February 2007 Archive
Wednesday, February 28, 2007 
New build BTL market is looking fragile
MSN: Why investing in new homes could be disastrous
The beginning of the chain is weakening.....
US new home sales plunge, from bad to worse
CNN: New home sales plunge
Worst figures in 13 years, beware all piffle that US house market is hitting bottom, nothing could be further from the truth. Also watch the market in mortgage backed securities - the A rated vehicles are now starting to wobble badly, and they are NOT subprime
Council tax rise will be a heavy blow for pensioners and the low paid!
Freehelpadvice: Council tax rise will be a heavy blow for pensioners and the low paid!
With the average council tax bill forecasted to rise by 4.2 per cent in Britain during 2007/08, the Liberal Democrats have warned that the increase could be too much for some. Andrew Stunell, Liberal Democrat local government spokesman, said that the council tax rise will be a heavy blow for pensioners and the low paid and more people will be added to the two million people already struggling to pay their council tax bills.
Another kick in the nuts for mortgage lenders....
BBC News: Firms yield on mortgage exit fees
"Around 10 million mortgages have been redeemed in the last four years," said Ray Boulger of the mortgage broking firm John Charcol. "But the number of people who claim compensation will no doubt be largely influenced by the amount of media coverage this topic receives. "However, I would estimate that the total compensation payable will be at least £50m and probably in the region of £100m."
Interest rate hikes have started to dampen the housing market
Freehelpadvice: Interest rate hikes have started to dampen the housing market
Nationwide Building Society, a major provider of mortgages in the United Kingdom, has claimed that the three interest rate hikes in five months have started to dampen the house price growth in the country. According to Nationwide, negative indicators emerging in the market, point to an impending decline in the house prices, which grew by 0.7 per cent in February compared to 0.3 per cent in January.
Cost of water increases at twice the rate of inflation
Water bills to rise by 7%: Guardian
OFWAT, regulator of the Water Industry has confirmed that water rates for the average household will rise by £20. Customer of South West Water face an increase of around 16%. These rises come despite the perceived failings of the industry and the shortages last summer.
Water Bills rise by more than twice Inflation
BBC news: Water and sewage bills up by 7%
South West Water has spent £1.5bn on cleaner beaches Household water and sewerage bills will go up by an average of 7% in England and Wales in the coming financial year, confirms the regulator, Ofwat.
Bearish news from around the globe sends markets tumbling
FT: European markets tumble following Asia sell-off
A combination of worries about the sustainability of Chinese growth and bearish news from the US particularly from the former Federal Reserve chairman Alan Greenspan who used the word "recession" gives the markets the jitters.
NI housing market to slow to ONLY 15% in 2007
BBC News: NI housing market to slow in 2007
Houses in NI rose by 37% 2006 and to slow to 15% this year....the madness continues.
In the US, is the worst over?
The Indy Online__: As home values fall, is the US heading for the much-feared 'hard landing'?
A doom and gloom article which suggests the economic situation in the US might take a turn for the worst - a 'soft landing' might not happen afterall.
IR rises effecting buyers, says Nationwide
BBC News: Housing demand 'starting to wane'
Nationwide sees the house market cooling off, despite an increase in the annual rate of house price inflation. The UK's third largest mortgage lender pointed towards a drop in the number of new mortgage approvals and enquiries at estate agents as possible indicators of a dip. This could be attributed to recent increase in the BoE's inflation base rate.
Markets continue to take a slapping
BBC: World stock slump hits second day
The second day of significant losses on worldwide markets continued today. After yesterday afternoon's 2.5% loss, the FTSE 100 shed a further 1.9% in early trading. Although the correction was expected at some point after such a long bull run, it wasn't expected quite as suddenly. It was triggered by comments about the possibility of a US recession by former FED chief Ben Bernanke, and the possibility new regulatory laws governing Chinese markets.
Nationwide figures released
Guardian: House price growth returns to double figures
The average price of housing in the UK rose by 0.7% in February, up to £174,706. This takes the annual rate of house price inflation to 10.2%, up from January's 9.3%. This comes despite the BoE's surprise decision to raise IR rates in January.
UK's largest mortgage lender posts results
Telegraph: HBOS cautious on lending
HBOS, owner of Halifax, posted its annual report yesterday. Its profits increased by nearly 20%, and it increased its dividend by 15%. Chief Exec Andy Hornby said the group's performance was moderated by concerns about bad debt and levels of unsecured personal lending, which it aims to scale back.
Housebuilder half-yearly profits up 10%
Guardian: Barratt posts £180m profits
Barratt, the homebuilder who recently purchased competitor Wilson Bowden, has posted its interim results, which show solid increases in business and revenue. Charkes Toner, the chairman, attributed their success to a cohesive business model and a market where demand outstrips supply.
Belfast 4 bedroom houses heading towards the million mark
BBC: 'Hysterical' buyers driving market
Developers have been knocking on doors of large houses in fashionable parts of Belfast, trying to perasuade homeowners to sell the house, so the developer can convert it to flats. Prices have reached frenzied levels, and first time buyers are becoming incredibly squeezed. Some parents are buying for their children now, before they move out, as they worry that leaving it any longer will make it impossible for their children to obtain a property.
Demand weakening
FT.com: House prices rise 0.7 per cent in February
“Nevertheless, the January and February data taken together hint that the housing market could be starting to lose buoyancy.” Markets reacted little to the stronger than expected Nationwide report, with traders more concerned about about the ramifications of Tuesday’s and Wednesday morning’s global equity sell-off.
Come on...!!
BBC: World stock slump hits second day
A global stock sell-off has moved into a second day, after a wobble in China sparked fears of a big price correction and hit UK, Asian and European indexes. ..
Come on...!!
BBC: World stock slump hits second day
A global stock sell-off has moved into a second day, after a wobble in China sparked fears of a big price correction and hit UK, Asian and European indexes.
