaging more than 10% pa (double the rate of earnings inflation)
Friday, October 27, 2006
Oil and housing put brake on US growth
FT: Oil and housing put brake on US growth
US economic growth slowed to an annualised rate of just 1.6 per cent in the third quarter of 2006, figures revealed on Friday, as a brutal correction in housing construction and an oil-fuelled rise in imports dragged down economic activity.
Houses cost too much!
Mortgage Solutions: House Price / Income Ratio 60% Worse Since 1970
The ratio of house prices to income has shot up 60% since 1970, according to the Alliance Trust Research Centre. The ratio has worsened most in London, East Anglia and the South West, where it increased by 66%, 65% and 63% respectively. London is the least affordable region for today’s first time buyers. House prices in the capital are now 4.4 times income, against 2.6 times in 1970. The South East, where the ratio has climbed to 4.3 times income from 2.7 times 35 years ago, is the second least affordable region.
How to raise more council tax.
THE BEST PLACE TO LIVE IN HULL: Hull Daily Mail
Saw this yesterday in our local rag, now any body who knows Hull will know Kingswood is the cheapest place to buy a house, and there is a good reason for that. Placed between 2 council estates with burnt out cars, and murders gallor, etc. But yet claims to be the best place to live in Hull. My theory, this table was produced by the council for -> Make house prices rise, receive more council tax. Simple!!
Rates to reach 5.25%, UK saving only 4% of income
Firstrung: Bank of England needs to raise interest rates to 5.25% to reach inflation target - NIESR
Inflation should fall back to the prescribed target by the end of next year if the Bank of England raises interest rates by another 50 basis points, the leading think-tank, NIESR has stated today. Financial markets were already gearing up for a quarter-point rise in borrowing costs to 5.0 percent in November and are starting to price in another rise early next year as policymakers have continued to stress their determination to keep prices and inflation under control.
Problems in US housing Market
Financial Times: US House Price Fall Steepest Since 1970
Prices for newly built American homes have suffered their largest drop year-on-year since 1970, according to data released yesterday, highlighting the dramatic nature of the downturn of the US housing sector.
BoE worried about HPC rather than inflation
Bloomberg: U.K. Home Shortage Keeps Property Market Ablaze as Rates Rise
Rates at 5.5 percent might be enough to slow the rest of the economy, but not property,'' said Peter Spencer of the Ernst & Young ITEM Club in London. ``The housing market is going to keep on chugging.'' While Britain's house-price boom has helped fuel economic growth, it also creates headaches for the central bankers as consumers borrow against the rising value of their homes to spend more. With consumers shouldering a record £1.25 trillion of debt, the housing market's importance to the economy may deter the Bank of England from clamping down too quickly. A speedy increase in rates might drive the investors and speculators who are helping fuel the boom out of the market.
The end of cheap money signals the end of the house price bubble
Daily Mail: Mortgage lenders axe cheap deals leaving homebuyers 'crippled'
Homebuyers face being crippled by their mortgage repayments as Britain's biggest lenders are axeing their cheapest deals, experts warned.......
The economic effects of large scale immigration
Daily Mail: British workers forced out by Eastern European migrants
Tens of thousands of Britons have been forced out of work because of the arrival of a wave of migrant workers from Eastern Europe, experts warn. Authoritative new research suggests almost 100,000 people have become unemployed as a result - though even that may be a significant underestimate......... Wage growth is being held down because more people are looking for jobs, meaning employers do not have to be so generous to their recruits. That is good news for borrowers because it allows interest rates to be kept relatively low. But on the other hand, "wage earners may feel that migration makes them worse off" because their salaries appear to be static, the report said.
The end of cheap money signals the end of the house price bubble
vonm@yahoo.co.uk: Mortgage lenders axe cheap deals leaving homebuyers 'crippled'
Homebuyers face being crippled by their mortgage repayments as Britain's biggest lenders are axeing their cheapest deals, experts warned.........
UK CPI inflation
AFX News: UK CPI inflation seen 2.6 pct in Q4; 2 more rate hikes needed in Q4, Q1 - NIESR
LONDON (AFX) - UK CPI inflation is set to remain well above target during the fourth quarter, necessitating another two rises in interest rates by early next year, while economic growth remains around its trend rate, a leading UK think-tank said.
US housing bust coming to an end?
CNN: Greenspan: Housing slump spares economy
Former Federal Reserve Chairman Alan Greenspan said Thursday the U.S. economy was pulling past a sharp housing sector downturn. Turning to the U.S. economy, he said it had gone through a very weak patch during the summer, due to an accelerating decline in housing construction and a slowing pace of inventory building. But the outlook was now "reasonably good." "Most of the negatives in housing are probably behind us," Greenspan said. "The fourth quarter should be reasonably good, certainly better than the third quarter."
Thursday, October 26, 2006
Does Tuffers know?
