November 2006 Archive
Thursday, November 30, 2006 
£11.6 Billion NL Affordable Housing Cost???
thisismoney.co.uk: Housing crisis 'needs £11.6bn'
Now that's what I call a fair chunk of investment - Iraq only cost UK £4 Billion!!!
Bernanke warns about inflation but ambiguous about interest rates
BBC News: Bernanke raises inflation concern
Ben Bernanke, the head of the Federal Reserve, has warned of the impact of continuing inflation on the US economy. "A failure of inflation to moderate as expected would be especially troublesome", said Mr Bernanke during a speech in New York.
OECD doesn't think IR rise necessary in UK
The Scotsman: Think-tank rejects case for raising interest rates
In its biannual assessment of the UK, the Organisation for Economic Cooperation & Development (OECD) said a raft of migrant workers from the likes of Eastern Europe was helping keep wage inflation under control.
Some fairly basic advice for FTBs from What Mortgage
What Mortgage: Top tips for first-time buyers
Life is pretty tough for would-be homeowners. Affordability is stretched to the limit and many of the cheaper flats and houses are snapped up by investors, before the poor first-time buyer even gets a look in. But help is it hand. We’ve put together top tips to help you on your way to home ownership.
More people mortgaging despite IR rises
The Independent: New mortgages hit highest level for three years
The number of new mortgages approved last month unexpectedly rose to its highest level for three years, according to figures from the Bank of England that confirmed the strength of the housing market.
BOE thinks wages are too high
Hemscott (AFX): UK's real wages have not fallen enough - BoE rate-setters
Real wages in the UK have not fallen by enough to stop unemployment rising, two members of the Bank of England's rate-setting Monetary Policy Committee said today. However, the perceived arch-dove on the Committee, David Blanchflower reckons that wage growth in the economy has been over-estimated because pay indicators in the UK do not cover a quarter of the labour market.
IR rates hit retail but not house prices
Scotsman: Mood and shop sales flag as house prices march on
House prices marched on this month in the face of higher interest rates, but retail sales fell more than expected and people's mood soured. The pound hit a 14-year high against the dollar as traders continued to dump the U.S. currency on concern the giant American economy was slowing down.
Eurozone inflation is up too.
Reuters: UPDATE 1-Euro zone Nov inflation, confidence spell ECB hikes
More pressure to raise ECB rates
US core inflation up 0.2%
FT: US inflation remains stubbornly high
How can they lower US interest rates ?
Anyone fancy a bit of inflation?
BBC: Pound hits 14-year dollar high
The pound has hit a 14-year high against the dollar amid speculation that the Bank of England will raise interest rates in the New Year.
House price inflation gathers pace according to the Nationwide
TimesOnline: House price gains hit 21-month high
House price inflation hit a 21 month high according to the Nationwide
Interest Rate Slap for BTL
Home.co.uk: Interest rate hike slowed buy-to-let market
Instructions to let property rose at the slowest pace since Q2 2005, says RICS Lettings Survey published today. The slowdown was skewed primarily towards flats as buy-to-let investors expressed caution in the market, reflecting a fall in landlords’ profit margins as a result of rising interest rates. The BTL house of cards begins to wobble.
Onwards and upwards?
FT.com: UK house prices ‘refuse to cool’
UK house prices rose in November at their fastest pace so far this year as the market “refused to cool”, the Nationwide building society said on Thursday. The average price of a home was £172,185, a month-on-month increase of 1.4 per cent. This was higher than the 0.8 increase recorded in October, is the sharpest rise since February 2005, and leaves annual house price inflation at 9.6 per cent.
Reaching the Apex.
BBC News: House price growth gathers pace
Average UK house £172,185 - rising by £41 per day. Up 9.6% from 8% in October.
Wednesday, November 29, 2006
Thoughts from the sheeple
Daily Mail: Women who face debt forever
Insight into attitudes towards debt.
Pounds up, interest rates up, job down, house price...
bloomberg.com: Pound Set for Longest Winning Run in Four Years on Rate Outlook
The pound is headed for its longest winning run against the dollar in more than four years on expectations the Bank of England will keep lifting interest rates into next year. . Investors and analysts are now expecting the pound to touch the milestone of $2, which was last reached in 1992. Deja vue?
Affordable Housing; On Starkey's last word
Starkey's last word, More4: Affordable Housing
Originally broadcast on 24th Oct, but missed by the HPC bloggers.
Debt starts to bite the lenders
The Times: Barclays to write off 1.5bn in credit card debt as bankruptcies hit record level
Barclaycard, Britain’s most popular credit card, signalled yesterday that it expected its army of customers to default on an unprecedented £1.5 billion of debt this year. Its parent company, Barclays, blamed rising numbers of personal insolvencies, particularly individual voluntary arrangements (IVAs), for the blow-out in bad debts. In the second half of this year, the bank has been writing off debts owed by credit card and personal loan customers at the rate of £31 million a week. The problem has been worsening, the write-off rate rising from £19.5 million a week to £22.7 million and then £26.8 million in the previous three six-month periods.
HOW TO SURVIVE A HOUSE MARKET CRASH
THE INDEPENDENT: How to survive a market crash
A return to the negative equity of the early 1990s would leave home owners unable to move, unless they could cover the mortgage shortfall from savings or other reserves, or through moving to a cheaper property. They might also be unable to remortgage, if negative equity means that they would have to borrow more than even the most generous lender will offer. At best, home owners with negative equity would face a narrower choice of mortgages.
Sorting out sub-prime mortgage brokers
The Scotsman: FSA targets 'sub-prime' mortgage brokers
MORTGAGE brokers targeting vulnerable "sub-prime" borrowers have come in for criticism from the Financial Services Authority (FSA) which has told 200 firms to withdraw or amend misleading advertising.
Halifax and its simplistic view of first time buyers
Firstrung: Handy hints for first time buyers from The Halifax, a place somewhere in Eutopia
It's a while since we published such an intelligence sapping and patronising press release as this from The Halifax. If you can bear to read it well done. It falls short of finishing with that time honoured phrase, "make sure you have the cups and kettle handy for that nice cup of tea..." although it does mention "tea break for the troops" It's so simple, this 'first time buyer lark'...
The sheeple are still buying...
BBC: Mortgage market continues to boom
Mortgage lending and mortgage approvals in the UK are running at their highest level since 2003, the Bank of England has said. Both the number of new mortgages approved for house buying and the amount of money lent on new mortgages roseto 3 year peaks in October. The figures will add weight to the view that the housing market is growing.
Why the UK's bad debt boom is just beginning
MoneyWeek: Why the UK's bad debt boom is just beginnning
The OECD is reassuring people that although the US housing downturn has marked “the end of a decade-long [property] boom that also occurred across much of the rest of the world,” the impact will be less pronounced in other countries. "It is comforting to note that in many countries households seem well prepared to cope with the consequences of a downturn in housing markets ... household balance sheets are generally sound and debt-servicing burdens still moderate, although some low-income households may be overstretched." We’re not sure which countries the OECD is talking about, but if consumers in the UK have ‘sound balance sheets’, it’s news to Barclaycard who have announced that bad debts are on the rise. And it's likely to get worse.
Dollar in trouble!
BBC: Dollar plunges on world markets
The dollar has continued its recent decline, falling to fresh 20-month lows against the euro as concerns grow about a US economic slowdown. In early Wednesday trading in the Far East, the dollar was hovering at about $1.32 against the euro, and also down against both sterling and the yen. The dollar's continuing weakness came after US data showed a fall in both the price of goods and consumer confidence. Analysts now predict US interest rates will have to be cut early next year.
Tuesday, November 28, 2006
Social problems brewing over lack of housing
BBC "News": Housing 'key to far right rise'
MPs say the lack of housing is fuelling propaganda from far right loons. The government replies - "No it isn't", ignores problem and hopes problem will go away.
secular trends continue
www.bullnotbull.com: Is This It?
Dollar breaks down Dow finally corrects Gold ready for lift off The secular trends are continuing after a cyclical reversal The 33-36 year cycle is lookig good again The goose is nearly cooked for the housing market
House prices still not reached tipping point?
Firstrung: House prices up 7 percent annually 1.2 percent monthly - Land Registry
Robust house price appreciation continues (average price increases 1.2 per cent in October to £171, 709). House prices in England and Wales have continued to exhibit strong growth. This month's data shows a monthly increase of 1.2 per cent and an annual increase of 7.0 per cent. This increase means that the average property price is now £171,709.
Monday, November 27, 2006
LOL! last ditch attempt to sucker the fool hardy
BBC News: Mortgage 'U-turn' at Nationwide
Just when you think that every trick in the book has been tried, they slip in an old chesnut. At least it shows they've run out of ideas to keep this bubble going
Council Taxes Could Be 1% of Property Values Soon
Telegraph.co.uk: Show your local authority the front door over higher charges
Typically speculation by the media, however nearly all local authorities are going broke so Tony and Gordon will allow a report to be released ( leaked ) showing that council taxes need to be based on current values, there will be widespread horror at 1% and it will be accepted when its .5 to .75%. Not the time to have a £1.5 Million home, well maybe if you can afford it - Tony.
More Predictions
TheTimesOnline: Place your bets now
Experts predict a slower market in 2007, report Anne Ashworth and Susan Emmett THE house price prediction industry is building up steam. This week we report on the first three substantial pieces of research on the prospects for 2007. No one is talking of a slump, but even the most optimistic of these gurus does not envisage that prices will outperform this year’s bravura performance of a rise of 8 per cent. Forecasts from Halifax and Nationwide will follow in the next few weeks......
ummmm... I wonder what will happen if HPC occurs
Times both online and in paper: What happens when house prices collapse?
"Old-fashioned bank managers, before the age of call centres, used to regard it as their professional duty to give prudent advice to their clients. One of their rules of thumb was that young buyers should not pay more than four times their income for their first purchase of a house. For most of the past 50 years that advice has worked tolerably well. House prices did average about four times disposable income in the late 1950s, 1960s and mid-1990s"
Nationwide BS reverses policy on best deals
BBC: Mortgage 'U-turn' at Nationwide
Nationwide will now only offer best deals to new customers or those actually moving home. Remortgagers won't get good deals. What does one make of this? This move seems to want to drive remortgagers away so might be the first signs of a reluctance to take on business.
No crash?
Property News: House price crash 'very unlikely'
Property News: "Independent" economist rubbishes idea of a crash....
Dangerous buy to let lending growth?
Firstrung: Buy to let specialist Paragon increases lending by 82 percent in twelve months
These stunning figures from Paragon quite simply defy belief - lending up 83% in a single year? In the volatile environment that is 'buy to let' some market commentators may describe this performance as out of control. Surely this 'stellar growth' can only have been achieved by taking on even riskier debt and ignoring even the most basic of under-writing criteria?
Serious economists say something's got to give
IMF: The Liquidity Glut
A little heavier going than your average tabloid house price story, but rather better informed. The investment bank Julius Baer put out a very interesting report today in the wake of this to which there's no link but which in essence agrees that central banks have pussy footed around while post 9/11 risk averse investors have created a self inflating prophesy by rampaging into assets. However that's been at the expense of serious long term investment into R&D and developing markets. The big boys aren't talking house price correction they're talking rebalancing between inflated asset prices and liquidity, between savings and investment and between Asia and the West. And when we wake up after the coming correction China and India will look much much much bigger than they do now.
Advertised prices up 5% on year
Reuters: House prices rise at fastest since 2004
Property consultant Hometrack said prices rose 5.3 percent in November compared with a year ago, up from 4.9 percent in October. On the month, prices were 0.6 percent higher, although the monthly figures are not seasonally adjusted.
November sees further house price increases according to Hometrack data
Reuters UK: UK Nov house price rise fastest since 2004 -survey
British house prices rose in November at their fastest annual pace since August 2004, a survey showed on Monday, in a further sign rising interest rates have not yet dented demand.
Poor business doesn't want to pay so much tax - bless!
MSN: One in 5 firms moving some business abroad
One in five companies have relocated some of their activities overseas and a third are considering it because of gripes over tax, according to a poll by the CBI published on Monday. The survey also showed nearly 20 percent of companies had even considered moving their headquarters abroad.
End of BTL?
bullbearings: Five time-bomb investments to sell now!
BTL is one of five places you DO NOT want to be!
Inflation UP UP UP, Bus Fares to rise 25%
IC Birmingham: Anger over plans to raise bus fares
Mirracle economy my arse, bus fares in the Midlands are set to rise by upto 25% as Travel West Midlands which has a near monopoly on bus travel in the midlands raises its charges from January 2007. Remember trickle down economics well this is trickle up inflation. You can fool some of the people........
Sunday, November 26, 2006
Is the Irish mortgage debt out of control?
Firstrung: Irish mortgage debt is double European level
Mortgage debt in Ireland is increasing at almost three times the EU average and Irish people owe twice as much on their mortgages as their European counterparts, according to new research.
New Yorkers struggling with mortgage payments
Firstrung: New Yorkers missing mortgage payments in increasing numbers in last quarter
In the third quarter of this year, the number of city residents who had missed more than three months of mortgage payments jumped by 20 percent compared with the same quarter a year ago. Still, New Yorkers often have more time to try to hold onto their homes than homeowners in the rest of the country.
Council Tax Re-Banding Looms
Telegraph: Show your local authority the front door over higher charges
Perhaps the main reason why NL loves house-prices going up and up - new council tax will be 1% of house value.
No-one wants to buy UK's most expensive residential property
Telegraph: Not for love nor money
Not much to say about this - just a perfect example of modern-day conspicuous consumption. First sign of a HPC? (joke)
Optimism still fuels house price engine
Financial Times: Optimism still fuels house price engine
Buyers are continuing to bank on price rises of 10% per year. This emotional element is seen as a big driver behind continued house price rises.
UK's fifth largest housebuilder for sale
Telegraph online: Wilson Bowden puts itself on the market for £2bn
Wilson Bowden is to be sold. Could they be selling at the top of the market, fearing an imminent slowdown?
Pack them in and stack them high
TimesOnline: The living room keeps on getting smaller
Britain is now building the smallest homes in Europe according to think tank. While the rest of Europe builds houses on an average sized plot of 100 sq metres the British squeeze them into a paltry 76 sq m.
Saturday, November 25, 2006
BBC homelessness season
Firstrung: Tune in to BBCs 'No Home' season of films and documentaries
The BBC is poised to broadcast a week of radio and TV programmes - including a special episode of Casualty - tackling homelessness and bad housing. The season, starting on Sat 25 Nov, coincides with the 40th anniversary of Cathy Come Home's first screening - the programme that alerted the nation to the crisis and led to the founding of Shelter
million pound houses increase by 32% in a year?