Looks like the Yen Rise is having an effect
Reuters: Stg slides vs yen, investors unload carry trades
Something is happening to Sterling. "Sterling fell sharply against the yen on Tuesday .... with the move also dragging the pound down versus the euro." Remember a rate rise may also occur in defence of the currency. However ..to be fair... the article also mentions Blanchflower's belief in voting for a cut soon ... "which would leave us with a three-way split on the MPC," Rabobank senior proprietary trader Lee Ferridge said. I think the MPC meeting on 8 March will be one where the members earn their pay... could be a long one.
Tuesday, February 27, 2007
What Next?
BBC News: World stocks plummet on China woe
Global stock markets have slumped, with the US Dow Jones index plummeting by more than 400 points and London's FTSE 100 index also posting sharp losses.
It means buckle your seatbelt, Dorothy, 'cause Kansas is going bye-bye
National Post: Stocks end sharply lower on China
Some friends of mine keep asking me "So when is this big crash going to happen then". I tell them, be patient, you'll see the first creaks soon enough. THEM: "Yeah, but you've been saying that for the last 5 years - and my house is now worth 5 times what it was 5 years ago, so you're the mug" ME: "True enough, but tell me, have you actually sold and realised that profit or are you just mewing like a cat on LSD? When the stock market tightens credit, your house may resemble an engine block strapped to your body as you are thrown into the River of Financial Despair"
FTBs Go For Broke With 100 Per Cent Mortgages
FindaProperty.com: FTBs Go For Broke With 100 Per Cent Mortgages
Mortgage Advice Bureau (MAB) revealed a 21 per cent rise in first-time buyers opting for 100 per cent mortgages in 2006 compared to 2005. They recorded an even greater increase in those borrowing in excess of the value of their property. This rose by 50 per cent over the course of the year with 11 per cent of all MAB cases now applying for mortgages in excess of 100 per cent. The Department for Communities and Local Government reported that in December the average house price for first-time buyers was £155,120, considerably more than the £125,000 stamp duty thresho
Mortgage figures hint at slowing market
The Guardian: Mortgage figures hint at slowing market
Signs of a possible cooling in the property market emerged last month as the number of people taking out a mortgage fell to its lowest point in two years, the British Bankers Association (BBA) said today. The number of people taking out a mortgage to buy a home fell from just over 45,000 in January 2006 to 37,804 in the same month this year.
Britannia sees house market slowing
Reuters: Britannia sees house market slowing
LONDON (Reuters) - Britannia, Britain's second biggest building society, sees little or no growth in the mortgage market this year as higher interest rates and personal debt feed through to the housing market, it said on Tuesday.
Property Market Cools
SKY NEWS: Property Market Cools
Borrowers are feeling the heat, according to Britain's second biggest building society. The three interest rate rises since last August and high personal debt are having an effect on the property market, says Britannia. It saw little or no growth in the UK mortgage market this year, Britannia said, as it revealed a record profit of £130.4m for the year, up from £120.5m in 2005.
First one to blink!!!
Reuters: FTSE tumbles 2 pct on China fears
"What a session. A stock exchange fall-out in Shanghai, indifferent data on inflation and durable goods exacerbating the downbeat sentiment of a creaking economy ... and geopolitical threats from Iran," said David Buik of Cantor Index. "That all looks like a very intoxicating cocktail of despair indeed," he said.
High prices and low interest rates, or lower prices when rates are up?
CNNmoney: Home buying: Buy now? Or wait for a price drop?
VIs put a positive spin on falling prices. Will we soon be reading similar advice from our own media? We cant be that far behind.
It's unravelling: The rats are heading for the Exits. US mortgage crisis goes into meltdown
Telegraph.co.uk: US mortgage crisis goes into meltdown
Panic has begun to sweep the sub-prime mortgage sector in the United States after the bankruptcy of 22 lenders over the past two months, setting off mass liquidation of housing loans packaged as securities. Analysts say the housing bust is pulling America into recession, citing a 14.4pc drop in housing starts The rapid deterioration could not come at a worse time for British bank HSBC, which has set aside $10.5bn (£5.4bn) to cover bad loans in the US.
US house price slide continues
CNN: Home price slump continues
Sixth straight month that prices have shown that year-over-year drop, a relatively rare condition for home prices before the current slide.
Britannia sees a slow in mortgage lending this year
Interactive Investor: Britannia sees house market slowing
Are these the signs that things are beginning to slow down?
house price rises getting faster and broader bases
Reuters: Latest News
LONDON (Reuters) - House prices climbed in February at their fastest annual rate since June 2003, a survey showed on Monday, with robust growth in London and the southeast overshadowing weaker increases elsewhere. Property consultant Hometrack said house prices rose 6.4 percent this month from a year earlier, up from 6.0 percent in January. Price growth was once again concentrated in London and the southeast, with property prices in areas such as the Midlands and Wales edging up by just 0.1 percent. However, unlike the previous month when growth was concentrated in a quarter of areas, prices in February rose more evenly, with rises in 42 percent of the nation. "Despite the January rate rise, it seems that a lack of supply is continuing to support higher prices, primarily in London an
If only the MPC were as vigilant!
FT: Eurozone money supply hits 17-year high
Money supply in the eurozone grew faster in January than at any time since early 1990, raising expectations of further interest rate rises by the European Central Bank in the coming months. M3, the money supply measure that the ECB uses as an indicator for the likely course of inflation, was 9.8 per cent higher last month than in January 2006, the bank reported on Tuesday.
Joe Public's verdict on the miracle economy?
Telegraph: Poll puts Cameron ahead with 11-point lead
The Labour party have been suffering in the opinion polls of late. This poll for the Independent puts the Conservatives on 40 per cent (up six points since Jan), Labour unchanged on 29 per cent, and the Lib Dems down four points on 17 per cent.