Firstrung: FSA order huge fine against Loans.co.uk for failures selling payment protection insurance
The Financial Services Authority (FSA) has fined Loans.co.uk Limited (LCUK) £455,000 for failing to treat its customers fairly when selling Payment Protection Insurance (PPI). The regulator found that LCUK did not have appropriate systems and controls to minimise the risk of unsuitable sales.
ECB talk hawk
Business Week: ECB president wary of inflation
Jean Claude Trichet talks of further tightening. Does the ECB only meet every 3 months? Only time will tell if he's talking hawk or crying wolf....
US House Prices show largest fall for 35 years
Yahoo Finance: Home Price Drop Is Largest in 35 Years
The Commerce Department reported that the median price for a new home sold in September was $217,100, a drop of 9.7 percent from September 2005. It was the lowest median price for a new home since September 2004 and the sharpest year-over-year decline since December 1970.
US House Prices Plummet
New York Times: Home Price Drop Is Largest in 35 Years
The median price of a new home plunged in September by the largest amount in more than 35 years, even as the pace of sales rebounded for a second month.
Bulgaria investment plans lie in tatters
Firstrung: Property investment returns in Bulgaria have fallen by over 70% due mainly to over development - Assetz
Bulgaria has suffered a dramatic change of fortunes in recent months, with the annual rate of capital growth plummeting from a remarkable 36% in 2005 to 13.9% in September 2006, and possibly set to fall further. Some areas, such as the Blagoevgrad District including the Bansko ski region, actually experienced price falls in the second quarter although these recovered in the third quarter. The oversupply of apartments has created fierce competition for rentals, even in the face of quickly-growing tourist demand, which is being aggravated by reported poor management from local agencies. Overall the return on cash invested has dropped from 116% in 2005 to just 35% for the year up to the end of September 2006
Councils get green light to fleece us with more taxes
BBC: Councils to get fresh law powers
Town hall pensions and perks are guaranteed by extra tax raising powers. Council tax payers have to struggle and have more stupid laws to worry about in return.
After the crash, things might be different next time
www.progress.org: After the Housing Bubble Bursts, Fix It!
I might be getting ahead of myself but for those interested in economic theory this article presents "geonomics" as a way of avoiding the extreme housing booms and busts in the future. Geonomics replaces taxes with land dues and replaces subsidies with rent dividends. Once implemented, geonomics changes the dynamics of the land-price cycle and the whole economy. To pay the land dues, owners use their land efficiently; owners who had been speculating get busy and develop. No longer allowed to tax anything that moves, local governments, too, which presently let acres of abandoned urban land and buildings lie fallow, get busy, too, and make sure to get those acres into the hands of ambitious owners who’ll pay land dues. More locations put to use and more buildings put up increases supply, which dampens price.
Will US housing have a soft landing?...And are hard landings in store for the UK and Australia?
MoneyWeek: Will US housing have a soft landing?
The US housing slump seems to be worsening. September saw sales of existing US homes fall at an annual rate of 14.2%. It's the seventh month in a row that sales have fallen. More worrying was the fact that house prices fell 2.2% on last year. That was faster than August's fall, and the first back-to-back monthly price declines in 16 years. But predictably, the realtors and Wall Street like to put a positive spin on these things. Many like to point to the UK and Australia, suggesting that similarly 'soft landings' may be in store for the US. So are they right to be this optimistic?
EU Gives Spain Two Months To Change Land Grab Laws
Place In The Sun: European Union Gives Spain Two Month Ultimatum Over Land Grab Laws
Spain's faltering housing market isn't being helped by the adverse publicity surrounding its land grab laws. Now the EU has given Spain its second and final warning before taking the country to the European Court over its land grab laws that have brought misery to thousands of property buyers, particularly in the Valencia region of Spain which includes the Costa Blanca. Buyers beware!
More Money In Property Abroad!
MSN: Invest Abroad For Property Profits Today
Well to all those property optomists - get out to countries like France, Australia, and the rest, to get profits in property - is this an admission that the UK looks over cooked??
Gordons, dept economy still on track!!
BBC News: Brown upbeat on UK growth outlook
The UK economy is set to surprise people who thought that 2006 would be "a period of low growth", Chancellor of the Exchequer Gordon Brown has said.
More IR warnings
The Independent: Jeremy Warner's Outlook: Excess liquidity keeps stock markets riding high, but what happens when it's withdrawn?
Periods of economic expansion rarely die of old age; instead, they are killed off by the anti-inflationary actions of central bankers. That threat has by no means gone away. Indeed, it may be more potent now than it was when these fears last got the upper hand back in May.
6% UK IR mentioned again
The Independent: Hamish McRae: If the US needs rates at 5.25% to check its housing market, what will it take in Britain?
People are more likely to borrow money if they think they will be paying back the loan in devalued currency A pause or a turning point? The Federal Reserve board duly decided last night to keep US interest rates at 5.25 per cent. The interesting issue, however, is whether this level will prove the peak of this interest rate cycle or will turn out to be a pause on the way to still higher rates.