Firstrung: Portman believe property millionaires increased by 32% in a year
Has the amount of property worth in excess of £1 million increased by 32% in the last 12 months? According to the Portman yes, according to the definitive data from Land Registry no...The Portman must improve their level of research if they are not to be immediately dismissed as simple 'spin merchants'
The Guardian assesses David Miles' claim that house prices are set to fall
The Guardian: Will the property bubble ever burst?
The collapse of the housing market has long been predicted, but Ashley Seager doubts anyone can put an exact timescale on it
No growth in Irish housing market for 3rd quarter of 2006 according to daft.ie
Firstrung: Growth in Irish house prices grinds to a halt
Daft.ie Ireland's busiest property website, has released the Daft.ie report for Quarter 3 2006. The report shows that growth in house prices has come to a halt. Average asking prices for residential property did not increase between the 2nd and 3rd quarter of this year. Prices fell slightly over the summer months but recovered somewhat in September. Preliminary figures for October indicate slight growth but all signs point to a levelling off in prices.
Longer term fixed rate mortgages- the solution for FTB's?
Reuters UK: Long-term fixed rate mortgages: the pros and cons
Mortgage lenders are introducing competitive longer-term fixed rates -- which could spell a surge in demand among homeowners. Unlike those in the US and continental Europe, British borrowers tend to avoid longer-term home loans, preferring cheap short-term fixed or discounted products, or variable rates which move up and down according to the Bank of England base rate.
More home owners with feel good paper profits
BBC News: Millionaire house owners increase
The number of property millionaires in England and Wales has increased by a third to nearly 80,000. Research from the Portman Building Society shows 78,219 homeowners in England and Wales have property that is worth in excess of £1m.
Friday, November 24, 2006
It's all going pair shaped!
BBC News: Why the dollar is falling so fast
The US domination of the world economy may be at stake. The US dollar is plunging in world currency markets - and bringing down share prices in its wake. But why is the dollar under pressure - and what would be the consequences for the US economy if it continues to fall? Behind the problems of the dollar lies the huge and growing US trade deficit, and the large Federal budget deficit. A fall in the greenback could hit Asian countries whose governments hold huge foreign currency reserves in dollars A disorderly unwinding of global imbalances would be very damaging Rodrigo Rato, IMF Managing Director For many years financial markets have worried about the growing size of the US trade deficit - the difference between the amount the US imports from the rest of the world, and the amount it can sell to the rest of the world. That deficit is now heading above $800bn for 2006, or 7% of the US economy, and shows no signs of diminishing. At the same time, tax cuts and the war in Iraq have led to a US budget deficit of several hundred billion dollars despite the booming economy. Asian giants Much of the trade gap relates to US commerce with East Asian countries such as China, Japan, and Korea, who sell much more to America than they buy. Cheap exports have fuelled China's enormous trade surplus Together, the East Asian countries have accumulated foreign currency surpluses of nearly $1 trillion, much of it held in US Treasury bonds denominated in dollars. Thus they are funding both the budget gap and the trade gap. These huge global imbalances are threatening to derail the world economy, the IMF and other international organisations have warned. The classic economic view of how to correct such changes is to adjust the exchange rate in order to make US goods cheaper and Asian goods more expensive. But many Asian currencies - especially the Chinese yuan - do not float freely on international currency markets, and the US has long been pressuring China to revalue its currency. Now the markets are beginning to take matters into their own hands, by forcing the US dollar down. Traders are worried about the effects of the dollar fall In the long run, the fall in the dollar could lead to a cut in the trade deficit and a boost to US exports. But this process often takes a long time, and in the meantime, it is fraught with dangers. The fall in the dollar is worrying the IMF, the international organisation charged with surveillance of the world economy. "A disorderly unwinding of global imbalances would be very damaging," IMF managing director Rodrigo Rato warned at its spring meeting in April. Run on the dollar In the first place, a rapid fall in the dollar, if it accelerates, could cause short-term problems for the US economy. The higher price of imported goods could lead to a hike in domestic inflation, and it could take several years before consumers switch back to buying more US goods. High inflation, combined with the stronger-than-expected growth of the US economy, could force the US central bank, the Federal Reserve, to keep raising interest rates. They have already been raised 15 times, and now stand at 5%, partly on fears of a growing housing boom. But the fears of inflation are also likely to affect the interest rates on long-term bonds, which determine mortgage rates. The rising mortgage rates, while they may eventually dampen the housing boom, will also give a further boost to inflationary pressures. International exporters hit Meanwhile, foreign companies who have derived an increasing proportion of their sales and profits from the US market could also be hit by falling demand for their exports. The sharp falls in non-US stock markets, especially in Asia, are a response to this fear, with electronics and car companies like Toyota and Sony especially vulnerable. And that in turn could affect the growth rate of countries like China, who derive much of the growth in their economies from exports. But the Asian exporters also have another reason to feel vulnerable. As the value of the dollar falls, their reserves of the currency also reduce in value, as do the yields on the US Treasury bonds held by many of their central banks. In buying such bonds these governments are, in effect, underwriting the large US Federal budget deficit as well. This deficit is set to increase as the baby boomer generation faces retirement. The Asian governments and investors may be tempted to sell many of their dollar holdings in order to protect themselves - but this would have the effect of weakening the dollar further. And it would force the Fed to raise interest rates even more to protect the dollar. Countries like China are reluctant to massively revalue their currency - because it would make investing in China much more expensive and could deter valuable foreign investment. Managed float This problem with the dollar has happened before, in the 1980s, when it was Japan rather than China that was seen as the main threat. At that time, the main industrialised countries worked together for a managed currency float in an agreement called the Plaza Accord. The coordinated approach led to a managed decline in the value of the dollar, which then stabilised at a more sustainable level, supported by central banks. However, the current US administration does not favour such an approach, believing that the markets should be left to their own devices. And given the vast size of foreign currency markets today, it is doubtful that central banks could make such an effective intervention again. The downside for the US in the 1980s was that it was forced to enter into an international agreement with other governments that reduced its freedom to set its own domestic policy. But in the absence of such an agreement, it looks like the markets themselves are finally deciding that the US 'twin deficits' are no longer sustainable. And when the world's largest economy begins to look shaky, it is not surprising that confidence among financial markets is weakened around the world.
CML urges government mortgage protection..
Firstrung: The CML's pre-Budget report urges the government to increase support for mortgage borrowers
The Council of Mortgage Lenders today urges the government to increase support for mortgage borrowers who fall into payment difficulties and renew its commitment to sustainable home-ownership..
Good schools price premium falling...
Firstrung: House price premium for good school catchment areas falling dramatically - RICS
The RICS survey results show that despite high demand for property in good school catchment areas, the value-added-premium that potential buyers are willing to pay for the privilege is falling.
Tenant protection starts April 2007
Firstrung: Tenants finally get protection for rent deposits from 2007
The 2004 Housing Act requires those holding tenants' deposits to join a scheme that protects the deposits held as well as offer a remedy should a dispute arise concerning the deposit. The legislation will come into force in April 2007 and will affect members who are managing agents involved in the collection and retention of deposits made by tenants.
More trouble for the dollar
BBC: Dollar loses ground against euro
The dollar has plunged to its lowest level against the euro since April 2005 amid concerns for the US economy
An insight into our obsession with house (prices)
BBC: Why is it so expensive to buy a house?
It covers the usual stuff about population, single households etc, but also covers speculation.
Thursday, November 23, 2006
Some people in the Beeb are bearish!
bbc.co.uk: House prices 'set to fall 20%'
Over the past decade, the UK has enjoyed the longest sustained rise in house prices than at any time since the Second World War. Between April and June this year, the average price of a house stood at £154,503, compared to £65,025 in the same period in 1993, an increase of 138% - and more than the increase in house prices in the booms of the 1970s or 1980s. But forecasters at Capital Economics say the housing boom is unsustainable, and predict that there will be a house price crash with profound effects on the economy.
Why UK house price falls are inevitable
moeyweek.com: Why UK house price falls are inevitable
Because of our bearish long-term view for UK property, which we believe to be significantly over-priced at current levels, we have spent the past year wondering about the impact that the new pension rules would have on the property market because of the expected wall of money.
Millions indeed
ThisIsMoney.co.uk: Millions at risk over cheap loans
Mortgages & homes: Millions are said to be risking losing their homes after taking out unprotected interest-only mortgages as they stretch themselves to meet high prices...
Property fat cat cuts and runs
Yahoo: London ends lower in as property shares slip
The FTSE 100 has ended the day down 20.3 points to 6,140, as negative broker comment affected property stocks. British Land fell 2 per cent to £15.52 as investors reacted to news that the property company’s outgoing chairman, Sir John Ritblat, had pocketed £56.6m through the sale of stock. British Land was also pressured by an HSBC downgrade to “neutral” from “overweight”. Land Securities, which has risen 7.4 cent in the past month, was also hit by profit taking. Its shares closed 2 per cent cheaper at £21.74. Shares in Kensington Group plunged yesterday as the specialist mortgage lender admitted its profits were being squeezed by "intense" competition. Kensington was also hurt by fresh concerns over house prices sparked by influential Morgan Stanley economist David Miles, who voiced fears of falls in the next two years. The company's shares tumbled 100p to 805p, making it the biggest faller in the FTSE 350 index of Britain's biggest companies. Kensington specialises in the sub-prime market - such as the self-employed or those with poor credit histories. Paragon, the lender to landlords, got caught in the backwash, falling as much as 8 per cent at one point before recovering.
Attn: first time buyers, stop being so fussy
Firstrung: haart estate agents - "first time buyers are too fussy"..
Look what you could have won!... a one bedroom converted flat in Broadstairs, a studio flat in Hindhead Surrey, 2 bed properties in Swindon or Ipswich... There is a serious point in this communication from haart - be realistic, be flexible, do your homework, be ruthless with your offer/s... However, first time buyers are (for the most part) simply 'priced-out', not "fussy". A run down, converted, one bed flat, in an unattractive part of Kent for 95K may not represent value..it is as 'they say ' all relative...
City analysts think further IR rises unlikely
London Stock Exchange: nterest rates predicted to remain at 5%
Following the Bank of England's (BoE) decision to raise interest rates by 0.25 per cent earlier this month, economy experts are predicting that interest rates will remain at the current level into 2007. In response to the publication of the minutes from the BoE's monetary policy committee meeting, Global Insight states that conditions within the current labour market will limit wage increases, meaning the BoE is unlikely to raise interest rates further.
The Motley Fool looks at the hidden costs of mortgages
Motley Fool: Mortgages With Fat Fees
When most of us search for a new mortgage, or shop around for a remortgage, we tend to concentrate on headline rates of interest. However, although the interest rate (and how interest is charged, such as fixed, discounted, capped or tracker rates) is the primary concern of mortgage borrowers, you need to look beyond mouth-watering rates of interest.
New company launches non-advisory mortgage brokerage
FT Advisor: Advice-free mortgages launched
Mform, a new online mortgage business that bypasses intermediaries by linking consumers directly to lenders, is targeting a 1% share of the UK mortgage market in its first year of operation.
Fastest growing house prices in the world are in Latvia
Latvia heads league of rising house prices: The Guardian
Many UK homeowners will be delighted with the near-9% house price growth notched up over the past year, but their counterparts in the Latvian capital of Riga really have something to smile about: prices are up 39% from 12 months ago.
Scottish growth outpaces UK according to Lloyds analyst
Real Estate TV: Lloyds: Scottish house prices on the up
Scotland might have seen the last of this year's housing boom, but the property prices are defiantly still climbing all over the region. The Lloyds house price index showed that house prices in the country rose by 2.6 per cent in the three months to the end of October, bringing the average house price close to £145,593.
Parents, paying for their house price... twice!
Priced Out: Parents, paying for their house price... twice!
The current housing boom has thrown up many examples of strange, misinformed and irrational behaviour. One of the most stark examples of this is the increasing phenomenon of parents "releasing equity" to help their children onto the housing ladder.
John Ritblat dumps his shares
This is Money: Market report: Thursday latest
John Ritblat, chairman of British Land, disposes of most of his shares. I wonder why?
Survey says half of mew is ploughed back into home improvements
BBC News: House prices 'fund renovations'
More than half of English homeowners who raise money by borrowing against the value of their houses spend some of it on home improvements, a survey says. The government's Survey of English Housing found that 656,000 people borrowed an average of £33,000 each in each of the past three years.
Pension ages to rise to 68
BBC News: Hutton says pension age must rise
The state pension age has to be raised to 68 to avoid shifting the tax burden onto younger people, Work and Pensions Secretary John Hutton has warned.
Adopt the position?
Firstrung: Why have house prices soared so high and are they set to crash?
Apparently house prices could well fall at some point over the next couple of years. Now regular MoneyWeek readers will know that we've been expecting some sort of collapse for quite a while - but it's not just us who are saying it this time. No lesser authority than David Miles, Morgan Stanley's chief UK economist and former adviser to the Treasury, has reported that "a sharp fall in real house prices is likely at some point in the relatively near future." So why does he believe this? Miles believes that as much as half of the growth in house prices since 1996 (up about 187%, according to figures from Halifax) has been driven by speculation, with only half down to fundamentals, such as the supply and demand issues that property bulls keep citing. He's not sure of exactly when the slump will come, but seems to think it'll be pretty soon - "it could yet be one or two years away".
House market 'risks bursting'
Telegraph.co.uk: House market 'risks bursting'
The housing market is likely to burst within the next few years, a prominent economist and former adviser to Gordon Brown will warn today. David Miles, chief UK economist at investment bank Morgan Stanley, has written a report arguing that house price growth has been grounded in unrealistic expectations of double digit annual rises.
A falling Dollar AND a slowing economy!!!
Telegraph: Santa's little helper: a plunging dollar
The FEDs worst case scenario. How are they gonna protect the value of the Dollar if people are trying to get rid of it? Upping IRs in the face of a slowing economy will get Hank and Velma trading in their Ute just to keep breathing! Last night the pound hit its strongest rate against the dollar for 18 months. It jumped 1½ cents to $1.91 and could test the two-dollar mark in the coming months, economists said.
Spin beginning to unwind...
Firstrung: What's that coming over the hill is it a 'house price crash'?
It's always a dilemma creating a title for our latest newsletter, trying to get it to 'stick out' in your inbox amongst the 'spam offers' to; buy Viagra/Cialis (now available in patches apparently), buy junk American shares/stock, to meet Katrina from Latvia who has just found you on the net from an internet cafe and is 'dying' to meet you, to accept the re-finance loan you've been accepted for...in fact, here's a thought, why not do the lot? Meet Katrina, 'drop' (or stick on) Viagra, buy the junk stock with the secured loan you've been accepted for..live a little! Katrina may be impressed, for a night at least. Question; is it any more dangerous than buying a property this side of Xmas?