The fundamental problem of housing price
Bloomberg: London Home Shortage Won't Go Away, BOE's Barker Says
This article can help to understand why the housing market hasn’t crash yet (if you didn’t have a clue yet) but moreover why it keep rising. Is it a coincidence, incompetence or rather a persistence relaxed attitude from some in power toward HP inflation? Found out for yourself in this article.
Greenspan admits possibility of recession
FT.com: Shares slide on fears of global slowdown
Adding to the downbeat sentiment, former Federal Reserve chairman Alan Greenspan said on Monday that it was “possible” the US economy may fall into recession later this year. Lots of bearish indicators in here which could contribute to an economic picture for HPC, including a 9% drop in China's stock market index and the FTSE dropping by over 100 points (1.7%) today. Also, concern over Iran, oil and the "carry trade" which could see global credit squeezed if it unwinds.
8pm Friday night: The usual VI spin from Trev's team
ITV1: House Price Forecast: Tonight
"Amid persistent warnings of an imminent property crash, Tonight consults experts about their predictions on house prices for the coming year" I'm not sure if the senior staff at ITV have managed to sell off all their investment properties yet, so watch this programme to be told by "experts" (the usual VI cheer leaders rolled out from estate agencies and mortgage lenders) that the UK property market is alive and well. If there is any bear advice, I notice, as usual, it's been scheduled for Friday night when a large part of the country are drowning their sorrows, probably FTB woe related.
Hammerson echoes warning on valuations
Telegraph: Hammerson echoes warning on valuations
Hammerson added its voice to recent warnings that the upward shift in property valuations in recent years has run its course. But the shopping centre and City office block owner promised a 25pc hike in the dividend this year and a £5bn development programme. John Richards, chief executive, said: "Following the recent rises in interest rates … the positive differential between property investment yields and borrowing costs has been largely eliminated or reversed, reducing the attractions of property to some debt financed investors." He warned that "secondary property remains potentially more vulnerable to any market weakness".
BBC
BBC: Mortgage approvals fall at banks
Mortgage approvals by the UK's biggest banks dipped slightly in January, said the British Bankers' Association (BBA). The underlying number of mortgages approved for house purchase last month was 44,804, a fall of 1% from the figures from a year earlier. "It was notable that underlying mortgage approvals were down by around 1% year-on-year in number in January," said Howard Archer of Global Insight. "This was the second successive month that approvals were down year-on-year, and contrasts with the substantial year-on-year increases seen through much of 2006."
buy to let remaining healthy?
Firstrung: Strong marketplace for UK residential lettings - NAEA
Lettings members of the National Association of Estate Agents (NAEA) reported a strong marketplace for UK residential lettings over the last quarter of 2006.
rates starting to bite?
Firstrung: Mortgage lending down significantly in Janaury - BBA
Following last week's release of MBBG net lending figures for January, further information now available on lending to individuals shows that: January's gross mortgage lending was £16.6bn, 15% more than the £14.5bn in January 2006. In line with seasonal patterns, January was well down on December's £18.1bn.
Housing inflation a problem in Ambridge
BBC Radio: Monday's episode of the archers
Listen to monday's edition. what's funny is that they got all key components in over dinner. -over priced hosues. -interest only mortgages. -parents lending kids money to move out. enjoy,
More tax for individuals to pay
The Telegraph: Private equity firms beat the Revenue
Five of the 10 largest private equity-owned companies in the UK effectively paid not a single penny of UK corporation tax in 2005/06.
Beware militant pensioners, Mr Brown...
Times Online: Council tax rises to beat inflation for a tenth year
The average council tax bill will rise 3.8% to £1,315. This means that since Labour came to power, council tax has risen 90%, and every year has seen increases above inflationary levels. Unsurprisingly, these increases will anger many who perceive the quality of local services to be decreasing.
Inflation could head back towards MPC target
Guardian: Falling energy prices force down inflation
The Monetary Policy Committee are split over the direction the economy will take in the coming months, says member David Blanchflower. His personal viwe is that inlflation will drop back towards target levels with dropping energy prices.
UK House Prices continue to Rise whilst the US Housing Market Slumps
Goldseek: UK House Prices continue to Rise whilst the US Housing Market Slumps
The UK housing market has proved remarkably resilient by notching up a further gain for January of 1.3% (Halifax) , whilst the US Housing market continues to go from bad to worse as the sub prime mortgages time bomb goes off, resulting in a slump that looks set to be the worst since the Great Depression of the 1930's. The UK housing market looks set to continue to be supported, even at these elevated levels,
Monday, February 26, 2007
House prices soaring again
Daily Express: Another irresponsible headline from the Express
House prices are rising at their fastest rate in almost three years. The average property is gaining £500 a week.
Houses still affordable in the UK?
Seekingalpha.com: This is the Housing Market the UK Built
The UK housing market looks set to continue to be supported, even at these elevated levels, primarily due to housing still not having reach unaffordable levels experienced in the past. Additionally, the strong growth in the money supply and continuing immigration continues to support the market. Even an expected interest rate rise to 5.75% is unlikely to affect the situation significantly. It would require an interest rate hike to well beyond 6% before we are likely to witness a significant house price decline in the UK. This would be preceded by inflation taking off beyond 3% CPI, and would be associated with a decline in economic activity.
Spend your way out a hole
BBC: US economic outlook 'improving'
The outlook for the US economy in 2007 has improved, research has indicated, suggesting that interest rates may stay on hold all year.