Wednesday, October 25, 2006
US housing sinking faster and faster
advfn: US housing decline
Latest figures show biggest year on year decline in 40 years
Prices to rise by ONLY 34%
BBC News: London faces 'housing timebomb'
The average price of a London home is expected to rise to nearly £400,000 by 2011, a new study has suggested. House prices are set to increase by 34% over the next five years, said the London Housing Federation's report.
Overdrawn by a quid?
Firstrung: Overdrawn £1 for 1 day - how much will this cost you? Moneyfacts.co.uk investigates
Lisa Taylor, analyst at moneyfacts.co.uk, takes a look at how fairly customers are treated by their bank if they miscalculate and use an unauthorised overdraft. "Following the OFTs 'success' at reducing credit card default fees, they are now in the process of focusing their attention on similar penalty fees within the industry, with its next target set to be current accounts. But if the credit card market is anything to go by, this lost revenue will not be taken lying down, with providers searching for alternative methods to recoup this income.
Noose tightening!
BBC: Banks 'may raise overdraft fees'
Bank customers have been warned by financial information firm Moneyfacts that they may soon face stricter charges on unauthorised overdrafts. Lloyds TSB has announced that from 1 November it will no longer give customers a £50 "buffer" if they accidentally slip into the red.
London house prices will continue to outpace London salaries
Home.co.uk News: London house price 'timebomb' warning
London’s average housing price is set to soar by 34% over the next five years, reaching £400,000 by 2011, according to figures released today by the London Housing Federation. As a result, the federation warns, London is sitting on of a ‘housing timebomb’ with the gulf between house prices and salaries growing wider than ever.
I'm starting to think 'Would I actually want a house now?'
BBC: Tories warn over home inspections
People who refuse to let council tax inspectors into their homes could soon be fined £1,000, say the Conservatives. MPs are discussing new powers for inspectors in Northern Ireland, as part of the revaluation of its rates system. It could pave the way for English tax payers to be forced to admit inspectors checking on features which could increase house values, the Tories say.
GDP and Wealth ?????
Daily Reckoning: Big holes, big GDP, more wealth?
An interesting and amusing view of GDP and the falseness of modern housing wealth. "We mentioned yesterday what happens when a man pays someone to cut his lawn for him. If he did it himself, the GDP would remain the same. If he pays a neighbour to do it, the GDP goes up."
The other edge of the global sword...
BBC News: Australia braced for higher rates
Inflation is higher than expected in Australia and as a result an interest rate rise is imminent, more high rate talk.....
Don't panic the Tories will save us..honest..
Firstrung: How the Conservatives will help more people get onto the first rung of the housing ladder
Conservatives have accused the Labour Party of pricing a whole generation of low and middle income earners out of buying a family home - and in response have heralded a change in Whitehall rules to encourage the construction of more new houses with bedrooms and gardens for families - in place of dense blocks of flats.
The 'excitement' of the property market gamble
icNewcastle: Investors turn away from 'boring' cash
Millions of pounds of North-East property have changed hands in the biggest sale by a London auction house. Auctioneer Mr Walker said the outlook for interest rates had failed to dent private investors, who were riding high as the stock market hit record levels.He said: "Investors have done well out of property in the last few years. They see cash as boring and are saying, `Why put money in the bank at 4% when I can get 5% or more in property'?". Mr Walker said investors were "eliminating risk" as a consideration in the prices now being paid for commercial property at auction. He said: "People are buying on yields that are factoring in an expectation of further rental or capital growth. Four or five years ago, nobody would buy at yield equal to the borrowing rate, but people seem happy to buy and don't perceive the same risk as there has been in the past. "Whether or not they are right to do that, I wouldn't like to say."
Buy to let 'appetite' shows no signs of weakening
Firstrung: Buy to let landlords continue to invest based on stable yields and double digit returns
Buy-to-let investors are continuing to purchase additional rental properties, attracted by stable rental yields and strong overall returns generated by their investment portfolios. There has been no let-up in investor activity following the Bank of England's decision to raise interest rates in August, despite some concerns that rising borrowing costs might dampen activity in the housing market generally...
Still looking good for November...
Times Online: Inflation warning signals a probable rate rise
GLOBALISATION will make it harder for central banks to quell inflation, forcing them to act more aggressively to do so and making it more crucial that they act quickly to stem any sustained pick-up in price pressures, the Bank of England’s chief economist said last night. In a speech that will harden expectations that another interest rate rise next month is near-certain, Charles Bean set out a series of effects from globalisation that meant that inflation was now less affected by changes in the domestic economy’s growth rate
Is Britain really booming?