More Good News for Bears
Reuters: Cost of a mortgage surges by a third
The cost of paying a mortgage has soared by a third in the past three years, a study says. The average annual cost of meeting mortgage repayments has hit 6,284 pounds -- up from 4,711 pounds in 2003, according to mform, a new online mortgage company that launched on Tuesday.
The beginning of the end or just a seasonal tail off?
Reuters: Property sales fell sharply in October
LONDON (Reuters) - The number of property transactions in England and Wales fell sharply in October to their lowest level in more than a year, tax authority data showed on Tuesday. Revenue and Customs department said the number of property sales fell to 118,000 in October in seasonally adjusted terms from 147,000 in September. That was the lowest level since May 2005 when 117,000 sales were recorded.
The end of the rate rises?
City A.M.: Dissent at MPC over rate rises
"HOPES that interest rates may have peaked were boosted yesterday when it emerged that two members of the Bank of England's Monetary Policy Committee voted against this month's rate rise, with deputy governor Rachel Lomax a surprise dissenter."
Commerical market booming
London Stock Exchange: UK property 'to continue prospering'
While the UK housing market may be set to burst, the commercial scene is looking healthy.
Internet key to house buying
What mortgage: Is homebuying stepping up a gear?
The days of plodding from estate agent to esate agent and mortgage lender to mortgage lender are over. Sit back, switch on, and get surfing.
Beginning of the burst?
BBC News: Scots house offers over the odds?
Following a top economist's warning that the house price bubble is set to burst, property prices in Scotland are branded "over the odds".
In defence of Abbey mortgages
City Wire: Why five times one still adds up
Abbey's mortgage offer of five times salary is defended. When lending is done responsibly, it is a way onto the property market for young professionals who have healthy salaries.
Buy-to-let boosts mortgage lenders
Reuters: Paragon eyes UK buy-to-let top spot as profits jump
Thanks to the buy-to-let market, business is booming for mortgage lender Paragon. Annual figures are healthy thanks to demand from "immigrants, students and young professionals".
House price halt
Scotsman: House prices set for serious slow down, says report
Top Morgan Stanley economist warns of imminent slow down in house prices - brace yourselves for a "sharp fall".
Have patience renters
Daily Mail: Housing market at risk of bursting
Britain's booming housing market is on the brink of a major collapse, a former Government adviser has said.
Wednesday, November 22, 2006
Yvette Cooper shames Ruth Kelly on housing
In2Perspective: Yvette Cooper shames Ruth Kelly on housing
Nice quote in here: "In time the Government's Homebuy scheme will be seen as the housing market equivalent of offering cut-price tickets aboard the Titanic."
World property price growth slows
Home.co.uk News: House price growth slowing around the globe
Global house price inflation has continued to slow from the peak levels reached in 2004, reports Knight Frank...Estate agents Knight Frank released their Global House Price Index for the third quarter of 2006. The report's main finding is that price growth has slowed in 21 of the 32 residential markets reviewed. Average global house prices were growing by 8.4% year-on-year at the end of September 2006 down from 10.9% a year earlier.
On the front page of the BBC site!!!!!
BBC: House prices 'set for slowdown'
A well posted story but significant this has reached the BBC. The UK's rampant house price inflation is likely to slow down dramatically in the next year or two, according to a former government economic adviser. The prediction comes from David Miles, the Morgan Stanley chief UK economist.
7% house price growth in 2007?
Firstrung: House price growth to be 7 percent in 2007 - Savills research
Savills Residential Research has forecasted 7% growth in average UK house prices for next year and substantially more in the London and South East markets. The forecast assumes that interest rates will peak at 5.25% but Savills say that, even with further rises, there would still be room for further value growth - albeit at a reduced rate. This reflects a departure from conventional thinking on property values as they say that the extremely supply-constrained market in most parts of the UK puts additional upward pressure on prices - even when traditional measures of affordability look strained
The rain in Spain..or the reign in Spain of the equity tourists...
Firstrung: Halifax advice on buying property in Spain
Good advice here from the Spanish arm of the Halifax in relation to buying property abroad...Our suggestion (for what it's worth, as we do not proclaim to be experts on the subject) is anyone considering buying in Spain, in the usual suspect places, needs to take a deep breath and count to ten - perhaps ten years for the absurd prices and drastic over development to have its full impact..As for the 'equity wealthy' borrowing v their main residence to then buy abroad....
UK house price inflation set to slow down dramatically
BBC: House prices 'set for slowdown'
The UK's rampant house price inflation is likely to slow down dramatically in the next year or two, according to a former government economic adviser.
MPC minutes released
BBC: Bank voted 7-2 for rate increase
7 to 2 - It ain't just Blanchflower
The case for affordable rural housing development
BBC News: Rural housing: Only for the wealthy?
More and more people are following their dream and moving out of the urban areas, either in pursuit of a much-vaunted lifestyle idyll or to invest in a second home. It is no coincidence that at the same time, local people are deserting the villages where the houses once occupied by their parents and grandparents have become too expensive for them.
FTBs share their experiences with the BBC
BBC News: FTBs; Reader's Panel
4 first time buyers from Kidderminster, Southampton, Liverpool and Surrey discuss their experiences and talk about the type of mortgage they have.
Price increases mean only 1 in 33 FTB's escape stamp duty
Telegraph: Fewer than one in five homes escapes stamp tax threshold
Relentless house price inflation means that fewer than one in five properties now escapes the £125,000 stamp duty threshold, new figures disclosed last night.The threshold was doubled from £60,000 only 18 months ago by the Chancellor and then increased again earlier this year to help first-time buyers to get a foot on the property ladder.
Former advisor to Gordon Brown predicts crash
FT.com: Housing bust ‘likely in next few years’
A housing market bust is likely within the next few years because house price growth has been grounded in unrealistic expectations of double-digit annual rises, a report by a prominent economist and former adviser to Gordon Brown will warn on Wednesday.
Gordon Brown gets a warning about house price crash
Telegraph: House market 'risks bursting'
The housing market is likely to burst within the next few years, a prominent economist and former adviser to Gordon Brown will warn today.
House price crash warning
This is Money: House price crash warning
The housing market may be heading for a sharp fall, a leading expert will warn today. Economist David Miles says property prices will probably drop dramatically in the next few years.
Lloyds TSB Study predicts Scottish housing market to 'gently subside'
BBC News: 'Brakes on boom' in house prices
Scotland's housing boom may have ended but prices are continuing to rise, a report has shown. The Lloyds TSB Scotland House Price Monitor found annual increases ranged from 8% in Glasgow to 15% in Aberdeen.
Hometrack predicts 4% house price rise next year
Mortgage Solutions: House prices ‘to rise 4%’ over 2007
Average UK house prices are forecast to rise by 4% over 2007, Hometrack has reported. According to Hometrack, the rise would be supported by low levels of housing turnover and prices being set by the ‘haves’ already on the housing ladder. It said London and the South East were expected to remain the primary engines for growth with prices being driven by a continuing supply/demand imbalance.
Housing market on the brink
Breaking News: UK housing market bubble at 'risk of bursting'
Gordon Brown will be advised today that the UK housing market will face "significant falls" in the next year or two. The massive increase in house prices hasn't been matched by salaries, and the time has come for the "bubble to burst".
UK millionaires can't afford Monaco
Firstrung: Monaco closes the real estate door on some UK millionaires
Monaco - famous for its fast cars and beautiful people - is becoming increasingly out of reach for even the richest UK property investors. A studio apartment can reach up to $1m in the tax haven.
UK market preferable to eastern Europe
Citywire: Barings avoids eastern Europe for its property fund
Barings asset management fund invests in UK property instead of joining the rush to bag eastern European bargains, hoping to cash in on the "strong demand from overseas investors".
Estate agent crack down
BBC News: Bill to curb bad estate agents
Dodgy estate agents be warned - the government announces new plans to regulate the profession.
Ere We Go - Housing Bust 'LIKELY IN NEXT FEW YEARS' - FORMER BROWN ADVISER
Financial Times: Housing Bust 'Likely in Next Few Years'
A Housing market bust is likely within the next few years because house price growth has been grounded in unrealistic expectations of double-digit annual rises, a report by a prominent economist and former adviser to Gordon Brown will warn on Wednesday. Throwing cold water on the current housing market euphoria, David Miles, chief UK economist of Morgan Stanley, says it is only possible to explain the more than doubling of house prices in the past decade if people’s demand for housing has been heavily influenced by expectations that the rapid price rises would continue. Chris Giles - Financial Times
Tuesday, November 21, 2006
Mortgage cost climbing
Reuters: Cost of mortgage surges by a third
The cost of a mortgage over the last 3 years has soared by a third, says a new study. Yet our salaries haven't... Something doesn't add up,
Sterling stable
Reuters: Sterling steady ahead of UK mortgage lending data
Sterling is steady against the Euro and Dollar, as investors wait for October mortgage data.
Campaigners tackle housing issues
BBC News: Campaigners tackle housing issues
Part of the new BBC special report into housing. Looks at a number of campaigns tackling various housing issues, including PricedOut.org.uk who get top spot.
UK spa towns give fast returns
Letting News website: Buying Property in UK Spa Towns is a Good Move
New research reveals that property in the UK's 18 spa towns is giving fast returns. Snap up a bargain and reap the rewards.
Jokes invited
BBC: US aims to relaunch dollar coin
Like: surely a dollar coin would be worth more on the scrap metal market - and, I don't fancy pushing a wheelbarrow full of those to the supermarket for a loaf of bread!
Keep the faith - looks like BBC changes tack!
BBC News: Special Report: Housing UK
Just as everyone on the forum was getting HPC fatigue - the BBC start showing signs of producing HPC articles themselves. Result!?
ECB warns of inflation complacency
ECB calls for inflation vigilance: BBC News
The president of the European Central Bank (ECB) has warned that rising inflation fuelled by oil prices remained a concern in global markets. Jean-Claude Trichet said that while the global economy was set for "dynamic growth" in 2007, there was "no room for complacency" over price rises.
Credit card borrowing declining in favour of mortgages
The Herald: Big demand for mortgages as credit card borrowing falls
UK mortgage lending remained robust last month, but consumers' borrowing on credit cards fell for the sixth straight month, industry figures showed yesterday. Seasonally-adjusted figures from the British Bankers' Association showed mortgage lending by the big UK banks rose by a net underlying £5.5bn last month.
New study assesses costs of keeping a mortgage
IFA online: True cost of a mortgage rises 33%
The true cost of servicing a mortgage has increased by a third is just over three years according to research from new online mortgage company mform. The company which launches into the mortgage market today say the average annual cost of a mortgage is around £6,284, compared to £4,711 three years ago.
Co-Op follows Abbey in offering 5x income multiples
BBC News: Co-op offers five times mortgages
The Co-operative Bank has become the latest mortgage lender to offer loans that are calculated at up to five times a customer's income. At the beginning of November the Abbey, the country's second largest lender, attracted widespread attention for a similar deal. The Co-op said it was stretching its lending criteria so borrowers could keep up with rising house prices. It said the offer was aimed at people with stable jobs and incomes.
Nice to see an MP that has some sense. Baby Boomers take note.
David Willetts MP: THE CLASH OF GENERATIONS, A Speech to Policy Exchange by David Willetts MP, Monday, 28th November 2005
First, personal financial assets are skewed most heavily towards the older and the rich. The top quarter of 50-69-year-olds own 84% of all the financial wealth held by that age group. Having built it up rapidly in their 50’s and early 60’s it is then run down quite fast to boost incomes in retirement. Amongst young people home ownership is an aspiration as strong as ever but one that seems harder and harder to fill. There is a fortunate generation of baby boomers who got into the housing market in time to enjoy the enormous appreciation of the past 15 years but it is going to be a longer, slower, and more painful process for the younger generation to achieve home ownership.
An old one, never posted before and from the golden days of VI housing market ramping. Things have only got worse since.
BBC News: UK 'empty nesters' top cash table
Analysts say this post-war baby boom generation has reaped the rewards of better job prospects, having their families early, and high house prices. "Generally, the boomers are better paid than previous generations and have had their families early," Andrew Russell, the report's author, told BBC News Online. "Their children have now left home early, relieving them of a huge expense," Mr Russell added. And the strength of the UK housing market means British early empty nesters are enjoying more spending power than their European counterparts, the report said. "Many Britons have owned their homes for 30 years and have benefited enormously from house price increases."
So not all Baby Boomers have the same negative attitude to the younger generation as Casual Observer then!
Reform: Two-thirds of voters think that today’s young people find it more difficult to get a start in life than their parents’ generation
A new report today paints a bleak picture of the economic position of young people in the UK and warns that their position will worsen significantly unless radical action is taken. The report – Class of 2006: a lifebelt for the IPOD generation, published by the independent think tank Reform – shows that a combination of rising taxes, student debt repayments and pensions contributions will give the average graduate aged 21-35 an effective tax burden of nearly 50 per cent early in the next decade. · A very large majority of all voters (65 per cent), and clear majorities in all age groups, think that it is now more difficult for younger people to get started in life than it was for their parents. Only 11 per cent think that today’s young people find it easier. · 70 per cent of voters agree that a key factor determining the success of the economy is the initiative and talent of young people. Again, clear majorities of all age groups agree. · Taken as a whole, a majority of voters agree that the tax burden on young people is unfair (50 per cent agree, 45 per cent disagree). · There is clear concern over political parties’ current efforts to address the economic position of young people. A clear majority – 52 per cent to 39 per cent – thinks that none of the political parties are setting out new ideas to improve the economic position of young people. Only people over 65 disagree. Young people are by far the most likely not to identify, to any extent, with any political party.
Telegraph discussion - September but not posted before
Telegraph: Should young people give up on owning a home?
The Bank of England has acknowledged that house prices have risen faster than expected so far this year, with the average cost of a home now exceeding £200,000. Is it financial prudence or collective madness for young people to plunge themselves into exorbitant levels of debt to buy a house? Any youngster with any sense should be looking at getting out of this crime infested hell hole of a country while the goings good. In years to come no one will want to live here anyway the way things are going and house prices will tumble. The creation of a new underclass, who have no hope of ever getting on the property ladder, is a direct result of Labour policies, with some assistance from Brown's "independent" Bank of England. The Baby Boomers were born at the most opportune time, have accumulated the overwhelming majority of the wealth, and are now busy pulling the ladder up behind them. This applies not just to housing but also to pensions. Shame on you boomers! To First Time Buyers: DO NOT get involved in this market...it is a ponzi-scheme built on funny money and a lies, and it will implode.