House price boom 'could end soon'
Dail Mail: House price boom 'could end soon'
The era of rising house prices and low interest rates could soon be at an end, say leading economists. In a red alert to Britain's 18m home owners, they said rates could rise while house prices fall. Last week, the average house price went above £200,000 after more than a decade of increases
Higher interest rates put brakes on housing
Moneyextra.com: Higher interest rates put brakes on housing
Although mortgage rates take time to change, the increase in base rate early in the New Year appears to have had a salutary effect on homebuyers and mortgage payers. Robin Amlôt of Moneyextra.com said, "For many, November's base rate rise has only just hit their mortgages and, now, they have the prospect of another guaranteed increase in their costs and talk of yet another base rate rise to come in the near future! "Under the circumstances it's hardly surprising that the average value of both property and likely mortgage being searched against on Moneyextra.com's mortgage comparison tool eased down across all sectors (first time buyer, home mover, re-mortgagor) from December to January."
100 p/c mortgage borrowing soars
Daily Mail: 100 p/c mortgage borrowing soars
The number of first-time buyers taking out a mortgage greater than the value of their home has risen by 50 per cent.
Groundbreaking research from propertyfinder.com
IC Wales: Population movement drives up house prices
The areas of the UK with the highest inward migration have seen the most dramatic increases in house prices. Apparently, a 1% increase in population can increase house prices by up to 183%.
Persimmon profit in line
Reuters: Country's biggest housebuilder meets market expectations and expects strong year
A secure economy and job market have helped keep demand for new housing high, with the unexpected IR hike making little dent in the strength of the property market. The company increased its dividend yield by 50%, on the back of achieving a good amount of reservations and forward sales.
Consistencies between Sterling and Euros
Independent: Stephen King: Why the pound and the euro are as entwined as lovers
Steven King, Economics Director of HSBC discusses the reasons behind the steady relationship between Sterling and the Euro. For the last 5 years or so, the behaviour of the two currencies has been remarkably similar, despite some fairly disparate behaviour from the central banks.
Shop around - loyalty is old-fashioned
Yorkshire Post: Shop around – banks haven't earned loyalty
Today, consumers with the best deals in banking and finance are known by banks as 'promiscuous'. They shop around, and don't stick with the same institution through thick and thin. With banks' increasingly motivated towards short-term profits, this attitude is hardly surprising.
Hometrack survey shows prices up 0.7% in Feb
Guardian: Supply shortages push house price growth to three-year high
The lack of supply compared to continuing high demand for property stock, particularly in the south, is the main factor keeping the property market strong. This is despite the MPC's IR rate rises at the end of 2006 and January 2007.
3i joins the chase as Foxtons sports a £400m tag
Times on-line: 3i joins the chase as Foxtons sports a £400m tag
3i Group, the quoted private equity house, is hoping to buy Foxtons, London’s largest estate agent, in what could be a £400 million sale, The Times has learnt. The UK private equity group is among suitors set to submit first round bids for Foxtons by the close of business today. Foxtons hired investment bankers at Credit Suisse last November to explore a possible stock market flotation of the company, which is owned and run by Jon Hunt, its founder.
Will The Housing Bubble Burst in 2007?
Time: Will The Housing Bubble Burst in 2007?
Since early 2000, economists have been sounding the housing bubble alarm with increasing urgency. And while many markets around the country have seen prices drop in the last year, the dire, across-the-board correction that many predicted has yet to materialize.
Sunday, February 25, 2007
Prepare for the failure of HBOS & similar
MoneyWeek: US Subprime worries just the tip of the iceberg
What happens when the loan goes bad? Mortgage companies make lots of money writing “iffy” loans as long as Wall Street can package and sell the securities (and risk) into the capital market. All looked well for the Titanic sailing ahead in the fog, until it was too late. Looks can be deceiving, too, in the subprime mortgage market because the mortgage companies are very thinly-capitalized and highly-levered. A few million dollars of capital can end up supporting reps and warranties on billions of mortgage loans.
The week that was
Firstrung: First time buyers property news, the week in focus - 24/02/07
Firstrung has always urged caution for those expecting a dramatic correction in house prices, our contention has remained steadfast that prices could revert back to 2004 levels as a minimum correction. This would reduce current prices by approx. 22%. However, it must be remembered that even at 2004 prices vast swathes of first time buyers were still locked out of the house buying process, therefore a reduction of 22% would hardly make property widely affordable to the many currently priced out and just how long this correction would take to unfold is anyone's guess...
UK Agi-Land is the Next Investment Bubble?
Times Online: Urban exodus fuels return to the farm
Agricultural land rose in value by an average of 18% last year. Tax break = farmed land potentially qualifies for 100% relief from death duty, which means it should fall out of your estate for IHT purposes. The rate of CGT for a higher-rate taxpayer would be just 10% if you had owned the farm for two years or more.
Sharebuying Frenzy = 1930s Style Depression?
Times Online: How to spot the top of the market
With the Footsie soaring to a six-year high, is it time to turn cautious before the bubble bursts, asks David Budworth. Unit-trust sales high of £17.7b in 2000 just before crash. Investment funds rocketed to £15b in 2006 - where next?
Saturday, February 24, 2007
The boom is over, the price must yet be paid
Guardian: The boom is over, the price must yet be paid
In some ways the housing market has resembled a drunk standing at the bar in some back-street boozer. With every drink he has, people think he must soon stagger and tumble over. But he doesn't. He keeps drinking and he remains standing. He stays up for so long that eventually people decide they were wrong to think he would fall over. But then, just as they decide he will never fall, he takes the last drink and finally tumbles to the ground.
Yet more debt stories
Times: Consumers hit by credit squeeze as debt spirals
High street banks are preparing to write off an unprecedented £6.6 billion as Britons default on a record amount of personal loans and credit card debt.
Just look who really benefits from HPI
Firstrung: House prices in 236 postcode districts are above the inheritance tax threshold - Halifax
Halifax calculates that the number of postcode districts where the average house price is above the inheritance tax (IHT) threshold has more than doubled in the past five years. The average house price in 236 (11%) postcode districts in England and Wales is now above the IHT threshold compared to 117 (6%) postcode districts five years ago in 2001.