The Guardian: Cloistered metropolitan elite in denial about Britain
At the risk of sounding hopelessly pious, it's worth repeating some statistics: not just the fact that 12 million Britons live on or below the poverty line, defined in the case of a two-adult household at £180 per week, but some rather less-quoted numbers. In August unemployment hit a six-year peak of 1.68 million, spurred on by a big fall in the number of manufacturing jobs, now at an all-time low. Contrary to the idea that buying in and trading up are within everyone's reach, one in three of us still live in rented accommodation; according to the Joseph Rowntree Foundation, a third of all working households containing people under 40 "cannot afford to buy even at the low end of local housing markets" Thanks to crash-and-burn in the forums for this link
Tuesday, October 24, 2006
Many US Families Living One Paycheck Away from Disaster
MSN News: MIDDLE CLASS LIVING ON THE EDGE
The worrying practical analysis -- and one becoming all too familiar --that says there is "unprecedented" financial pressure on a growing number of middle class families who live "passing each other in the driveway" just to earn enough to meet basic expenses. Households are gradually losing their grips on economic security and, with little or no savings, finding themselves less likely than ever to withstand a financial crisis of illness or unemployment. Not so different it seems from their British cousins.
Fred Harrison on BBC Radio Five Live
Radio Five Live: ‘Boom and bust’ man disagrees
In contrast to our top story today we bring you news that boom & bust man economist Fred Harrison doesn’t think there is a soft landing at all – it will all end in tears with a damaging crash in – well – maybe 2010.
Land Registry launch Independent House Price Index
Politics.co.uk: Land Registry launch Independent House Price Index
This month (31 October 2006) Land Registry launches the first official, independent House Price Index (HPI). Using Land Registry’s comprehensive property data, the new seasonally-adjusted index will appear monthly, making average house prices available at national, regional, county and London borough level.
The Flood Gates Open
BBC: Reid outlines new EU work curbs
Loads of loop holes in the curbs on the Romanian and Bulgarian invasion next year so that we will be well and truly swamped. House prices will be pushed up as a result.
Yes Minster, tell us something we don't already know
Firstrung: Housing Minister sounds warning on future affordability for first time buyers
Yvette Cooper said: "If we don't build more homes less than a third of today's ten year olds will be able to afford a place of their own in twenty years time. Helping our towns and cities that want to grow can make substantial difference in delivering the new homes we need. "This gives local areas the chance to provide more jobs and homes with higher design and environmental standards too." New Growth Points will help to concentrate future growth at existing urban centres and present a significant opportunity for the new communities to become exemplars of sustainabilty by pioneering eco-development and encapsulating high design standards in parallel with meeting the housing needs of local communities.
My Home is my Other Pension
Lincoln UK: My Home is my Other Pension say 7.6 million
...or my only pension as seems to be the current vogue amongst the financially illiterate. “Of course it can be difficult building up other savings while paying off your mortgage and also investing in a pension. But it is potentially risky to believe that your home will provide for your retirement if your pension is not sufficient."
The HIP still on its way..
Firstrung: Buying with home information packs gets resounding vote of confidence
At the latest HIPs conference the audience and panel, made up of both leading proponents and opponents of the packs, unanimously said YES, they would prefer to buy a home with a pack.
The trade cycle
Googled: mechanism "expansion of credit": The Austrian Theory of the Trade Cycle
Interesting quote "If, on the contrary, the banks decided to halt the expansion of credit in time to prevent the collapse of the currency and if a brake is thus put on the boom, it will quickly be seen that the false impression of 'profitability' created by the credit expansion has led to unjustified investments"
Wish I'd bought shares early!
BBC: Boomtime for debt management firm
The debt management company Debts.co.uk has reported a 62% jump in its annual profits to £2.1m. The company is one of several that specialise in setting up individual voluntary arrangements (IVAs) for people who cannot pay all their debts. The sector is growing rapidly, and Debts.co.uk said annual sales rose by 79% to £6.1m in the year to 31 July.
Commercial property sell-off
Ft.com: Investors go in one door and out the other
Large institutions and fund managers have released a lot of commercial stock in the last couple of years. Although the Swiss-Re "Gherkin" tower is up for sale, I wouldn't buy it! Yields have been appaling low for a while but may be as low as 0.2% above risk.
High fuel bills panel
BBC News: Inflation, what's that again?
British household gas and electricity bills have almost doubled in the last three years and now total more than £1,000 a year on average. Six people tell us how they are coping.
More on buying a house with friends
ThisIsMoney: Club together to buy a home
Clubbing together to buy property with friends is an increasingly popular way round the problem. HSBC bank says it has seen a 50% rise in applications for group mortgages. The most important aspect of a joint mortgage is that it is offered on a 'joint and several liability' basis. This means that all the borrowers are equally liable for repayments on the mortgage. If one borrower stops payments for some reason, the remaining borrowers are responsible for the shortfall. If someone wants to sell their stake, the other owners can choose to buy them out at the market value, or another buyer can be found. In these cases the person leaving will have their name removed from the mortgage. If a buyer cannot be found and the other co-owners cannot afford to buy out their friend then the lender may force a sale of the property.