Boomers have it far easier than the Ipod generation
Propertyinvesting.net: UK wealth and cultural differences within the age groups – investors take note
The post war generation of baby-boomers (more 1946 to 1962) were bought up in an austere post-war environment of rising unemployment, closing of heavy industry and increasing competitiveness. Many, taught by their parents, did not take anything for granted and worked hard to get themselves up the social ladder – out of the slums, into the middle-classes. This all sounds rather historical and old fashioned, yet this psyche led to rapidly increasing wealth, living conditions, deposable incomes and retail spending. The Thatcher years created a bunch of hard working, keenly competitive workers – aspiring to climb a social/wealth ladder. Increasing borrowing led to the current sustained housing boom over the last ten years – where prices have tripled. Most of this wealth of some £1 Trillion now resides with the baby-boomers. Some of these even went into buy-to-let, helping to drive asset prices further up – and out of reach of the younger first time buyers. Many of these younger generation have now been forced to rent because of the high costs of stamp duty, deposit, fees and mortgage payments on high capital borrowing.
For all the baby boomers that say the younger generation have it easier
Reform: Class of 2006 - A lifebelt for the Ipod generation
Last year the independent think tank Reform published the first analysis of the impact of tax, public expenditure and higher education policies on young people under 35. The research outlined the difficult economic position of the young and explained how this constituency has been unfairly burdened both by the actions of successive governments and by a general unwillingness to assess how policy decisions affect the financial prospects of the younger generation. It termed young people the IPOD generation: Insecure, Pressured, Over-taxed and Debt-ridden.
One for the boomers
Will the baby boomers be better-off than their parents in retirement?: London School of Economics
The paper concludes that although many of the 1960s baby boomers will be better off in retirement than their parent’s generation, there is evidence that the poorest baby boomers have benefited relatively less from recent economic growth than the cohort on average, reflecting widening inequality within the cohort. The increasing emphasis on the individualisation of risk means that incomes in later life are likely to be more rather than less unequal in the future, with the result that some baby boomers may well fare a less secure retirement than their parent’s generation.
Old but wasn't posted before, still relevant today
The Times: Anxious life of the 'Ipod' generation
THEY should be Britain’s gilded youth, enjoying opportunities to study, travel and embark on exciting careers in a way previous generations could only dream about. But instead they are the “Ipod” generation — “Insecure, Pressured, Over-taxed and Debt-ridden” — according to a study by Reform, the think tank, to be published this week.
Risk grows for FTBs
BBC website: Risk grows for FTBs
FINALLY!!! BBC allows someone to stop people getting caught in the madness. I already emailed him Julian.Knight@bbc.co.uk and told him well done. Perhaps others might like to. It can be lonely for a contrarian journalist. He responded with thanks and appreciation.
Inside Track eNewsletter BTL Propaganda
Inside Track: Don't be fooled by IR rises
A very big VI in the BTL sector. Talk about snake oil salesman - his view is don't worry about cashflow it's all about er capital gains...which is fine if you can remain solvent long enough!
INFLATE OR DIE ! (say estate agents, land owners, and 'new economy' nutters)
The Daily Reconing: A Japan style deflation for the UK?
More on the 'inflate to stop deflation' maddness of the 'new economy' evangalists.
Would you like a loan?
Leeds Evening Post: Banks plan summit over UK debt crisis
...would you like another loan? Would you like another credit card? Would you like to consolidate those loans in to another loan? Would you like to get an IVA for a hefty fee? Would you like to go bankrupt? Would you like to move out of that house - it's not your's any more, nor is the plasma screen TV, the BMW and the SMEG cooker. Would you like to consider you may have spent a little too much of other peoples money?
Why the hell is this news? People have been borrowing this for years
BBC News: Co-op offers five times mortgages
The Co-operative bank advertises its new deal. The Co-operative Bank has become the latest mortgage lender to offer loans that are calculated at up to five times a customer's income
Risks grow for first-time buyers
BBC News: Risks grow for first-time buyers
A country divided between housing haves and housing have-nots. Each time a new house price survey is published - almost inevitably showing prices rising to a new record high - you can almost hear the groans from Britain's army of would-be first-time buyers.
Cracks appearing in the market? Probably not....
Times Online: First signs of property market weakness
The first signs of weakness in the housing market started to filter through last month with building societies reporting net mortgage inflows were down 6 per cent on the last year to £772 million while consumer confidence in the market had also slipped. However, today's data indicated that the property market remained robust despite the first tentative signs of a slowdown.
More on Inflation v deflation
safehaven.com: Inflation or Deflation?
A bit of a gold plug at the end - but a good read... "Nobody is going to "win" this deflation vs. inflation debate. We will all suffer. There will be wide-spread "flation" all over the place, and nobody will care whether this "flation" is of the "in" or the "de" flavor."
RIsks grow for 1st time buyers
BBC: Risks grow for first-time buyers
Beeb article on the risks 1st timers are taking in their panic to get on the ladder
XMAS Spending? Well IVA's to made easier!!!
MSN: Will it be a merry christmas for the high street?
Article tells us nothing new , except people in debt and they expect spending to be low. Can anyone help as the article outlines plans to make IVA's EASIER????? Are they not too easy already & immoral. Why should I as a saver pay for other debts? What can we do?
Mandleson....
Firstrung: Mandelson takes another step up the greasy property ladder
It's always other people who seem to rise up the property ladder without a hint of vertigo. Peter Mandelson has just bought a lovely £2.4m villa in Regent's Park even though it is only eight years since he had to resign his cabinet post when it was revealed he had borrowed £373,000 from Geoffrey Robinson to buy his Notting Hill home for less than half a million.
Sink estates have stopped sinking - Joseph Rowntree foundation
Firstrung: Council estates, twenty five years on sees huge turnaround for twenty most unpopular estates
Twenty-five years ago, they were unpopular council estates, suffering from poor management, dilapidated environments, bad reputations and high proportions of empty homes. Today, after spending on homes and environments, more intensive neighbourhood management and long-standing community involvement, most of them appear to be turning the tide. This is according to a major report covering 25 years on 20 estates in London, the Midlands, the North East and North West, by the London School of Economics for the Joseph Rowntree Foundation.
Never-ending debt hits 2m
Daily Mail: Never-ending debt hits 2m
Two million people have borrowed so much they will never escape their debts, experts warned yesterday. These debtors - equal to more than double the population of Birmingham - can only just manage to make their minimum monthly repayments on loans and credit card debt. How much longer can this fiasco go on, some regulation is surely needed now.
Monday, November 20, 2006
inflation vs deflation “is THE question
dollarcollapse.com: THE Question
By now, pretty much the whole sound-money community agrees that humanity in general and the U.S. in particular are headed for seriously hard times. But exactly how we get from today’s illusion of prosperity to tomorrow’s financial Armageddon is a tougher call. Will the global economy collapse under a mountain of debt as in the 1930s, or will central banks run the printing presses until hyperinflation vaporizes most fiat currencies? As Sprott Asset Management’s John Embry recently put it, inflation vs deflation “is THE question, really.”
How bad the situation is in the US
Atimes: Hard US lessons, harder landings
Excellent piece summarising the problems in the US housing market and the debt mountain.
Inflation v Deflation
itulip.com: No Deflation! Disinflation then Lots of Inflation
There will be no deflation. I repeat: there will be no self reinforcing spiral of debt defaults, an irreversible collapse in the money supply and a decline in the general price level. Central banks will never again allow short term interest rates to fall below the rate of inflation, nor fail to supply sufficient liquidity to meet the demands of financial markets. There will be no repeat of a 1930s US depression or the grinding 1990s Japanese deflationary recession. Instead, we will experience something new, with elements of deflations, and inflations and stagflations past – rhymes of past verses of economic misfortune – but unlike any of these past episodes except equally unpleasant. I call this new process "Ka-Poom Theory."
Confidence slipping
Firstrung: Confidence in the housing market slipped in November as buyers and sellers absorb base rate rise impact
Confidence in the housing market slipped in November as home buyers and sellers absorbed the news that base rates had risen to 5% and that further increases may be on the way. On average, respondents to propertyfinder.com's November survey expect house prices to rise 5.2% over the next 12 months, down from 5.5% in October.
Mortgage lending down
Firstrung: Mortgage approvals down nine percent in October
Higher borrowing costs appear to be beginning to have a dramatic effect on the UK's housing market, a leading industry group said today. The Building Societies' Association has revealed that the number of mortgage approvals, on a seasonally-adjusted basis, fell by 9 pct in October (from the previous month) to 4.3 bln stg.
Property Pornfest at the BBC
BBC "News": Why home is where the heart is
Property ... ngggggh ..... oooh aaaah .... nggggh ........ ummmmm ..... nice ... etc,. etc.
Summary of the housing situation today in UK and Europe
BBC News: Homes In The UK
Of the 25 million homes in the UK, about seven out of 10 are owner-occupied. The number of home owners has risen by more than one million since 1997 alone. House prices have been booming for more than a decade - almost tripling since 1996. The sharp increase has far outpaced wage rises. It has led to fears that many people will not be able to buy a first home, or a larger one. The typical first time buyer is now 33-years-old and takes five years to save the average £24,000 deposit (rising to £44,000 in London). It is thought that four out of 10 people buying a first home now rely on parental help. A shortage of homes has contributed to high house prices. In England, about 155,000 new households form each year, but as few as 120,000 homes are built. UK homes are among Europe's most expensive, but spending on housing as a share of income is fairly low - one fifth, compared to quarter in Germany and a third in Spain.
Is sentiment changing?
Firstrung: Confidence in the housing market slipped in November as buyers and sellers absorb base rate rise impact
Confidence in the housing market slipped in November as home buyers and sellers absorbed the news that base rates had risen to 5% and that further increases may be on the way. On average, respondents to propertyfinder.com's November survey expect house prices to rise 5.2% over the next 12 months, down from 5.5% in October.
Gross mortgage lending up again..
Firstrung: Mortgage lending hits new record in October, up 12% compared to 2005
Gross lending hit a new monthly record in October of £30.3 billion, according to the latest data from the Council of Mortgage Lenders. Lending was up by 4% on the September figure of £29.2 billion, but down by 8% from the overall record of £33 billion in August. Lending was up 12% in comparison to October last year (£27 billion).
Foxtons calling the top of the market?
TimesOnline: For sale: Foxtons to offer its shares in £400m float
The plans for a share listing, which are said to be at an early stage, come at a time when property prices, particularly in London, are reaching record levels.
Could be messy!!!
Times: The deflation threat facing Europe
When I ask businessmen or investors about their biggest economic worry at present, they almost invariably put the housing-related slowdown in the American economy at the top of their lists. More recently, there has also been concern about the unexpected weakness of consumer demand in Japan. Much less widely noticed, but arguably more important, especially for British business, are newly published European statistics that show growth slowing sharply in Germany and coming to a standstill in France.
Lenders using supermarket psychology says academic study
Sunday Herald: Mortgage borrowers fall for 'supermarket-style' rates
Everyone knows about the old sales trick, where a supermarket prices an item at £4.99 instead of £5 so that it seems cheaper than it really is. We all like to think we are too smart to fall for that particular ruse. Yet hundreds of thousands of mortgage borrowers are taking out home loans from lenders who use exactly the same ploy to persuade them that their deals are better than their rivals’.
Lenders quick to raise standard variable rates in line with BoE changes, not so quick to apply changes to savings accounts
Times Online: Mortgage lenders accused of using rate rise to boost profits
Leading mortgage lenders in Britain have been accused of exploiting interest-rate rises to boost profits while failing to pass on the benefits to savers. Vince Cable, the Liberal Democrats’ Treasury spokesman, has accused the banks of “bolstering their very generous profits” by magnifying interest-rate increases for borrowers but delaying corresponding increases for investors.
Sustained price increases in Greater London keeps overall growth high for October
Reuters: UK house prices up 12.4 pct y/y in Nov -Rightmove
House prices in England and Wales rose at their fastest annual pace in 2 years between October and November to surge to a record high, a survey showed on Monday, indicating higher interest rates have yet to dent the market.
House price rises decelerating?
Times Online: Rising interest rate brings autumn chill to housing market
Rises in house prices have slowed and confidence in the housing market has receded over the past month as it digested the implications of the Bank of England’s interest-rate rise, two studies published today show.
Sunday, November 19, 2006
European Mortgage Federation sees little prospect of a European house price crash
Reuters: Europe's housing market is built to last
Expected interest rate rises will not cause significant damage to Europe's housing market, even though small cracks are starting to appear in parts of Spain and Ireland where supply has surged, property experts say.
Interest rate hike may take the steam out of debt-backed property speculators
Sunday Times: Propety Tycoons Who Owe Billions
The commercial-property world has been on a huge borrowing spree since 2000. Research from De Montfort University, to be published next month, shows that by July this year the sector owed a record £176 billion, up 12% from the £157 billion at the end of 2005.
Aah, the good old days...
Scotland on Sunday: Comparing the generations
Two articles by the Scotsman basically saying the older generation had it good, while we young 'uns are screwed. Geoff and Denise, buying in 1978, faced discrimination, high interest rates, low multiples, and high deposit requirements before they could get a mortgage. However, house prices were much lower. The average house price was £15,470, three times Geoff's income. After a 10% deposit this would have cost £145 monthly. Mortgage rates were 12.5%, but tax relief brought this down to nearer 8%. Utility bills and council tax were also much lower. They bought as high up the property ladder as they could afford, and their house has now increased in value 12x. Geoff is looking forward to a fat pension with no mortgage to pay. Geoff's son Gordon emerges from college with £20,000 debt. His salary is huge compared to what his dad earned in the 70s, but although things like food and electronics have come down in price, the overall cost of living is higher. If Gordon can rustle up enough of a deposit, he can look forward to 50 year mortgage chewing up over half his salary each month. The younger generations have lost their fear of debt and easy availability of credit means he will also rack up unsecured debts in loans and credit cards. Gordon will struggle to find a good final-value pension scheme like his dad, and has to wait till 68 before he can reaches the state pension age.
Unbelievable Article
The Sunday Times - Review: Housey housey is a mug's game
Considering who this is by this is amazing: "Last week I found my daughter weeping in the kitchen. This isn’t that unusual — she is 15 — but the cause of her distress wasn’t boys or exams or pimples but, “Mummy I don’t think I will ever get on the property ladder.” "I think the sooner we realise that an Englishman’s home is not his castle but his tastefully decorated, original-featured prison the happier, more interesting, less predictable, more enterprising we will be as a nation.Property isn’t just theft. It is grievous bodily harm as well"
FTBs buying abroad, we don't believe you...
Firstrung: Are first time buyers really looking abroad to get on the first-rung?
The Firstrung team always struggle with the logic that 'priced-out' first time buyers are rushing to former remote parts of Europe to set up home simply to get onto that much fabled first-rung. The anecdotal urban myths are beginning to sound a little worn by now, you know the script; "Riga, capital of Lativa, has experienced 30% growth in the past year....buy now before you lose out!" Lose out on what exactly, a 12 hour commute to work, or is the image being peddled that we can all work anywhere in Europe on UK wages if we have access to broadband and a laptop? What nonsense.