Never had it so good, or owed so much to so few
Firstrung: Pay rises and bonuses spent before received
No matter how generously large or painfully small people's pay rises or bonuses may be, nearly eight in ten (79%) of us will have already 'mentally' spent the extra cash before it even hits our bank accounts.
Debt is so good
MSN money: Why it pays never to pay off your mortgage
The author argues that debt generates wealth in a booming market.I enjoyed spotting and counting the statements supported by weak arguments; the most obvious being that markets don't always gain.
Property prices rising faster than Inheritance Tax
BBC News: More homes 'face inheritance tax'
More than two million homes are now worth more than £300,000 - the level at which inheritance tax (IHT) is levied - a report says. The study from the Halifax found that in 236 postcode areas, mainly in London and south-east England, the average house price now tops £300,000. It said if current trends continue, 4.3 million homes will be worth more than the IHT threshold by 2020.
More bad news from the US
Daily Telegraph: US mortgage crisis goes into meltdown
Not looking good in the US - careless lending to people who shouldnt really be borrowing/stretching the tradition income multiples etc.....and look what starts to happen
Friday, February 23, 2007
Private Equity Juggernaut smashing through UK companies
Guardian Unlimited: Private equity: the human cost
A very good article, especially when you are half way through it and you see the figures involved. I now realise that I myself was a victim of one such buyout in 2003 by 3i, fasten your seatbelt you have been warned.
February - up but slower up?
London Stock Exchange: House Prices to Lose Buoyancy
Although property prices in the UK are likely to have risen in February, they are expected to slow down over the next few months, one expert has claimed.
This link is worth it just for the picture!
Atlantic Free Press: The Second Great Depression
This week’s data on the sagging real estate market leaves no doubt that the housing bubble is quickly crashing to earth and that hard times are on the way. “The slump in home prices from the end of 2005 to the end of 2006 was the biggest year over year drop since the National Association of Realtors started keeping track in 1982.” (New York Times) The Commerce Dept announced that the construction of new homes fell in January by a whopping 14.3%. Prices fell in half of the nation’s major markets and “existing home sales declined in 40 states”.
feature on MPC 'Hawk' Sentance
Times Online: Bank of England’s new boy is happy to be known as a pragmatic hawk
Since joining the MPC 5 months ago, Sentance has voted to raise interest rates 4 times. He is concerned that the high level of consumer demand in the economy will perpetuate inflation, and keep pushing it away from the MPC's target.
ONS figures show UK economy still growing
Times Online: Economy growing at fastest pace for two years
Today's ONS figures show that the UK's GDP increased by 0.8% in the fourth quarter of 2006, which is the highest rate since the corresponding period of 2004. Consumer spening also rose by 2.6% over the course of the year.
Inflation expectations decrease
The Guardian: Inflation predictions scaled back
A YouGov policy conducted this week shows that people are scaling back their inflation expections for the coming months. The figure from the poll now puts the CPI at 2.4% rather than 2.7% Although this is still above the MPC's 2% target, it will come to some relief to the policymakers with concerns over rising prices.
Uncertainty over investment and inflation
The Herald: Investment and inflation cloud interest rate picture
Analysts are unclear as to what direction the MPC will take in their next meeting as high levels of business investment may be distorting the CPI inflation figures to some extent.
It's a long shot by the BBC - but it's all they've got this month!
BBC "News": Ten signals of areas 'on the up'
Running low on feelgood stories for the housing market? As an up and coming newsdesk sub-editor, have you been worried that your BTL investment may not have been so prudent? Things gone a bit quiet on the good news gravy train? Well simply post a no-facts, no figures, wishy-washy opinion-editorial article with catchphrases like "A sign of a property price boom?". PS. Remember to pay your TV license fee!
Things are changing in the personal banking world
BBC News: Lloyds introduces credit card fee
Lloyds TSB is to impose a £35 annual charge on credit card account holders who do not use their cards. The annual charge will apply to "low-usage" customers; including people who use do not use their cards at all.
Nearly 100K homeless households in the U.K
Firstrung: 20,000 additional social rented homes a year needed to start tackling the housing crisis - Shelter
"With waiting lists topping 1.6 million and 93,000 homeless households currently trapped in temporary accommodation, there is an urgent need to build more social rented homes. The Government must commit to funding 20,000 additional social rented homes a year to start tackling the housing crisis and help those children and families in the greatest need."
The right to home ownership comes second to the right to an adequate home
Firstrung: Future of social housing
The Government must respond to Professor John Hills report into the future of social housing by placing the issue at the top of the political agenda, says the National Housing Federation, which represents England's housing associations - the country's main providers of affordable homes.
You can't fool all the people all of the time
Telegraph: Brown losing touch on economy, say voters
Gordon Brown is losing his reputation for economic competence. When voters were asked which party was likely to run the economy well, 30 per cent said the Conservatives and 27 per cent Labour. At the 2005 election, Labour had a commanding 22-point lead, with 49 per cent regarding them as economically competent compared to 27 per cent for the Tories.
Could we be getting a visit?
REG: No bottom to the housing and mortgage meltdown
Looking rosy
Thursday, February 22, 2007
Another article questioning the strength of the BTL market
Guardian Unlimited: Buy-to-let investors are still smiling - but for how long?
Nothing really new for HPC visitors. It talks about how rental yields are falling, but with lots of quotes from VIs saying how the market will tail off rather than collapse. It also mentions that additional interest rate rises will be very dangerous to BTL... "With three interest rate rises in six months, and another on the cards, life is getting harder for buy-to-letters, with some talking about selling up because their mortgage payments are now higher than their income from rent."
More tosh from a VI
London Stock Exchange: Investors attracted by rising property prices
With many investors considering their BTL properties part of their pension fund, a number of people are attracted to the market by rising house prices, it has been claimed. Philip Davies, CEO of the Linden Homes, said: "Many are concerned only with covering the costs through rental income rather than making an immediate profit, in the knowledge that the property is gaining value which can be realised in the future." Lee Tillcock, editor of business at Moneyfacts, recently stated that investors should remember that the current base rate of interest remains close to "historic lows" and that the buy-to-let market can provide a "sound" long-term investment.