Oooooh, but in Bulgaria why don't you....
MSN: Emerging property hotspots – a buyer's guide
I forget who it was who said he survived the 1929 Wall Street Crash because when the bellhop had started giving him stock tips in the weeks prior he knew it was tip to get out. These days bellhops seem to have property shows on C4 and columns for MSN. But they've been saying daft things for years and still..... Nevertheless when people are writing articles on buy to let in Bulgaria then doesn't that say to you things have gone seriously awry? Don't know about you but I'm getting fed up screaming 'The Emperor's got no clothes'....
Amex Slashes Cardholder Rates
This Is money: Amex Slashes Cardholder Rates
Amex has slashed the rates of thousands of cardholders, in some cases without warning. Could this be due to the increase in bad debts forcing an attempt to reduce losses?
Monday, October 23, 2006
Banks under fire for lack of online security
Firstrung: Despite warnings four out of seven major banks fail to patch their security problems
Four out of seven on-line banks have failed to secure their sites after being alerted over a month ago by Heise Security to serious security issues on their web pages for online banking. On 20th September heise Security published an article, demonstrating that many on-line banks were taking too few precautions to protect their customers from phishing attacks. Some have reacted positively to this and improved their sites, but others seem to have made no changes to their sites, and the responsibility for avoiding phishing scams is still left entirely with their customers.
Flavour of the month .........
The Telegraph online: Toxic loans that threaten us all
Remember those big tubs of Neapolitan ice cream - the ones with the three fat slices of chocolate, vanilla and strawberry flavours? Well, believe it or not, those tubs can tell us a great deal about the housing market.........Once again an interesting article from Mr. Conway. Let's just hope the whole damn ice cream doesn't just 'melt down' ......!!!!!!!
Higher rates in the States?
Bloomberg: Dollar Advances on Speculation Fed Will Highlight Inflation .
Money markets are gambling on further rate rises in the US, and you know what that means for us...
Raise the Interest Rate says Ernst and Young
Home.co.uk News: Rates must rise to check house price inflation
Great article on how inflation fire fighting must get cracking. “However, interest rates need to be raised again in November to stop credit expansion and asset price inflation spilling over into excessive demand and inflation. If house prices continue to accelerate, interest rates will have to rise further in 2007.”
When property investment goes bad.
USA TODAY: 10 mistakes that made flipping a flop
A cautionary tale from the US on how wrong it can go for inexperienced property investors.
MoneyWeek continues to see the case for higher interest rates
MoneyWeek: How to profit from higher food prices
An analysis of rising food stuffs will result in higher inflation, even though food is not a "core" item - people need to eat and so will demand higher wages. There are hooks into the great debt debate too.
80% of borrowers opt for fixed rates. Cheaper mortgages mean more home buyers keeping confidence in the market high
Firstrung: More buyers and competitive fixed rate mortgages continue to propel housing market - propertyfinder.com
A large new wave of homebuyers shrugged off the August interest rate increase and entered the home buying market in September and October. According to Propertyfinder's October survey 56% of home buyers had been searching for a month or less - up 8% from 48% in July.
Housing Slump in U.S. Poised to Worsen
Housing Slump in U.S. Poised to Worsen, Derivatives Trades Show: Bloomberg
The slumping U.S. housing market is about to get a lot worse, according to traders of mortgage-backed securities and the so-called derivatives on which they are based. The ABX index, which measures the risk of owning bonds backed by home-loans to people with poor credit, rose 30 percent since Aug. 9 to the highest since January. There are more than $500 billion of such notes outstanding.
Sunday, October 22, 2006
Stuff Like This Is Despressing BUT ...
Times Online: First-time buyers left stranded as house prices rise by 11 per cent
A depressing article for potential FTBs like me. However, the titainium shield of high house prices, economic performance, might have a crack in it afterall. See "The result is record prices but on a low turnover, as fewer homeowners can afford to trade up, which “is sustainable unless there is a serious economic downturn” meaning when there is a recession, house prices will not be sustainable. Roll on the recession.
Item Club Model Predicts Interests Rates Steady at 5% Due To Immigration
Item Club warns of £4bn black hole: The Groinean
Item Club uses the same economic model as the Treasury and predicts Interest Rates will not rise above 5%. Various reasons given but notably immigration will keep wage demands lower then otherwise.
Inflation - New car running costs 'rise £500' or 10%
BBC: New car running costs 'rise £500'
While we are told tha inflation is below 3%, we get more reasons to believe that inflation is much higher. Yet another example - car running costs. 10% increase in one year. What else you can say. Do we need to have shadow government which does serious job for people, not for government itself? What is really really real inflation?