Does monetary policy still work? Or have the brakes failed?
NZ Herald: Losing his grip
Notice any paralells with the UK economy? "For a Reserve Bank Governor trying to cool the housing market and curb the shopper's enthusiasm, the news this week was all bad"
Saturday, November 18, 2006
A picture is worth a thousand words.
Safe Haven: The Coming Collapse in Housing
"The housing bubble is gigantic and will burst before long with massive implications here and abroad. In fact, it's the key to the global economic outlook." Graph-heavy blog to aid post Sunday lunch digestion - a picture is worth a thousand words.
Land reg house price figures explained
Firstrung: Land Registry house price index - why repeat sales regression is the best method of comparison
Repeat Sales Regression uses "unique comparables" - comparing the value of a property to itself over time. It says that the value of all of the characteristics of a property is wrapped up in the price someone will pay for it. After all, that's really the only measure of value which counts. This means that if we know what a property sold for in the past, and what it sold for recently, we can know what the change in value of the combination of characteristics that make up that property over time.
How Primark may push house prices
Times: How Primark may push house prices
One can only assume that Savills are looking to sell or float their business with "reports" such as this. The new willingness of the middle classes to sport a £25 Primark winter coat may mean that the homes market even picks up pace in the South East, where Savills forecasts a 15 per cent rise
Commodities low is a good buying opportunity
Bloomberg: G-20 Recognizes Oil Investment Need, Flaherty Says
The world's energy needs will surge by a quarter by 2015 and 50 percent by 2030, according to the Paris-based International Energy Agency. For those people with cash waiting to buy in 2011 - commodities could be a decent bet.
Gold steady as other commodities drop
The Independent: Metals and oils plummet amid US growth fears
In "normal" downturns gold follows the commodities index down. If people think there is something much more severe ahead (deep recession/currency crisis) then gold goes in the opposite direction. Watch this trend closely over the next month or so.
US recession fears grow
The Telegraph: US housing 'caught in death spiral'
US housing construction tumbled 14.6pc in October to a six-year low and building permits slid for the ninth consecutive month, dashing hopes for quick end to the economic slowdown. Yields on 10-year Treasury bonds fell sharply to 4.6pc on recession fears, though the Dow Jones index of leading stocks continued to probe record highs - a contradiction that left analysts scratching their heads.
bbc listen again.
the now show - bbc.: The now show
cannot really post this, but this week's now show has funny take on the bbc money section, british attitudes to housing, and tesco and their 50 year mortgages. have a chuckle.
Friday, November 17, 2006
Government prepares bill to tighten estate agent's code of conduct
Guardian Unlimited: Estate agents face compulsory watchdog scheme
Estate agents will be forced to join an independent ombudsman scheme and keep records of their dealings with buyers and sellers for six years, under plans put forward today by the government.
Bank of England expects inflation to rise further but has no plans for another interest rate increase
Reutrers: BoE's King-Inflation to rise before falling to target
British inflation will likely rise further above its 2 percent target in the near term before falling back to meet it, Bank of England Governor Mervyn King said on Thursday in a speech that repeated comments in the Inflation Report.
Hamish McRae discusses what impact rising interest rates wil have on the rest of the economy
The Independent: Higher unemployment, inflation and interest rates. But does it matter?
Yesterday the news was higher unemployment; the day before it was higher inflation; and last week it was higher interest rates. That does not sound too great, does it? Is this serious or is it the usual mix of economic news you would expect at this stage of the cycle?
FSA concerned some lenders not properly assessing mortgage affordability
IFA Online: FSA raises concerns over higher income multiples
The Financial Services Authority has raised conFSA concerned some lenders not properly assessing mortgage affordabilitcerns the move to higher income multiples on mortgages and a possible change in economic circumstances could result in more consumers falling into debt.
Nationwide revises 07 house price inscreases
Guardian Unlimited: Nationwide predicts house prices to rise 5-6% in 2007
Britain's biggest building society today predicted that house prices would rise by 5-6% in 2007. Nationwide also said it expected prices to end this year up 8%.That was an upwards revision of its forecast in August that they would rise 5% this year, which was itself an increase on the previous prediction of 0%-3% annual growth.
Who'd have thought it, we want to live somewhere 'nice'
Firstrung: Home buyers are prepared to pay a premium to live in a spa town
The great British public prefer spa and market towns to 'sink estates' - Halifax. In tomorrow's news house prices have gone up 300% in a decade...
FTB numbers up? Enquiries/applications certainly are...
Firstrung: First time buyers 'bounce back' in October - NAEA
First time buyers made a dramatic return to the housing market in October increasing their market share to an encouraging 16.4%; this is up from 11.1% in September. This is the highest percentage of first time buyers reported since April 2005 when first time buyers accounted for a healthy 23.6% of the market. This increase could be akin to a slow down in the market with first time buyers taking advantage of a decrease in buyers on books. However, the interest rate rise will certainly work against this vulnerable sector.
house price rises
nottingham evening post: house prices to rise %50
house prices to rise %50
Thought you were safe in a public sector job?
Daily Post: Axe to fall on 350 Revenue jobs in ‘devastating’ blow
HUNDREDS of public sector jobs will be slashed in North Wales under a Government cost-cutting plan announced yesterday. Around 350 people will lose their jobs in North and Mid Wales, with 1,000 across Wales as a whole.
Thursday, November 16, 2006
Banks told to predict effects of a 40% crash in house prices
Timesonline: Banks told to predict effects of a 40% crash in house prices
BANKS in the UK have been ordered by financial regulators to assess how they would cope in the event of house prices crashing by 40 per cent.
Where should yor money be, property or equities?
Cheshire: Is the property market still a better investment prospect than equities?
The stock market has had a good run in the last few weeks, while the prospects for the property market remain unclear in the light of last week's interest rate rise. So what should investors be doing now? Should they be considering switching their money from property investments, or does some degree of diversification between different types of asset still make sense?
First penthouse sold in Norwich for £1 million - more to follow
Norwich Evening News: Coming soon: Average house price for Norwich £1m
The average house price in Norwich will reach the £1 million mark in just 16 years' time. Two months ago the first £1 million penthouse was sold in the city and snapped up by a mystery buyer.However, according to one of the country's biggest building societies, such seven-figure deals will become the norm in Norwich by 2022, two years ahead of the majority of the United Kingdom.
UK's fastest rising house prices in Ulster
Belfast Telegraph: Ulster house prices fastest rising in UK
House prices in Northern Ireland rose faster than anywhere else in the UK last month, it was revealed today.
House prices crash...into the sea!
Bloomberg: Homes Dangle on English Cliffs as Global Warming Erodes Shore
With global warming forecast to hasten the sea's encroachment, the government estimates that 140 billion pounds ($267 billion) of homes, roads and businesses are at risk. Phyllis Tubby bought her home 20 years ago so she could live near the sea. Now, the cliff is just a few yards from her fence. A nearby house is worth one pound, and three doors away Diana Wrightson has closed her tea shop.
October sees fastest house price rise in 4 years
Guardian Unlimited: October House Prices rise with demand
House prices rebounded in October to rise at their fastest rate in more than four years, suggesting potential buyers were not put off by August's base rate rise, surveyors said today.
Mortgages boost Nationwide profit
BBC News: Mortgages boost Nationwide profit
Nationwide, the UK's largest building society, has seen its profits rise by almost a third, boosted by a 50% increase in mortgage lending.
Ten year fixed rate mortgage from Leeds Building Society
Money News: Leeds Building Society Ten Year Fixed Mortgage Launched
Leeds Building Society has launched its new ten-year fixed-rate mortgage aimed at first-time buyers who may be struggling to get a foot onto the property ladder.
Upbeat appraisal will be reversed just before next MPC meeting!!!
BBC: UK retail sales in surprise surge
British retail sales rose more than expected in October, increasing at their fastest pace in almost a year, official figures have shown. Sales jumped 0.9%, three times more than analysts forecast, and the biggest monthly gain since November 2005, the Office for National Statistics said.
Banks warned of 'end to good times'
Guardian Online (this morning): Banks warned of 'end to the good times'
The regulator believes banks should consider the impact of a 40% fall in property prices and a 35% increase in the repossession rate
House prices surge toward a ‘tipping point’
The Move Channel: House prices surge toward a ‘tipping point’
Doug Shephard, director of Home.co.uk laments that just as the scene was set for affordability to be improved for first-time buyers a wave of market confidence has turned the tide again. This time though, suggests the cautionary tale, we may be on the verge of a nasty surprise…
Not a prediction, but banks not making enough provision
The Times: Banks told to predict effects of a 40% crash in house prices
BANKS in the UK have been ordered by financial regulators to assess how they would cope in the event of house prices crashing by 40 per cent
Is 40% crash in house prices on cards?
The Times: Banks told to predict effects of a 40% crash in house prices
BANKS in the UK have been ordered by financial regulators to assess how they would cope in the event of house prices crashing by 40 per cent.
Wednesday, November 15, 2006
HBOS pour more petrol onto the fire
The Times: Young professionals get 125% mortgages
HBOS, Britain’s biggest mortgage lender, will launch a loan for graduates and professionals today that will allow them to borrow more than the value of their property to help with the initial costs of buying a home. Other lenders that offer similar deals include Northern Rock, Coventry Building Society and Bradford & Bingley. The move is expected to boost demand for mortgages worth more than 100 per cent at a time when fears are growing that homeowners are already borrowing too much against their incomes.
Ticking Pension Time Bomb
The Times: No guarantee of a bullet-proof pension
More than half of workers continue to believe that their occupational pensions are guaranteed, despite the fact that as many as 125,000 people in more than 400 schemes have lost their final salary savings and have little or no hope of compensation, a survey will reveal this week. Up to 125,000 people lost 20 per cent or more of their pensions savings after their employers went bust with a deficit in their final salary scheme. Most will not qualify for government compensation, which will, in any event, pay only a fraction of the money lost.
EA's to be Regulated
BBC News: New regime to protect homebuyers
Plans to make it easier for customers to seek compensation from rogue estate agents have been unveiled in the Queen's Speech. Capturing the mood of the people apparently...
Britons have more unsecured borrowing, as a proportion of income, than any other country
The Times: Annual fee for paying with your plastic is on the cards
Banks are certain to introduce annual fees for credit cards to offset an estimated £1 billion fall in revenues as a result of regulatory clampdowns, an accounting firm forecast yesterday. Recouping £1 billion would take the equivalent of a £35-a-year card charge or a 2 percentage point rise in borrowing rates.
UK unemployment rates - London highest at 8%
BBC News: Unemployment at seven-year high
UK unemployment is continuing to rise - climbing by 27,000 to 1.71 million in the three months to September, the highest level in seven years.
An interesting one for those that think Gordon controls the MPC
The Times: Has MPC decided it is time to act tough?
So the Bank of England sprang into action last week just as predicted, offering the nation a double “high five” — an increase in interest rates to 5 per cent, their highest level for five years. What seems to have rattled the MPC’s gilded cages is a disturbing mix of short-term worries and long-term trends. Taken together, these could signal the end of an extraordinarily benign and protracted period of low interest rates and cheap money. The increase brought to an end a 61-month run of official rates of less than 5 per cent. As Michael Saunders, of Citigroup, noted, this was the longest such stretch since 1956. This prolonged era of easy money was made possible — and necessary — by a series of shocks to the housing market correction of 2004-05, coupled with the favourable, disinflationary effects of globalisation.
News from USA: Housing Downturn Leading To Recession?
Telegraph Online: US Prices Take A Tumble
Federal Reserve governor William Poole yesterday said the bank may soon have to make a judgment whether the softer data was a "sign of impending recession", the first time a governor has used the recession word in this context. This article suggests a coming US recession and a decline in the value of the dollar; both are linked to the falling US housing market. Prices have been lowered in an attempt to liven consumers. Economists disagree over rising or falling inflation. Will the UK get this too?
Inflation is at 3.7% using the other 'preferred' calculation
Firstrung: Retail Prices Index (RPI) figure of 3.7% for inflation in October could lead to an explosion of wage growth next year
Better-than-expected inflation figures were overshadowed today when a separate measure used to determine pay rises and pensions hit an eight-year high. Economists warned that the Retail Prices Index (RPI) figure of 3.7% for inflation in October could lead to an explosion of wage growth next year. It is feared that rapidly rising wages could put pressure on the now more commonly used measure of inflation - the Consumer Prices Index (CPI) - which was unchanged at 2.4% last month.
Big bonuses heat London property market
FT website: Big bonuses heat London property market
The surge in prices at the top end of London’s property market tells the story: the good times are back in the City. Bonuses for bankers, traders and lawyers in the City, as London’s financial district is known, are forecast to hit record levels, largely on the back of strong merger and acquisition activity.
Give First Direct a bloody nose Now!
BBC News: First Direct to end free banking
Most banks have less than 3% liquidity. If more than 3% of First Direct customers ask for their money back they will be insolvent forcing HSBC, their owners to bail them out. If we act in concert we can stop the banks charging for current accounts. Kick them back into line. First Direct users, move your account elsewhere. Non First Direct account users, write to your bank via email etc. and tell your bank that you will close your account if they even think about following suite. We only need to get close to 3% to scare them back into line!
Are the Tra-La days over?
BBC: First Direct to end free banking
First Direct is set to charge customers for running a current account unless they pay in or keep a balance of £1500 a month. It is proposing to charge people who only hold a current account a fee of £10 a month. With base rates rising, annual charges for using credit cards touted as likely and now First Direct making moves to stop free banking are the days of an economy propped up by the consumer taking advantage of cheap credit coming to an end.
Debt addicts!!! - A nation of Stigs!
BBC: Christmas gift spending 'to soar'
Britons are forecast to spend almost £17bn on gifts this Christmas, according to a survey by Deloitte, with average spending set to rise by 22%. Clothes, jewellery and MP3 players are set to prove the most popular items, particularly among 16-24 year olds. The real meaning of Christmas has officially been snubbed out by retailers and the media! Baaahhh humbug!
Liquidity has never been greater....
Firstrung: The UK millionaires' club is growing fast - 1 million UK individuals have more than 200K liquid assets
A new report by independent market analyst Datamonitor (DTM.L) reveals that the number of individuals with more than GBP200k in onshore liquid assets in UK will break through the 1 million barrier next year, with young people becoming richer faster than any other age group. "Younger people may not have the wealth accumulated by older people in the UK yet, but they are gaining on their middle aged and retired counterparts fast," says Katie Langridge, Financial Services Analyst at Datamonitor and author of the report.