Repossessions on the rise
MoneyExpert: Mortgage rate rises hit home in repossession misery
Homeowners who remember the housing crash of the early 1990s will shiver at the news of a rise in repossessions. Last year saw a 65 per cent rise in the number of homes repossessed after their owners couldn't keep up payments. That doesn't mean we should all start panicking. The 17,000 repossessions are sad but still represent just 0.38 per cent of all mortgages in the UK. You have a one in 260 chance of getting repossessed.
First A&L, now HSBC. The wheels are coming off the SubPrime Market
FT.com: Mehta quits as HSBC’s North American head
Bobby Mehta, head of HSBC‘s North American arm, has become the bank’s first senior casualty following its first profits warning earlier this month. Mr Mehta, chief executive of HSBC North America Holdings and chairman and chief executive of HSBC Finance Corporation, stepped down with effect from February 15, the bank said on Thursday.
Flashback: May 2006 - Incorrectly priced mortgage risk
MoneyWeek: How US mortgage debt could cause a global financial crisis
And if you want the even briefer version, here it is: The large size of GSE mortgage portfolios (about US$1.5 trillion), coupled with the lack of market discipline at correctly pricing the risk of GSE debt, multiplied by the interconnectivity of the world's financial institutions has led to a possibility "without precedent." Henry adds that "Financial markets across the board would likely become very illiquid and volatile as firms with significant losses attempted to unwind their positions."
Utter rubbish
Daily ExpressSALES: SCRAP NEW TAX ON HOUSE SALES
I beleive this as much as the other bull that comes from "experts" in the industry. I was under the impression that HIPS would add some degree of framework to protect buyers from the dubious and well documented practices of estate agents. However, the Daily Express seems to think this is a tax. "But a study by property company In2Perspective showed last year that the proposals could instead trigger a £1.35trillion property crash." Why does this deserve the front page ?
Novastar Financial - a taste of things to come
"Jeff Matthews is not maming this up" Blog: The Least Helpful Research Report You Will Read Today
What happened last night—specifically, four seconds after the market closed—was that Novastar Financial took New Century’s crown by announcing one of the most horrific operational 180’s in Wall Street history.
Insights of an active buy to let investor
everyinvestor.co.uk: Why newbuild BTL is heading for disaster
This year could see a record number of new-build flats completed, but most families still prefer houses and the supply of new flats could be well ahead of demand. In December and January, BTL mortgage lenders and agents were pumping out optimistic comments that were unthinkingly recycled by the press. Now they have gone quiet. No prizes for guessing why.
Housing downturn = economic downturn
Bloomberg: Housing `Hangover' Kills Jobs as Spending Wanes; More Cuts Loom
Quite a few examples of this coming through lately, Home Depot being another notable case. Expect to see a lot more of this Stateside over the coming months. Here...? Who knows.
Brits are not community minded to live in these new flats
ehomesblog: Brits just can't live in these new posh apartments
Interesting blog I've found on the web - this latest entry talks about the sheer agro of managing all these new apartments where occupants don't give a damn about communal living. And these are prestigious new flats in desirable locations. As a result service charges are going through the roof to clear up the mess. BTLs take note.
Huh? How about Yen falls because BoJ didn't raise rates soon enough?
FT.com: Yen falls as BoJ raises rates
This is because the Japanese Economy is still being pummelled 15 years (FIFTEEN!) after drinking too much "Houses can never crash" Kool Aid. This means that the smart move is to sell Yen and buy better currencies. This is our future if Crash Gordon stays the course. Except that they actually DO something. "Currency analysts said the rate rise was unlikely to cause any let-up in the global carry trade, which has seen investors borrowing the Japanese currency to invest in higher-yielding assets elsewhere. Neil Mellor, currency strategist at Bank of New York, said the yen’s weakness was no surprise given that Japanese interest rates were set to remain low for the foreseeable future."
Does this sound like a man who knows something the rest of us don't
The Independent: Alliance & Leicester chief in surprise exit as profits rise
When reality still ruled in UK Economics, people who presided over periods when their bank made record profits would have to be carried out stone cold dead from that organisation, their claw marks in the marble flaw as they were subdued prior to being removed. Here we have a Chief Executive hightailing it out of their faster than the Starship Enterprise on speed. Something stinks really badly in the state of the City: -> "Alliance and Leicester boss Richard Pym yesterday took the City by surprise, saying he planned to quit as chief executive after five years in the top job. Mr Pym, who has been with the mortgage bank for 15 years, made the announcement at the end of the company's annual results presentation to analysts."
Can you all say "In Defence of Currency" people.....
The Herald: Bean signals early rate rise
Reminds me of a nursery rhyme.... Oh dear, what can the matter be? That man Gordon Brown has destroyed our currency Mortgage Defaults soon will follow thee Gordon and Tony are clowns...
US mortgage applications fall again
CNN: Mortgage applications tumble
US mortgage applications lowest for year so far, levels fall back to mid 2006 values, shows that supposid recovery in US market is a dead duck.
US subprime meltdown expands
bloomberg: Subprime collapse
Yet more bad news as the subprime problems in the US worsen - yet another big subprime lender in trouble and the costs of 'insuring' these toxic loans soars.......
Wednesday, February 21, 2007
NYT tells it how it is!!
New York Times: Bank of Japan Raises Short-Term Interest Rates
"Economists say this trade has made Japan a source of low-cost capital for the world, pumping money into everything from Wall Street stocks to real estate in South Korea, India and even Eastern Europe. Economists say the risk is that global markets could suffer steep sell-offs, hurting home buyers in Seoul and Bucharest, as well as 401(k) holders in New York, if the trade suddenly dried up — or worse, if Japanese investors started pulling back their money. This has led some economists to begin calling the carry trade a bubble, funded by cheap Japanese credit, that is just waiting to burst."