FTBs a hot topic in the media this week as usual
Firstrung: Firstrung, first time buyers - the week in focus 22/10/06
Another interesting week for first time buyers? We'll let you be the judge of that statement. What is undeniable is that the subject of first time buyers has never been hotter. This weeks hot topics: At least 300,000 homes empty for over six months, the majority suitable for first time buyer occupation after refurbishment. Rightmove reporting asking prices up 2% in a month, 0.2% over the past quarter. Halifax report, suggesting Rightmove's conclusion that Chelsea and Kensington prices have risen by 66%, debunked by superior data from Halifax suggesting the rise is in fact only 2% YoY. Firstrung condemns the CML stats on first time buyers, they admit they simply 'create figures'. Northern Ireland prices explode over past year by up to 33%. Co-buying, if you can't afford a house why buy a quarter of something you can't afford? Industry warning over "insane" FTB salary multiples
Ireland and Spain are highest risk says Deutsche Bank
Deutsche Bank Research: US house prices declining: Is Europe next?
Strong price rises on most European housing markets. In the last ten years, house prices in Spain increased by 150%, in the UK even by 200% and in Ireland by as much as 300%.
Hamish Macrae - Independent - What planet is he on?
Independent: The mountain top is shrouded in mist: could rates have some way to climb?
"The Bank of England must try to avoid a housing bubble" This Guy's an A1 jerk. A reasonable article totally spoilt by denial of the most obvious factor regarding house prices. He obviously didn't watch the "Tonight" programme on Friday.
Saturday, October 21, 2006
.. The nation is blind to the risks ... Mad ...
The Scotsman: Savings slump deepens, with few looking to retirement
... the proportion of people saving has fallen over the past three months, but confidence in property as an investment class continues to be high. ..... of those saving regularly, only 46 per cent are salting cash away for their retirement. The majority are still looking to fund the short-term gratification of holidays and home improvements. But consumer confidence in property continues to grow. Buy-to-let property has jumped in popularity for investors, increasing by 23 per cent in the last three months. That makes it the second most popular savings class after consumers' own homes. The popularity of equities continues to fall ..... This suggests that, while people are prepared to take more of a risk by investing in property, they are reticent about taking on a higher level of volatility.
US house prices forecast drop
In2perspective: US house prices at "tipping point"
Will it be the same in the UK?
Where's the supply shortage?
Daily Mail: Controversial law means 300,000 homes could be repossessed
Three hundred thousand homes have been empty for at least six months, leaving them open to being commandeered by local councils. New laws, which came into effect in the summer, mean a property left standing for long periods can be grabbed for the homeless...
America's sneezing
Financial Sense Online: Dream Homes and Mortgage-Debt Nightmares
Sound blog analysis of the current state of play in the US housing market. Can the Fed hold it together until after the mid-term elections?
What a waste...
Firstrung: 300,000 potential first time buyer homes left vacant for over six months - Halifax report
New Halifax research highlights that there are 290,862 private homes in England that have been empty for more than six months, the government's preferred measure. This is equivalent to 1.6% of all privately owned dwellings in England. The number of private empty homes has fallen by 6% in England over the past three years.
Friday, October 20, 2006
ECONOMY GROWTH MAKES RATE HIKE 'A DONE DEAL'
The Independent: ECONOMY GROWTH MAKES RATE HIKE 'A DONE DEAL'
Interest rates were given another nudge towards 5 per cent today after it emerged the UK economy expanded by 0.7 per cent for a fourth quarter in a row. The provisional GDP estimate was 0.1 per cent higher than most forecasts, leading analysts to describe a hike in borrowing costs as a "done deal" when Bank of England policymakers meet on November 8 and 9. Reports Graeme Evans PA in the Independent 20Oct06
Chelsea up 66% year on year? Er no, more like 2%
Firstrung: London house prices on a different planet? Look again...
Kensington and Chelsea prices are actually up by only 2% year on year according to this survey, now taking the average price to £630,794. So you don't need the widely publicised million pounds to live in these areas after all, still what's a glitch of 400K, or 64%. The report still manages to disappoint with tired cliches in the form of "Olympic affect" quotations, apparently the growth in prices in Tower Hamlets owes nothing to the proximity of the area to City workers and the boom the banking industry has experienced over the past year
The MPC may be more independent and cleverer then previously thought
MoneyWeek ;-): Why the Bank of England is turning more hawkish
A summary of the UK's economic situation which suggests an Interest Rate hike in Nov 06 might not be the peak of the cycle. I would be grateful if "NpHPC" read this one and comment.
Going Green on Aviation
Guardian Online (this morning): UK seeks early entry for airlines in EU green plan
This gov going green on aviation to try to keep up with Cameron...........the point is an awful lot of holiday home owners will be stung badly paying for expensive flights to their weekend pads
Mortgage Misery
ITV1: Tonight with Trevor McDonald
OK, not really a news story, but housepricecrash.co.uk should get a mention in tonight's show. Originally due to be broadcast on Monday 16th, but was pulled at the last minute. "Interest rates look set to rise next month and figures show that hundreds of thousands of people are failing to keep up with their mortgage payments and risk losing their homes. Fiona Foster reports on whether the public is paying too big a price to get on the property ladder - is it time to give up the national home owning obsession? "
Finally credit records might be shared
Out-law: Government wants to allow data sharing on 40 million bank accounts without permission
In a move to counter what it calls the UK's over-indebtedness the DTI wants to share information on 40 million bank accounts to prevent their users borrowing too heavily. It will consult with industry on four plans, two of which involve ordering that debt data be shared.