Tuesday, November 14, 2006
29 of 39 Economists say UK Property is Over Valued
Reuters: FACTBOX-Reuters November poll on UK house prices
Nov 14 (Reuters) - Reuters surveyed 32 economists for their views on British house price inflation, whether current house prices are overvalued and the likelihood of a correction in the coming year.
US Economy hit by housing slowdown
FT.COM ( Subscription): US Economy hit by housing slowdown
Housing slowdown is taking the blame for sluggish retailing. Spending is overall weaker than expected. Home Depot ( DIY) and DR Horton (housebuilder) show "pain mounting in sectors most directly exposed to the housing slowdown" H Depot say slowdown "faster and deeper" than expeceted. DRHorton reported a rise in cancellations and that they believe the downturn has a long way to go!! But the Investment analysts are still living in cloud cookoo land and think there will be a merry christmas ( hmmmm; this is PC America... shouldn't that read "holidays"?). Japan is doing great though.
End of cash and carry
guardian: Japan's economy grows faster than expected
Japan likely to raise interest rates
sales down
guardian: Mortgage figures signal slowing housing market
This is what we need - prices up but a further 10% drop in FTB mortgages. It's the peak in prices before the slump.
Has remortgaging reached azenith?
Firstrung: Remortgaging hits lowest level for five years,- CML
New data published today by the Council of Mortgage Lenders shows that levels of remortgaging have reached their lowest figure for five years. Figures for September show that remortgaging accounted for 30% of the market by value - the lowest figure since August 2001 and down from 42% in September last year. Figures for the third quarter of this year reflect this trend, with remortgaging accounting for just 31% of the market, compared to 39% in the third quarter of last year. The sharp drop in the popularity of remortgaging over recent months probably reflects the fact that lenders are managing to retain more customers for longer by reducing the incentive to remortgage to other lenders.
Rumours of 'buy to let death' greatly exaggerated - ARLA
Firstrung: Buy to Let reports irresponsibly wide of the mark, says ARLA
Weekend reports that claim Buy to Let repossessions are on the increase are irresponsibly wide of the mark, ARLA the Association of Residential Letting Agents said today. In a statement issued this morning, the Association has pointed out that industry data not only confirms that buy to let mortgages have lower arrears than mortgages generally, but that there are also fewer buy to let repossessions too.
Mmmmmm...check out the RPI though!
BBC: UK inflation stays steady at 2.4%
UK inflation was unchanged in October and above the official target of 2% again despite two rate rises this year. Last month's Consumer Price Index (CPI) figure was 2.4%, the Office for National Statistics (ONS) said. Many economists had been expecting a rise to 2.6% because of the introduction of more expensive university tuition fees in October. The RPI rate, which includes mortgage payments rose from 3.6% to 3.7% - the highest level in more than eight years. 'University tuition fees had less impact on inflation than expected'.......Once they had fiddled with the weighting!!!
Monday, November 13, 2006
Jaguar workers reject inflation busting pay deal.
IC Birmingham: Jaguar workers ignore unions to turn down new pay offer
Even the track workers at Jaguar can see that inflation is not running at 2%. £1 a litre fuel, £1 a loaf of bread, doubling of utility bills. Miracle economy my arse. Its a miracle they haven't asked for a 20% pay rise. Once Joe Bloggs begins to wake up and smell the coffee as to the true picture of the Miracle economy we could be in for a sustained period of strikes and walk outs.
Inflation, We've Heard of It. BOE. £1 a loaf of bread.
The Sun: £1 loaf of bread on the way
The average price of a loaf of bread in the UK will soon top £1. Need I say more. Miracle economy my arse. Its a miracle that people are not rioting in the streets. You can fool some of the people some of the time........
They keep on going
BBC News: House prices continue upward move
UK house price inflation picked up in September, according to the Department of Communities & Local Government.
Negative equity from day one
Independent: On the ladder or stretched out on the rack?
Negative equity - owing more than your home is actually worth - is usually portrayed as the bogeyman of the UK housing market. In the early 1990s, tens of thousands of homeowners lost their homes as a crashing property market, coupled with high interest rates and rising unemployment, forced them to default on loan repayments. Yet today, growing numbers of buyers - mostly first-timers - are being encouraged to start off their life on the property ladder in just such a position.
UK overtakes US for personal debt
herald: UK overtakes US for personal debt
The UK now has personal debt (secured and unsecured) at 104% of GDP, versus the US with 92%.
Housing market surges toward collapse.
Home.co.uk: House Prices Surge Toward A 'Tipping Point'
Asking prices for UK homes jumped up by 1.3% in November, according to the latest Asking Price Index report from Home.co.uk. This further rise in the national average means that house prices have increased for three months in succession and is a sure sign that sellers' confidence is growing. A three month rally in asking prices signals an up-lift in market sentiment and a new upward trend, but the timing couldn't be worse.
MP attacks 'malign' lenders
Guardian: MP attacks 'malign' lenders
A former government minister has accused the Council of Mortgage Lenders of being a "malign brake on reform". Nick Raynsford, the former housing minister who promoted the now dropped idea of making "sellers' packs" for homebuyers compulsory, has attacked Michael Coogan, the director general of the CML, for a speech questioning whether the government had helped the housing market.
Prices up 8% year on year - DCLG
Firstrung: House prices up 8% year on year as first time buyers now pay £152,633
The UK house price inflation rate rose from 7.4 per cent in August 2006 to 8.0 per cent in September 2006. Prices rose by 0.8 per cent between August and September, compared with a smaller rise of 0.2 per cent over the same period last year.
HBOS prepared to blow more air into the house price bubble
TimesOnline: Young professionals get 125% mortgages
HBOS are preparing to offer 125% mortgages to young professionals (based on future earnings potential) to enable them to scramble onto the first rung of the property ladder. I wonder whether we will reach an era when mortgages based on personal medical checks and your family's health history will be offered.
Are the Tra-La days over?
TimesOnline: Annual fee for paying with your plastic is on the cards
With the BoE hammering another nail into the coffin of the low inflation era last week with yet another increase in base rates the banks may yet issue another salvo as the era of charge-less credit cards may likely come to a close, according to PricewaterhouseCoopers.
Sunday, November 12, 2006
Sydney on edge of insolvency?
Sydney Morning Herald: Suffering in silence: a city on the edge of insolvency
ONE in three Sydney households is beset by financial worries and almost one in seven is teetering on the edge of insolvency, a church survey has found. The study commissioned by the Wesley Mission warns financial stress is greatest in the south-west and outer west, but is also pervasive across all parts of the city, including its more affluent suburbs. Families reported forgoing family activities, borrowing from relatives or friends, failing to pay bills on time or being unable to make minimum credit card payments.
Saturday, November 11, 2006
Borrowers urged to prepare for another rise
FT.com: Borrowers urged to prepare for another rise
The Bank of England took no-one by surprise when it raised interest rates by a quarter point to 5 per cent this week. The rise was widely – if not unanimously – predicted by economists as inflation has remained above its target level and house prices have continued to accelerate. Interest rates are now at their highest level for five years.
New homes have further to fall
Firstrung: New home prices down 6.2% year on year as buyers apparently 'head North' - smartnewhomes.com
Escalating house prices are pushing new home buyers out of the south and into the north says SmartNewHomes.com, the UK's leading new homes website. The average price of a new home in London was recorded as £427,875 in October, having grown 14% since the previous year. This positive growth in house prices has been echoed by both the south east and south west where some of the most expensive new homes in the UK can be found, with average prices of £313,841 and £247,496 respectively.
BBC Video: House price protests in Spain
BBC News Video: House price protests in Spain
Thousands of young Spaniards have become so frustrated with property prices that they regularly stage demonstrations. If we thought the situation in the UK looked bad, Spain seems to have it worse. Maybe we should stage demonstrations too?
Weekend blog
Financial Sense Online: The Creature from Jekyll Island
Edward Griffin askes, "Just what is the Federal Reserve?" Prepare to be shocked.
Re-pats putting more pressure on housing?
thisismoney: We don't love Spain any more
Britain's long property love-affair with Spain is going cold. UK nationals who emigrated with dreams of a carefree retirement are returning home in increasing numbers. And a leading mortgage business says the country is no longer at the top of the list for families seeking holiday homes or buy-to-let properties.
Friday, November 10, 2006
The reason for yesterdays gold increase
The Telegraph: China 'to boost gold for years to come'
Gold surged more than $19 an ounce to $635 in New York trading after China's central bank chief said the country was eyeing "lots of instruments" as alternatives to US dollar reserves
Code in the BoE press release? Rapid, asset prices still rising...
Firstrung: Interest rate decision, the Bank of England's official release
Methinks so..."The outlook for growth in the United Kingdom's main export markets remains positive. Credit and broad money growth remain rapid, and asset prices have continued to rise. Although unemployment has continued to edge up, the margin of spare capacity within businesses appears limited. Oil prices have dropped back, but there are signs that other pricing pressures have picked up. CPI inflation was 2.4% in September. It is likely that inflation will rise further above the target in the near term, but then fall back as energy and import price inflation abate."
Icici increase savings rate to 5.45% AER
Motley Fool: A New Savings War!
If you're a homeowner with a variable rate mortgage, you will no doubt be lamenting yesterday's decision by the Bank of England to raise interest rates. The 0.25% rise means that UK interest rates are now set at 5%, the highest they have been for five years, and will certainly result in an increase in repayments for some borrowers and mortgage holders.
BTL in trouble
FT.com: Buy-to-let beauties show their ugly side
Large numbers of buy-to-let investors are having their properties repossessed and sold off at auction as rising interest rates and over-development of new flats in some areas has meant that growing numbers of property investors are unable to meet interest repayments.
More homeowners in danger of losing their homes as rates rise
Times Online: First-time buyers left teetering on the brink
Homeowners who are already struggling to pay their mortgage bills, such as first-time buyers and young families, could be pushed over the edge into severe debt by the interest rate rise.
Mortgage lenders expect to raise rates further
Firstrung: More interest rate rises to come - Council of Mortgage Lenders
Commenting on the rise, CML Director General Michael Coogan said: "Financial markets have been anticipating a rise in interest rates since the last one in August, so today's news should come as no surprise to anyone. A quarter point interest rate rise on a typical £120,000 repayment mortgage equates to around an extra £20 per month."
Mortgage fees could treble again
Firstrung: First time buyer mortgage fees set to hit £2,700 by 2016'
Moneyfacts.co.uk investigates the rapid growth in mortgage fees over the last 10 years, and predicts that we could see mortgage fees of £2,700 by 2016 if the trend continues at the same rate.
Cost of living rising strongly - not just mortgages
The Independent: Interest rate rise squeezes homeowners on the limit
It's not just mortgages that cost more after yesterdays interest rate rise - gas, water, electricity, petrol and council tax are all rising too. Home owners are being squeezed across the board.
Reuters turning bearish
Reuters: House prices set to cool as rates rise
Interestingly the discussion isn't about *whether* prices will cool but by how much - and whether it'll be a soft or hard landing. "An increasingly robust housing market has shrugged off one interest rate rise this year and seemingly dipped below policymakers' radar screens, but prices look poised to cool as rates rise further, analysts say."
Repossessions up 34 percent in Oxfordshire
This is Oxfordshire: Mortgage woe adds to strain
Oxfordshire homeowners have been left counting the cost after the Bank of England hiked interest rates to their highest level in five years.
London's boom masks stagnation in the regions
FT.com: London housing booms while regions stagnate
Two distinct housing markets exist in England and Wales, according to the latest FT house price index, with a booming market in London contrasting with near stagnation elsewhere. In the third quarter of the year, London’s house prices rose at an annualised rate of 11 per cent, while Wales, the region the with the second fastest price rises, recorded only an equivalent rise of 4.5 per cent.
Thursday, November 9, 2006
What the experts say
Firstrung: Interest rate rise, what the experts say...
We've compiled a 'snapshot' of industry expert opinion on the news that interest rates have risen 0.25%. Taking a step back it strikes the Firstrung team as odd that, within the general commentary available on todays news, there is no 'voice' available in relation to the damage for exporters, or manufacturers, or the knock on effect this rise may have on short term wage demands, particularly in the new year when consumers will find their wage packet stretched more than at any time over the past five years.
Debate with David Smith over long-wave cycles
House prices just keep on flying: www.economicsuk.com
I have been having a debate with David Smith (from The Sunday Times) about my theory that stocks, commodities and property are in a long-wave cycle of 33-36 years. Please read the posts from November 8th onwards. It would be useful to know any of your comments on this subject.
All benefits of home ownership out the (rented) window!
The Times: 52-year mortgage is latest offer to beat house prices
Homeowners will be paying off their mortgages long into retirement if they take up the latest offer designed to beat rising house prices — loans with a 52-year term.
5% as reported by FT
FT.com: UK interest rates raised to 5 per cent
(Just in case no one has posted this yet:) Interest rates hit 5 per cent and the highest level in five years after the Bank of England on Thursday raised the cost of borrowing in an attempt to curtail inflation. The Bank cited firm economic growth, a positive global outlook and the continued rise in asset prices among the reasons for the move.
Futures market expects two further interest rate risess
Bloomberg: Bank of England Raises Key Interest Rate to Highest Since 2001
....Investors expect the Bank of England to raise rates again in the first quarter, futures trading suggests. The implied rate on the contract maturing in March 2007 was 5.42 percent at 10:33 a.m. in London, up from 5.19 percent at the start of September......
'Tipping point' finally reached?
Firstrung: First time buyer website Firstrung.com hails interest rate rise as 'good news' for first time buyers
Always noted for its contrarian stance versus the accepted consensus, first time buyer website www.firstrung.com has welcomed today's news on the quarter of a percent interest rate rise as it may have finally 'called the top' of the rising housing market. Far from believing that a rise in rates makes the situation even more hopeless for FTBs, firstrung believes a buyers' market, that favours FTBs first, may be just around the corner due to the rise in rates...
Interest Only
Eternal mortgages: My mortgage is imperpetuity.
There are some people who want to live debt free and that's fine. There are others who understand the value of leverage (gearing) and are prepared to take the risk that the can afford repayments and accept that the long term value of the property market is UP. This is a note for the latter: People need to understand that the length of your mortgage payment is largely irrelevant. You will pay down your mortgage as your affordability allows and you may choose never to pay it down. Most people I know, who live around me in South West London, and these are clever folk, have interest only mortgages. This means you are effectively renting, but benefiting from any upside in the value of your property. Clearly, if you don't pay off your mortgage with lump sums, you will not own your house but because you haven't had to fund the capital repayments, you could afford a more expensive house (mortgage) in the first place and thus maintained a higher gearing to the property market. If you choose to sell and move up you will have more profit from the increased value of your more expensive home; to put towards your next purchase or if you are nearing retirement to downsize to the country, with a load of cash in the bank. All tax free. Problem is: unless you are a well funded and can put down a sizeable deposit (50%) and have good credit history not many lender will give you an interest only mortgage. This of course is just my view. It is surly a way of getting people into more expensive properties which hopefully will make them money and possibly be able to repay as their earnings improve.
no surprise: 5% base rate
BBC: UK interest rates increased to 5%
The Bank of England has increased UK interest rates to a five-year high of 5% because of inflation concerns.