This will keep those oil prices lower...
Herald Sun: Second US carrier arrives off Iran
The USS John C Stennis and its accompanying strike group joined the USS Dwight D Eisenhower in the Sea of Oman but has not yet entered Gulf waters, the US Fifth Fleet said from its base in Manama.
FINANCE:What exactly is a Credit Default Swap
Wikipedia: Credit Default Swaps
This little creature may be the financial instrument which brings the whole Anglo-Countries house of cards down. Read more and find out what it is.
Nice conclusion
Dismal Scientist: Mounting mortgage credit problems
Things are turning sour but there's nothing to worry about .... or is there?
Another rate rise on the cards for the US?
BBC News: US consumer prices show increase
US consumer prices increased more than expected in January, figures have shown, despite a fall in energy prices. US Department of Labor figures showed rising medical and food costs pushed consumer prices up 0.2% in January, with prices up by 2.1% on a year ago.
A sign of things to come
Guardian: George Wimpey axes jobs in US
Builders. US. In the s**t.
2 members wanted rate hike to 5.5%
Firstrung: MPC members Andrew Sentance and Tim Besley opted to hike interest rates to 5.50 pct
The Bank of England's rate-setting body - the MPC voted by a 7-to-2 margin to keep its benchmark rate unchanged at 5.25 pct at its policy deliberations earlier this month, minutes of the meeting revealed today. The vote to leave the base rate unchanged at a five-and-a-half-year high revealed a divergence of opinion within the nine-member Monetary Policy Committee.
Sub-prime lending worries begin to hit UK banks
MoneyWeek: Why the UK debt mountain isn't getting any smaller
The UK consumer’s average credit card spending fell on an annual basis for the first time ever last year, according to Euromonitor International. Meanwhile, banking giant Barclays reckons it’s over the worst of its bad debt problems. So are UK consumers finally getting to grips with our borrowing? No, says John Stepek. Credit card debt may be falling, but lenders are still borrowing elsewhere - and that includes sub-prime lending against property.
The times gets it right!
Timesonline: Is it a monster? No, it’s a liquidity squeeze
As ample supplies of capital fuelled a boom in demand for investments of all kinds, the resulting rapid rise in asset prices depressed the returns being earned, triggering the well-known “search for yield”, with moves into riskier asset classes and increased use of leverage, not least by hedge funds and private equity players.
the 21st Feb 1979 was a Wednesday...
BBC News: The News in 1979
It really is 1979. Figuratively and temporally. The dates in 2007 are identical to 1979.
Fisherprice "My First House Price Crash"
ITulip.com: New Road To Serfdom
A Simple look at the housing bubble and crash taking place in the USA.
Japan tightens monetary policy
BBC News: Japan ups interest rates to 0.5%
Japan's central bank has showed signs of confidence in the country's economy, raising interest rates to 0.5%. It said the decision - only its second interest rate rise in more than six years - had been made because Japan's steady growth was likely to continue.
It's the 1970s all over again
Prospect.org.uk: Defence professionals vote for strike action
Six thousand specialists, managers and technical support staff in the Ministry of Defence have voted to take industrial action over a below inflation pay offer. By 61% to 39%, they voted in favour of a one-day strike to be held on 28 February. They are protesting over a two-year pay offer worth 2.5% for most staff in 2006 and 2007, which will be imposed on staff by MOD on the day of the protest. "This offer is a kick in the teeth for years of commitment by dedicated staff, without whom the front line simply could not function. The action is not an attempt to bring government to its knees, it is a demonstration of resolve that government must value its most skilled staff if it wants decent logistical support for the armed forces."
Tuesday, February 20, 2007
Runaway Train
BBC: Many NHS trusts face growing debt
NHS trusts in England are creeping deeper into debt, forecasts show. Over one in three hospitals and primary care trusts, which pay for local services, are not expecting to balance their books this financial year.
Times hacks state the obvious
Times Online: Homebuyers borrow to pay soaring stamp duty
The only actual news seems to be that "lenders are calling on the Chancellor to increase the stamp duty thresholds in next month’s budget".
Call for mix of homes on estates
western daily press: Call for mix of homes on estates
"Moves to get higher earners living alongside the poorest households have been unveiled in a Government-commissioned report on "sink estate" deprivation."
The end of high prices?? hhmmm
reuters: Lending growth boosts case for rate rise
LONDON (Reuters) - Mortgage lending rose strongly again, building society mortgage approvals hit a record high and money supply growth picked up in January, bolstering the case for higher interest rates this year. Interest rate and gilt futures extended losses after the data on Tuesday which suggest three rate rises since August have not yet affected the housing market significantly, while signs of excess cash in the system may fuel fears of higher inflation.
Effects of high house prices
The Independent: Steve Richards: It will take real courage to solve our housing crisis (which is why it is so rarely discussed)
Steve Richards talks about various effects of high housing costs and how it'll take balls to solve them without proposing any solutions. From the article : "The Labour MP and deputy leadership candidate, Jon Cruddas, claims that in his east London constituency and well beyond, the rise of the BNP can be linked directly to housing."
Govt want to raid accounts for Olympics
BBC: Bank alert over dormant accounts
Halifax bank wants customers with dormant accounts to contact them so they can be reunited with their cash. Labour spin is that it will go to good causes - but recent statements point to it supporting Olympics!