OPEC aren't about to let oil slide...
Business Week: Oil prices up after OPEC production cut
OPEC have cut production by more than expected and member states have indicated more cuts may be on the cards...
Early rise in interest rates looks inevitable as inflation spreads through the economy
TimesOnline: Consumers recoil at nasty whiff of inflation
Inflation is showing its face in the high street forcing consumers to retreat from the shops. M4 money supply also rose at its fastest pace for 16 years will have MPC members on their toes ready to vote for an immediate rise in interest rates.
Roll up, roll up, buy to let mortgages for anyone..
Firstrung: Buy to let mortgages offered to 21 year olds by Bank of Ireland
The lender's Buy to Let (BTL) proposition has been given a significant facelift, with a range of improvements, namely: rental income has been reduced to 100%, the portfolio limit has been increased from £1.5m to £2.5m, up to a maximum of 15 properties, the max. individual loan is increased from £400k to £500k at 85% LTV, the minimum age has been reduced from 25 to 21, the requirement of 12 months BTL experience for borrowers seeking six or more (or £750k+) BTL loans with the lender, has been removed.
HMO landlords fallen sharply since legislation
Firstrung: Number of landlords who have invested in in multiple occupation houses, HMOs, has fallen sharply
With significant timing, the number of landlords in the Private Rented Sector who have invested in Houses in Multiple Occupation, HMOs, has fallen sharply. This is revealed in the latest quarterly Review and Index published by ARLA. The HMO share of the whole rental sector has dropped from nine percent to six percent over the last three months. This coincides with the requirement to register the properties with local authorities by last July and could represent a loss of as many as 75,000 properties to the multiple sharer market.
Thursday, October 19, 2006
My goodness - a voice of caution ....
MSN: Why student buy-to-let equals debt
Many parents who expect to become buy-to-let millionaires during their children’s time at university are likely to be disappointed. Experts warn that it is a medium- to long-term investment over at least 10 years that needs to be carefully considered.
Mortgage lending up or is it ?
BBC: Mortgage surge fuels housing boom
Down on the previous month - But up on the year. The BBC plugs it for all it's worth
Still no sign of that HPC.
FT: Lex - UK house prices
Residents of London’s Kensington and Chelsea are reported to have the highest life expectancy in the UK. This is fortunate, since they will have many years to enjoy some of the most expensive houses in the country. Property prices in the borough, according to website Rightmove, have risen by almost two-thirds in just 12 months. perhaps not a measure for the rest of the country, but sure looks like every last drop is being squeazed out to try and maintain growth in house prices. - it's only talking about asking prices as covered in other threads. But the comment at the bottom is funny, esp coming from the FT.
Interest Rates due to rise
Guardian Online (this morning): Bank Hints at Interest Rate Rise
Bank hints at rise in interest rates next month despite growing unemployment Larry Elliott and Angela Balakrishnan Thursday October 19, 2006 The Guardian The City was last night preparing for a November rise in borrowing costs after the Bank of England dropped a broad hint that it would shrug off growing unemployment and increase interest rates. Despite the number of jobless benefit claimants hitting a five-year high last month, the minutes of the last meeting of the Bank's monetary policy committee (MPC) strongly suggested that a tightening of policy was imminent. The two new members of the MPC - Andrew Sentance and Tim Besley - voted for an immediate increase in rates to 5%, and the minutes showed that most of the other seven objected to dearer borrowing only for reasons of timing. "Other members placed considerable weight on [the arguments] supporting a further rise in the bank rate, but thought there was no pressing need to raise rates this month," the minutes said. They added that it would be helpful to wait until the Bank's quarterly inflation report before making a decision. The MPC will next decide on rates on November 9. The minutes said the Bank's agents across Britain were picking up evidence of firms seeking to raise prices. A sharp drop in oil costs meant inflation as measured by the Consumer Price Index fell from 2.5% to 2.4% last month. But had it not been for cheaper petrol, inflation would have been 3.1%. Mervyn King, the Bank's governor, is obliged to write an explanatory letter to Gordon Brown when inflation deviates from its 2% target by more than one percentage point. "If any further confirmation that interest rates will rise in November was needed, the minutes to the October MPC meeting provided it," said Paul Dales, UK economist at Capital Economics. "But the subdued tone of the labour market data questions how far rates need to rise thereafter, if at all." Data from the Office for National Statistics showed that the number of people out of work and claiming benefit rose by more than 10,000 in September to just over 960,000. At that rate of increase, the total would pass 1 million early in 2007, but some analysts believe that a pick-up in growth this year will apply the brakes. The broader measure of unemployment - the labour force survey - found that numbers rose by 45,000 in the three months to August, pushing up the jobless rate from 5.4% to 5.5%. Figures for average earnings showed that wage pressure remained muted. Earnings in the three months to August were up 4.2% on a year earlier, compared with a 4.4% increase in the three months to July. Excluding bonuses, average earnings growth eased to 3.6% in the three months to August from 3.7% in the previous three months, the lowest rate for more than two and a half years. The data suggested that soaring utility bills and rising inflation had not yet fed through to wages, but economists said the Bank of England would still be worried about inflation risks. Employment also rose by 120,000 over the three months, taking the total to 29.01 million - the highest since records began in 1971. Yet the number of jobs failed to keep pace with a labour force swelled by immigration and more older workers. "The increasing slack in the labour market should help to contain wages growth and dilute the need for further interest rate hikes after the likely one in November," said Howard Archer, an economist at Global Insight.