Why higher interest rates are good news for First Time Buyers
Priced Out: To many it may seem like a complete contradiction and flying in the face of the common "wisdom" but the fact of the matter is that higher interest rates are good news for First Time Buyers.
To many it may seem like a complete contradiction and flying in the face of the common "wisdom" but the fact of the matter is that higher interest rates are good news for First Time Buyers.
The madness of 52-year mortgages
MoneyWeek: are 52-year mortgages the way to get on the property ladder?
It‘s that time of the month again, when all eyes fall on the Bank of England as it deliberates on interest rates... The buoyancy of the UK housing market is of particular concern. Property pundits and lenders say that a supply and demand imbalance is to blame for rising house prices, but the fact that there are now so many weird and not-so-wonderful ways to overstretch yourself to get on the housing ladder shows that easy lending is the reason for the continued boom. Just look at the 52-year mortgage offered by Tesco...
Now here come the 60 year mortgages...
Daily Mail: Lender offers 'mad' mortgages that take 57 years to pay off
Abbey's at it again... Britain's biggest mortage lenders are offering home loans which don't need to be paid off for almost 60 years. The "life-long mortgages" are aimed at first-time buyers who are struggling to get on the property ladder due to soaring house prices. But experts warned last night that while they initially appeared attractive due to low monthly repayments, the borrower can end up paying more than £100,000 extra in interest. The deals are a far cry from the traditional 25-year mortgage and were last night labelled "madness"
in 2001 average prices were 92K...
Firstrung: The average house price in 2001 was 92K, what went wrong?
With a decision on interest rates imminent the Firstrung team thought it may be appropriate to take our readers back to the the year 2001 when interest rates were last at 5% although in the corresponsing month, November 2001, rates had actually fallen to 4%.
Renting vs Buying
BBC Breakfast: Renting vs Buying
"Fourteen years ago there was a very loud crash!". Video report on the merits of renting, guest starring one of our PricedOut.org.uk volunteers.
UK House prices still rising strongly
BBC: UK October house prices gain 1.7%
Halifax data states that house prices rose 1.7% in October pushing year on year growth to 8.6%, however and unsurprisingly Halifax predicts the market will slow over the coming months. Halifax's prediction will probably have little bearing on the Monetary Policy Committee who are expected to raise interest rates to a five year high today and talk is of yet another rise early in the new year
We can't see the risks any more
The Telegraph: Have we lost our fear of those all too-familiar bogeymen?
A good article explaining that the good times have rolled on for so long that the risks of a downside are being ignored
Wednesday, November 8, 2006
Sounds like a good deal, I'm in..
BBC News: 40 year mortgages 'becoming norm'
Nearly a third of UK lenders now allow borrowers to take out a mortgage lasting for 40 years or longer, research has revealed.
Bullet-proof confidence - misplaced?!?!
BBC: Shoppers 'shrug off rate worries'
UK consumer confidence rose in October, despite indications that another interest rate rise may be on the cards, according to a Nationwide survey. Its Expectation Index, expressing consumer sentiment about the economy and jobs in six month's time, saw its largest ever increase during the month.
111K to go from 3 to 4 bedrooms....
Firstrung: Moving up from 3-4 bedrooms costs on average £111,000
Leading UK property portal, propertyfinder.com analysed property for sale around the UK in October 2006 and uncovered some surprising results. Each successive rung on the ladder is a much greater step than the last, forcing homebuyers to stretch themselves further and further every time they trade up. On average across the nation a two-bedroom home costs £38,620 more than the price of a one-bedroom home, while a three-bedroom will set you back £55,353 more than a two-bedroom. A four-bedroom home is on average £111,402 more than the price of a three-bedroom home.
MPs call for land tax to encourage home building
Financial Director: MPs call for land tax to encourage home building
A tax on increases in land value could stimulate the building of thousands of new homes by raising money for new infrastructure. A parliamentary committee is to say today that a tax on increases in land value could finance the building of thousands of new homes.
Absolutely Bonkers!!
BBC News: House prices 'now top £200,000'
The average house in England and Wales now costs more than £200,000, according to the Land Registry.
BBC whooping about house prices again
BBC "News": House prices 'now top £200,000'
The average house in England and Wales now costs more than £200,000, according to the Land Registry ... Onwards and upwards ... seemingly relentless rise in property values ... pay your license fee ... please don't raise interest rates.
3rd rate rise in a year is hitting hard
ABC: Higher interest rates starting to bite: Reserve Bank
Main headline news in Oz today. This is hitting hard from the country to the inner suburbs. Apart from Western Australia which is experiencing a resources boom, Australian real estate has, at best, been flat for a few years and in many incidents fallen substantially. These falls are likely to widen to more areas......UK this could be you?
So how come house prices are so high & affordable
MSN: Where the UK's richest people live
So top earnings are in London at £70K, and above averagre elsewhere at 30K ish. So how come they can afford houses at the current prices???? In my area in Kent a nice 5 bed detached is £825,000. In the villages 10 mins from station and 55mins from London. If you have £250,000 in cash to buy the house you have to earn £82,000 at 7x salary. It has been for sale over 12 months! This is why the madness will end soon.
Think your savings are safe with Halifax?
thisismoney: The 125% mortgage debt warning
Britain's biggest mortgage lender (HBOS) came under fire yesterday over plans to offer a 125% home loan. But critics warned prospective clients against taking on such liabilities, which would plunge them into instant negative equity.
Think your savings are safe with Halifax?
thisismoney: The 125% mortgage debt warning
Britain's biggest mortgage lender (HBOS) came under fire yesterday over plans to offer a 125% home loan. But critics warned prospective clients against taking on such liabilities, which would plunge them into instant negative equity.
Millions walking a financial tightrope
Daily Mail: Millions 'will struggle to cope with a rise in mortgage rates'
Some 23 per cent of the 11.6 million with a mortgage believe the increase, coming on top of an earlier rise in August, will cause genuine difficulties. The combined effect of two rate rises would add around 10 per cent to monthly mortgage bills, increasing the average repayment from £400 a month to £440.
Tuesday, November 7, 2006
Further tightening!
BBC: Bank of Japan hints at rate raise
The head of the Bank of Japan has hinted that interest rates may rise soon as inflation pressures increase. "We must not take a long time to adjust policy interest rates," Bank of Japan governor Toshihiko Fukui said during a meeting with business leaders
Houses to rise
secured loan uk: house prices to rise
Building societies believe houses to rise to rise in scotland but no fall either
Interest rates to become runaway train
MSN Money: Interest rates to become runaway train
Basically Article telling homeowners to watch out as by next year interest rates may rise as high as 7.5% urging people to change their mortage to 5 year fixed rate as inflation is on an upward trend...
RICS: We Want an Interest Rate Rise!
LSE: RICS urges BoE to raise rates on Thursday to five-year high of 5%
The Royal Institution of Chartered Surveyors has urged the Bank of England to raise interest rates to a five-year high of 5.00% on Thursday to dampen the housing market and prevent economic volatility. RICS said a pre-emptive rise in interest rates will help to contain inflation pressures and wage rises in the next year, providing for a more stable economic environment. RICS's demand may come as a surprise as most industry groups refrain from calling for an interest rate hike. With the supply of property coming onto the market falling, house price rises are likely to remain firm into the new year, RICS said
BBC's begging, BOE please don't increase!!!
BBC News: Charity sees surge in debt cases
Charity Citizens Advice has advised 1.4 million people in debt difficulty during the past year, an 11% increase on the previous twelve months.
Positive, but caveat-ed outlook
National Institute of Economic and social research: UK Economy Forecast
Linked to the First Rung report, here is the NIESR summary of the UK economic outlook; follow the link for the full report. Having scanned the report and read this summary, there is very little that indicates the the bottom will fall out of the housing market over the next 2 years. Such reports are the source of "House Price Crash Fatigue" which is now being experienced across the country.
Debt down for first time since early 90s
Reuters: Debt down for first time since early 90s
"Debt, other than mortgage borrowings, is growing at its slowest rate for the past 13 years, and is falling in real terms, according to the latest borrowing monitor from Alliance & Leicester (A&L)." ..."other than mortgage borrowings"...classic.
Rates up twice by February
Firstrung: NIESR forecast shows that interest rates need to be raised now and probably again in February
NIESR - "We project that the output of the economy in the three months ending in October was 0.7% higher than in the previous three months. The economy continues to grow at just above trend. Our forecast shows that interest rates need to be raised now and probably again in February."
When will Ireland crash?
Home.co.uk News: Irish housing crash forecast defied again
The Bank of Ireland's Irish Property Review has revealed that the Irish housing market continues to defy commentators predictions of a sharp correction and 2006 looks set to become another record year for completions, house prices and mortgage take up. However, the Review predicts that 2007 is likely to see sluggish price inflation due to further deterioration of affordability on the back of higher interest rates.
Monday, November 6, 2006
Newsworthy? Errr, no.
Hey big spenders — it's time to get real
The Sunday Times: Merryn on Money: Hey big spenders — it's time to get real
Another Merryn mortar slams into BTL camp incoming: "But when prices aren’t going your way, it all becomes a nightmare. In a flat or falling market you can’t sell without making a loss. Even if prices stay steady, you still have to carry the cost of your stamp duty and all the transaction fees. If you are stuck with a house you can’t really afford or can afford only under certain circumstances, all the choices that make life tolerable are gone. You can’t leave a job you hate, can’t scale back your hours and, in a partnership, can’t decide that one of you should stay at home with the children."
Have Your Say: Mortgage borrowing
BBC News: Have Your Say: Mortgage borrowing
With house prices so high and rates set to rise is it too risky to buy a home now or would you still take the plunge? With Abbey offering mortgages of five times income, do you think banks are lending responsibly? Or is it up to us to borrow carefully? Have you or someone you know taken on too much mortgage debt?
property market still may have some growth
FT: Social forces change the very fabric of house market
Residential property has seen phenomenal growth over the past decade, largely due to a low interest rate environment, which enables homebuyers to borrow more, low unemployment and robust earnings growth. But bubbling below the financial credentials of a buoyant economy are a wealth of social and demographic factors which are also providing significant support for house prices. And these social factors look likely to underpin a robust property market for years to come, according to experts.
Please don't raise rates!!! Bleat, bleat...
BBC: Weak data spark UK growth fears
Looks closely though and the drop is from 0.7% growth to 0.6% growth - This data hardly warrants this extravagant headline from mthe BBC. UK manufacturing weakened in September, sparking fears that official growth forecasts could be cut. Factory output growth slowed for the first time in five months, rising 0.6% as against 0.7% in August, Office for National Statistics (ONS) data showed. The wider measure of industrial production rose 0.2% on the month, and 0.1% in the three months to September.
Why banks' moans about IVas ring hollow
MoneyWeek: Why banks moans about IVas ring hollow
Britain’s borrowers aren’t out for the count yet, but some of them are certainly getting acquainted with the canvas. While consumer lending continues to soar, the number of debtors who find they can’t cope is picking up even faster. Personal insolvencies hit another record high last quarter, up by 55% year-on-year to 27,644, mainly due to a surge in IVAs. Mortgage repossession orders are back to levels not seen since the shakeout from the last housing crash. And the numbers are likely to get worse before they get better. Awash with cash in our high-liquidity world, lenders have been handing it out like play money. Then, for some reason, they’re baffled when it doesn’t come back again.
All is not well
Guardian: Property boom builds on a swamp of debt
I am sensing a real shift in the way media are reporting house prices. After their attack on Abbey, the reports are increasingly pessimistic.
Debt - What debt??
MSN: Is Britain a becomin a nation of bankcrupts?
Just more facts we know - the people are broke - up to their eyes in debt and the figures will only get worse. But not worry - house prices only ever go up!!
Sunday, November 5, 2006
Banks lending unaffordable amounts
Yahoo/AFP: British banks stretch home loans amid red-hot property market
Potential home-buyers are being offered unprecedented loans to help secure a first property -- a nation where the average house price has soared almost 200 percent in a decade. "To some people this is going to look like the answer to their prayers, because suddenly they are going to have the opportunity of borrowing the amount they feel they need to borrow," said Malcolm Hurlston, chairman of the Consumer Credit Counselling Service. "But it risks taking them into very dangerous territory, not least because interest rates are likely to be going up as well. hey are going to be very heavily stretched and if their salaries don't go up in the way they think they are going to do, they could find themselves dangerously overstretched," Hurlston added Sunday. Nici Audham Gardiner, mortgage product executive at Abbey, which is owned by Spain's Banco Santander Central Hispano, said her bank's move was aimed at making it easier for first-time buyers to join the property ladder.The traditional limit for British lenders has been three and a half times salary.
Standard Life encourages responsible lending
Firstrung: Mortgages should be based on affordability not multiples - Standard Life
Standard Life Bank is insisting that mortgage providers should lend on affordability rather than salary multiples. To lend responsibly, Standard Life Bank believes that reviewing an individual's full financial situation is essential when making a decison as to how much to lend. The flexible mortgage specialist, which was an early adopter and pioneered the practice of lending on affordability as early as 1999, considers a would-be homeowner's income and financial commitments rather than simply a multiple of their current salary and the equity in the property (the Loan to Value position).
3 generations under one roof more common than first thought
Firstrung: Nearly a quarter of parents still rent or live with their own parents
It's not just struggling singletons or professional couples in their 20s or 30s finding it hard to get on the property ladder. A new generation of parental renters is emerging, with nearly a quarter (23%) either renting, or still living with their children's grandparents, reveals Alliance & Leicester Mortgages' movingimproving index.
1 Million Lotto Is Less all the Time in Ireland
Sunday Times Online: Our Houses Are Not Worth All The Money We've Borrowed on Them
It's taking larger numbers all the time to make any impression in Ireland. A 1.3 million Lotto is a pittance; hardly enough to buy another luxury home. Excess is standard parlance. Who cares if house prices are exorbitant? Who cares if investments stand empty? Who cares?...Homeowners who are weighing up the odds; and the government who envision a sharp drop in taxes as the market begins to tremble....
Saturday, November 4, 2006
Watch out! You've been warned!
Daily Telegraph: What goes up...
House prices are rocketing, the market's crazily optimistic: surely we cannot be headed for a crash? Our man with the maths, Edmund Conway, examines the evidence
600 FLATS LEFT EMPTY IN CITY CENTRE
Nottingham Evening Post: CITY LIVING: 600 FLATS LEFT EMPTY
A report from Nottingham City Council has revealed that 15% of the flats are vacant-a further 3,795 "luxury" apartments are still being built - or are set to be built.
Friday, November 3, 2006
How desperate is this?
ThisisLondon: Green parking charges to spark house price rise
Homes with off-street parking charges could increase in value New 'Chelsea Tractor' parking charges will drive up the price of homes with a garage by up to 20 per cent, it has been claimed. The need for off-street parking to escape punishing charges could add as much as £80,000 to the asking price of a £400,000 family home in the south of England.
Boom and Bust
Daily Reckoning - Bill Bonner: The history of the great US house price bubble
The history of the great US house price bubble. The great US housing bubble may be dead, but it already has a certain corpse-like stink to it. We are still not sure that the great bull market in US residential real estate has come to an end. What we are sure of, on the other hand, is that it isn't at the beginning. The great US housing bubble may be dead, but it already has a certain corpse-like stink to it. The relatives are gathered in the parlour. The silver has already been packed up. The local priest is already on the scene, administering last rites. True, we still don't know exactly how the story will turn out. But it is time to begin preparing the obituary.
Mortgage repossession orders at a five year high
BBC News: Mortgage repossession orders rise
Mortgage repossession orders made by courts in England and Wales are at a five-year high, indicating that more homeowners are under financial strain. More than 24,000 orders were approved in the past three months, a 22% increase on the same period in 2005.
US labour costs rising at fastest pace for quarter of a century
TimesOnline: Surge in US labour cost brings new fear of inflation
Further disturbing evidence from the US that inflation is awaking from its slumber. Unit labour costs measure the cost to the employer of wage and other costs for each unit of production and are rising at their fastest pace for 25 years. When production rises this helps offset the cost of wage rises and benefits but when productivety is flat, as it is currently the costs must be carried by the employer which is typically handed down to the consumer.
The hole gets bigger in British pockets
Bloomberg: U.K. Personal Bankruptcies Reach Record as Rates Rise (Update3)
Personal bankruptcies in Britain climbed to a record in the third quarter as surging house prices pushed consumers to take on more debt and rising interest rates reduced their ability to repay.
Another asset boom
The Independent: Forget trade deficits, the real worry is what China will do with its money
It may be that asset diversification by China will be the thing that continues to drive up asset prices this cycle to what will eventually be unsustainable levels. But which assets will get the lion's share of the money: stocks, property or commodities?
Peak oil spells disaster
The Guardian: Film turns black gold to black death
New film: A Crude Awakening: the Oil Crash, a Swiss-made documentary; one of the most frightening films you are ever likely to see.
Insolvency figures show huge growth year on year
Firstrung: Insolvencies up 55.4 percent in a year - The Insolvency Service
There were 27,644 individual insolvencies in England and Wales in the third quarter of 2006 on a seasonally adjusted basis. This was an increase of 5.7% on the previous quarter and an increase of 55.4% on the same period a year ago. This was made up of 15,416 bankruptcies, an increase of 2.7% on the previous quarter and an increase of 26.6% on the corresponding quarter of the previous year, and 12,228 Individual Voluntary Arrangements (IVAs), an increase of 9.8% on the previous quarter and an increase of 117.9% on the corresponding quarter of the previous year.
Irish property market still gravity defying
Firstrung: Irish housing market continues to defy predictions of downturn - BOI
2006 will be another record year in terms of house completions and mortgage numbers, average price of a home rises to Eur400,000 nationally and Eur540,000 in Dublin by year end, extraordinarily robust demand for housing due to strong employment growth and a surge in population, property price inflation to slow in 2007...
Insolvency figures acceleration
BBC: Q&A: Rising insolvencies
What a surprise - the government's own Insolvency Service says there has been a sharp rise in the number of individuals being declared insolvent.
US going off the rails
The Telegraph: Inflation rears its ugly head in US
3 articles about US infaltion, stock market, and economy. The figures don't look good
Thursday, November 2, 2006
New Land Registry Index Shows Yet More HPI
Home.co.uk News: Strong house price rise shown in new index
Land Registry’s new monthly index shows house prices in England and Wales have risen strongly, with the average house price reaching £169,569. The growth rate has accelerated to 1.3%, compared to the 0.4% growth in the same month last year. It is the first time since October 2004 that monthly price growth has exceeded 1%...
As Expected - no rise by ECB today - wait for December and more ... beyond
BBC News: Eurozone rates held steady by ECB
ECB voted to keep eurozone interest rates on hold at 3.25% for November, a decision that was widely expected. Analysts now expect the ECB will raise rates by one quarter of a percentage point in December.
How to preserve your savings
www.investorsintelligence.com: The Big Picture Outlook for Global Markets
Written 1 year ago this is an in depth view of the world economy over the next 15 years. It describes us living in a world of “stealth inflation” and that inflation may not get going in earnest until 2010 because of the china effect
Insolvencies expected to rise in official figures released tomorrow
BBC News: Insolvencies set for record rise
Official government figures to be published on Friday are expected to show a record number of people in England and Wales going insolvent. PriceWaterhouseCoopers (PWC) forecast that about 27,000 people will have gone insolvent between July and September.
1500 migrants arrive in the UK daily while 1000 a day leave
BBC: 1,500 migrants arrive in UK daily
Considering the government admit to having no idea how many migrants have entered the UK this article should most probably be taken with a pinch of salt. However, the article does provide some level of depth and what is interesting is that a 1000 people a day leave the UK and over half of those are British. What affect the high level of migration has on the house price inflation is difficult to gauge.
Lib Dems to test single room rent rules
Firstrung: Single room housing benefit must be re-examined - Lib Dems
Commenting ahead of tomorrow's vote on a Liberal Democrat amendment to abolish single room rent, Liberal Democrat Work and Pensions Spokesperson, Danny Alexander MP said: "It is high time that the Labour Government remembered the good reasons why it opposed the single room rent when it was introduced in 1996.
Plea for no interest rate rise - Smartnewhomes.com
Firstrung: Interest rate rise next week will seriously dampen the housing market - smartnewhomes.com
David Bexon, Managing Director of SmartNewHomes.com, the UK's leading new homes website, offers a warning ahead of this month's decision on interest rates: "A rate rise in November would seriously dampen the market at this crucial time when it is slowly starting to show signs of growth. With predicted higher costs of transactions next year from HIPs, albeit slimmed down, a rate rise at this time could send house prices into reverse and seriously damage buyer confidence
UK manufacturing sector maintains momentum
FTcom: UK manufacturing sector maintains momentum
Strong domestic demand helped the UK manufacturing sector deliver its fifteenth successive month of expansion, a trend that has encouraged producers to continue raising prices at the factory gate,
Are we in 1973
zealllc.com: Dow 30 Record Highs
After reading a few articles about secular bull and bear markets I am beginning to think that our economy is at the same stage as it was in the early to mid 1970's
PricewaterhouseCoopers challenge housing as a safe bet for growth
TimesOnline: One in three chance that house prices will be lower by 2010
PWC challenge the misconception that housing is always a "one-way" bet and state that there is currently a one is three chance that house prices will be lower in 2010.
More news of the economy slowing down
Bloomberg: U.K. October Manufacturing Growth Slows, CIPS Says
British manufacturing growth slowed in October, the third indication in a week that the economy's expansion may be flagging.
If You Like to Walk Then He'll Tax Your Feet...He's the Tax Man
Daily Express: Now Brown Is to Tax People With Nice Neighborhoods
Well before you buy that overpriced house, make sure it's in a naff neighborhood and not "location, location, location." Otherwise Gordo's got big plans to Tax your lovely view, clean streets, nice neighbors, decent school. And he's taken photos from every angle just to prove how nice it is or isn't. He also knows your ethnicity what you had for breakfast ....Then see BBC News online -- front page "UK Surveillance Society" article, to really make your day.
Wednesday, November 1, 2006
Hunt begins for cheaper loans as debt hits new high
Irish Independant: Hunt begins for cheaper loans as debt hits new high
CASH-STRAPPED home owners are desperately shopping around to reduce soaring monthly repayments as debt levels hit new records. Figures from the Central Bank show that companies and individuals borrowed almost €6bn in September, with mortgages accounting for €2bn.
estate agents warn against interest rate rise
in2perspective: estate agents warn against interest rate rise
estate agents running the country again!
Itchy recession guide
http://www.itchylondon.co.uk: Itchy recession guide
Get to grips with the recession with this handy survival guide. thought this might lighten up the mood.
ECB rate rise in December
FXStreet.com: Forex Weekly Review and Outlook
ECB is widely expected to keep rate unchanged at 3.25% but signal another hike in December.
ECB rate rise (tomorrow perhaps?)
Gulf Times: ECB money supply data points to rate increase
The acceleration .. in Eurozone money supply ... took analysts by surprise. Analysts said this raised prospects that the European Central Bank would raise interest rates in coming months.
Property Websites
Times Online: The Click
I'd like to get people's opinions on the best property websites out there. I spotted this article and am intrigued by the concept of www.auctionyourproperty.com. But does anyone have any experience of using property websites?
US housing starts - Oh dear!!!
Yahoo Finance: Construction Spending Falls in September
Even more evidence of what is to come
An attempt to explain the continuing rise
Moneyweek: Why are house prices rising ?
It all seems plausible - but they have been saying it for ages.
Half of new homes started in UK so far this year were flats and maisonettes
Firstrung: Flats dwarf all other housing types
According to NHBC, who cover over eighty per cent of new homes in the UK, up until the end of August, 47 per cent of new homes started in the UK were flats and maisonettes. In contrast, 20 per cent of new homes started during the first eight months of the year were detached properties.
Is anyone at home?
Firstrung: Letting agents see their vacant properties increase by over 100 percent in a year
What bit of this message are buy to let investors not getting? "The average number of vacant properties reported per agent in the third quarter of 2006 was 14, compared with 6 empty properties per agent in the third quarter of 2005, yet the average time to let has decreased from 14 days in 2005 to 12 in 2006. A greater number of properties coupled with the increase in speed taken to let, indicates a strong sector".
A house price crash is that serious?!
Daily Telegraph: US housing crash could bring UK down with it
Edmund Conway writes of Peter Warburton who says, "There is an increasingly large possibility of a scenario where, frankly, economic activity could fall quite materially. In short, I do not believe that the UK has become a more stable economy." This was helpful but to balance up the article for the less bearish, he quotes Trevor Williams, the chief economist at Lloyds TSB Financial Marketswho is predicting that after expanding by 2.8pc this year, the UK will grow at 2.9pc next year. You decide but Edmund's leaning closer to Peter Warburton this time!
Why are house prices still rising?
MoneyWeek: Why are house prices still rising?
It probably hasn’t escaped your notice that house prices are still rising. UK property is overvalued by any conventional, and most unconventional, measures. But because the housing bubble has lasted for so long, and because people are so scared of missing out on what they see as easy money (buy-to-let investors) or are scared witless that they’ll never be able to get on the ladder (first-time buyers), there’s now only two things that matter - how much can I afford to pay a month; and how can I get the loan? On the first point, people are now only too happy to throw every penny of disposable (and some indisposable) income at their property quest. And if they’re over-optimistic in their assumptions and find their outgoings creep up over their incomes, well, who cares - house prices and wages only go up, don‘t they? And as for the second point - well, getting a bank to lend you money is getting easier and easier. Just ask Abbey…
New Land Registry house price index touted as being most accurate
TimesOnline: New house price index gives regional picture
The new house price index collated on monthly data should become the authoratitive and most accurate reflection of house price movements according to Land Registry deputy chief executive Ted Beardsall. Currently it show London booming and other areas falling.
Inflation figures are meaningless
The Daily Telegraph: King attacks inflation index for excluding housing boom
Inflation exists when prices, on average, are rising. Of course you have to decide first what items you include in that average. If the Bank of England Governor is complaining about the compilation of CPI then surely the City will start to suspect that government bonds at 4.75% are not adequately compensating them above real inflation.
Inflation figures are meaningless
The Daily Telegraph: King attacks inflation index for excluding housing boom
Inflation exists when prices, on average, are rising. Of course you have to decide first what items you include in that average. If the Bank of England Governor is complaining about the compilation of CPI then surely the City will start to suspect that government bonds at 4.75% are not adequately compensating them above real inflation.
Inaccuracy of migrant data hampers BoE ability to steer economy
TimesOnline: Uncertainty on migrant numbers is hampering rate policy
Mervyn King states that flawed 2001 census data and difficulty measuring migrant numbers in Britain is creating problems steering the UK economy
Big news of the week!
BBC: Five-times-salary mortgage offer
Abbey, Britain's second largest home loan provider, is offering borrowers five times their salary in order to help them get onto the property ladder. The bank is making the offer available to individuals or couples with a 25% deposit for their house and an annual income of £50,000 or more.
Five-times-salary mortgage offer
BBC: five times joint incomes
Abbey, Britain's second largest home loan provider, is offering borrowers five times their salary in order to help them get onto the property ladder.
Fools Mortgage - Five Times Joint Earnings While They Last!
Financial Times: Home loans on offer at five times salary level
Homebuyers are being offered unprecedented borrowing power by banks and building societies, which are now marketing mainstream mortgages of up to FIVE times joint salary levels as they attempt to win first-time buyers. Abbey, the UK’s second-largest home loans provider, has raised the standard amount it will lend homebuyers to five times either their single or joint salaries, eclipsing the traditional borrowing levels of around three and a half times salary. Melanie Bien, associate director at independent mortgage broker, Savills Private Finance, said of Abbey’s move: “It is unprecedented for a mortgage lender to offer this much on a joint basis. It seems lenders are going all out to enable first-time buyers to borrow as much as they can.” Reported By Sharlene Goff, Deputy Personal Finance Editor, Financial Times Published: October 31 2006 22:10
Fools Mortgage - Five Times Joint Earnings While They Last!
Financial Times: Home loans on offer at five times salary level
Homebuyers are being offered unprecedented borrowing power by banks and building societies, which are now marketing mainstream mortgages of up to FIVE times joint salary levels as they attempt to win first-time buyers. Abbey, the UK’s second-largest home loans provider, has raised the standard amount it will lend homebuyers to five times either their single or joint salaries, eclipsing the traditional borrowing levels of around three and a half times salary. Melanie Bien, associate director at independent mortgage broker, Savills Private Finance, said of Abbey’s move: “It is unprecedented for a mortgage lender to offer this much on a joint basis. It seems lenders are going all out to enable first-time buyers to borrow as much as they can.” Reported By Sharlene Goff, Deputy Personal Finance Editor, Financial Times Published: October 31 2006 22:10