Egg Card Sees Bad Debts Rising
BBC News: Egg Profit warning
Yet another lender seeing bad debts rise and people struggling with huge amounts of debt. When will the banks tighten their lending? Will they ever?
IVAs biting the finance sector
FT: Prudential blames IVAs for losses at Egg
Prudential on Thursday blamed an anticipated second half loss at Egg on a 20 per cent increase in individual voluntary arrangements in the third quarter, which the insurer said it had not anticipated when it increased its ownership of the online bank a year ago.
Quarter of FTBs can't get mortgage without parental help
ThisIsLondon: One in four first-time buyers rely on parents to buy a home
Spiralling living costs has led to young first-time buyers relying on "the bank of mum and dad" to get on the housing ladder, according to a report. Research from Skipton Building Society revealed that one in four 20-35 year olds are counting on parents to contribute to their deposit. Jennifer Holloway at Skipton Building Society, said: "Faced with industry figures which put the average cost of a house in the UK at nearly £200,000 climbing onto the property ladder must seem as daunting as climbing Everest.It is little wonder first-time buyers are looking to their parents for financial help. She added: "The reality is that, if you want to be a homeowner, you have to make the most of the money you have. Our advice for young people is to start saving as early as possible - even if it means forgoing the odd night out or new pair of shoes."
Experts surprised by drop in retail sales
BBC: UK retail sales show surprise dip
ONS state that sales fell 0.4% in September from the previous month. "Consumer spending is one of the main drivers of UK economic growth and there have been concerns that it could wane", the BBC report states.
FTBs 'mortgaging future'
Firstrung: First time buyers 'mortgaging their future' with interest only mortgages on ridiculously high income multiples
First time buyers 'mortgaging their future' with interest only mortgages on ridiculously high income multiples. As mortgage lending still increases month-on-month to record levels and property prices continue to defy gravity, do we see any let up or reasons for concern, or are some cracks beginning to appear...Colin Sloss is head of business development at The Exchange..
Warsaw Job Centre Plus Job Fair
British Embassy, Warsaw: Warsaw Job Centre Plus Job Fair
From 18-19 October Urząd Pracy (the Polish Employment Service), in partnership with Jobcentre Plus (part of the Department of Works and Pensions - UK Ministry of Labour), will be holding a job fair in Warsaw. The event will be attended by the British Embassy, Scottish Executive, the Trades Union Congress (TUC) and various UK employment organisations.
Wednesday, October 18, 2006
250 TVR job losses at Blackpool plant.
BBC news: TVR to move car production abroad
Sports car company TVR is to cease production in the UK, with the loss of 250 jobs at its factory in Blackpool.
Dollar, stocks reassured by US housing,CPI
Reuters: GLOBAL MARKETS-Dollar, stocks reassured by US housing,CPI
...investors took heart from strong housing figures...
Economy Broke
Yahoo: Jobless figures worst for six years
Jobless figures looking very bad despite miracle economy
Housing ladder out of reach for divorcees
Firstrung: A large proportion of divorcees never get back on the housing ladder
Divorcees tend to be older - 54 on average - and as such are nearer retirement than these other groups. Carrying a high debt burden at this late stage in working life leaves them much more vulnerable. Divorcees are also twice as likely to be unemployed than their married counterparts - 4 per cent compared to 2 per cent.
Jobless figure worst for six years
Yahoo news: Jobless figure worst for six years
Unemployment jumped by 45,000 to its worst level for six years, even though more people are in work, new figures reveal. A total of 1.7 million people were out of work in the three months to August, a quarter of a million more than a year ago.
Has she been lurking on the forum?
Split decision
BBC: Bank divided over interest rates
7-2 In favour of the status quo - According to minutes
Stagflation on the way?
Daily Telegraph: Black day on both sides of Atlantic
...Janet Yellen, head of the San Francisco Federal Reserve and a lea