What can happen to other asset classes when you bet big and lose big on a commodity
Money Week: The Amaranth Debacle
Many banks and hedge funds have positions on oil, gas and other commodities. If these positions unwind unexpectedly causing huge losses, the bank/hedge fund will have to sell its other assets to compensate. This happened to Amaranth Advisers last summer and by losing a Natural Gas bet , they actually forced the global price of oil down, because they were "long" oil and had to sell it all to cover their losses. If a war with Iran kicks off and banks who were betting on low oil prices get killed, guess what they will have to sell sharpish: you got it - property. This will ironically more likely be the trigger of the biggest house price crash since the Great Flood. Welcome to Credit Contagion 101.
What happens when a country destroys its manufacturing base
WhatReallyHappened.com: The United States is in Deep Doodoo
This article talks about the United States - but it may as well be the UK. Imagine for a moment that someone inherits a farm. Let's say that the farm has good topsoil, a good well, good breeding stock, good seed, and excellent farm equipment in good repair. Prior to passing into the control of the present owner the farm did a good business selling vegetables, meat, and dairy products to the local market, and it made a small profit. But let us suppose for a moment that the present owner of the farm doesn't understand farming, or isn't even really interested in learning. The present owner has no objection to standing around looking good, so he stays at the farm, standing in front of it, looking good to passers by.
UK plc moves from savers to spenders in one month
Firstrung: Building societies had net withdrawals of £196m in January 2007 compared to net receipts of £212m in January 2006
"The net withdrawal of savings from building societies is not too surprising. We often see this in January, as people use their savings to pay off their Christmas bills. At the moment, it is difficult to say how savers are responding to higher rates, as these figures won't fully reflect the January rate rise. We expect that higher savings rates being offered by building societies should attract greater deposits in future months, especially as utility bills begin to reduce and consumers have more of their take home pay to play with."
Real Estate Boom 1.0
Japan Inc: Real Estate Boom 1.0
Compared to the real estate prices of the 1980s Bubble Economy, today's office rents are dirt cheap. Back then, a 100-dollar bill wouldn't buy the land it covered in downtown Tokyo, the Imperial Palace was worth more than California, and all of Tokyo could have bought all of the US. In theory, the Japanese could have bought the entire world by selling their archipelago. At the height of the bubble, Tokyo land prices reached $350,000 per square meter. Since that peak, prices have fallen by more than $5,000 billion, over 110 percent of Japan's GDP.
Mortgage lending "robust" according to CML and BSA
BBC: Mortgage record broken in January
The council of mortgage lenders (CML) and another body called the Building Societies Association (BSA, no I'd not heard of them either) state that the increase rate rises are not having any impact on the housing market as yet. CML state the lending in January was a record for January but it was also down 6% on December.
Blair's Britain
BBC: Blair's Britain
Gordon Brown (son of the manse) has presided over an economy in which we all live on tick. Consumer debt is 150% of disposable income (up from 105% in 1997). No-one seems to worry much because house prices keep rising, up 165% since 1997. The IMF say they are 1/3 above sustainable level.
Barclays profits hit record level
BBC: Barclays profits hit record level
Barclays Bank has announced a record pre-tax profit of £7.14bn in 2006 - up by 35% on the previous year.
U.K. House Prices Rose in February, Rightmove Says
Bloomberg: U.K. House Prices Rose in February, Rightmove Says
Feb. 19 (Bloomberg) -- U.K. property prices accelerated for a second month in February as a shortage of homes for sale mitigated the impact of higher interest rates, a survey showed.
House prices soar by one pound a minute in fashionable London areas
Kuwait News Agency: House prices soar by one pound a minute in fashionable London areas
LONDON, Feb 19 (KUNA) -- House prices in one fashionable area of London have risen by close to one pound a minute over the past year, according to a survey here Monday.
Is this what it's come to? =:¬(
Firstrung: First time buyers and the 52 year mortgages
Julia Harris, senior analyst at Moneyfacts.co.uk investigates the increasing take up of longer term mortgages and questions the overall viability of terms exceeding the normal 25 years..."A mortgage for most of us will represent the largest and longest financial commitment of our lives. For many years the standard term considered for a mortgage in the UK was 25 years, but as affordability becomes increasingly difficult for many of today's first time buyers, a 25-year term is perhaps no longer considered sufficient.
Keep an eye on oil!
BBC: US 'Iran attack plans' revealed
US contingency plans for air strikes on Iran extend beyond nuclear sites and include most of the country's military infrastructure, the BBC has learned. It is understood that any such attack - if ordered - would target Iranian air bases, naval bases, missile facilities and command-and-control centres.
Inflation warning as Bank predicts volatility
Telegraph: News Article
Well it looks like some of the soothsayers on line have been right all along about Chinese prices and globalization keeping prices down. Perhaps one swervyn Mervyn's position is also 'inherently volatile' so to say...
Even the Wall Street Journal can see the danger now
Wall Street Journal: How expansions die
When the normally perma-bull WSJ can see a problem with US housing you sense the tide is turning
Reckless spending: will it all go pop? Er... Yes
Telegraph: Reckless spending: will it all go pop?
Dresdner Kleinwort said its fear and greed index - a measure of the global market's appetite for risk - had just hit an all-time high. It warned that this meant a full-scale slump in risky assets could come in a matter of months, or even weeks.
More to come
Business Week: Fewer Housing Starts? Don't Despair
If you have a house on the market or you're thinking of selling, the latest bad news on housing was actually very good news from a selfish perspective. How's that? Because when construction slows down, it means fewer new homes are hitting the market to compete with your own listing. Less competition means quicker sales and higher prices. Relatively, that is—it's still an extremely soft market.
INFO NUGGET: What are gilts?
Money Week: What gilts are telling us about the UK economy
Yields on UK government bonds are at extraordinary lows. This has caught pension funds up in a vicious circle - and could have serious consequences for the UK economy.
More to come
Business Week: Fewer Housing Starts? Don't Despair
If you have a house on the market or you're thinking of selling, the latest bad news on housing was actually very good news from a selfish perspective. How's that? Because when construction slows down, it means fewer new homes are hitting the market to compete with your own listing. Less competition means quicker sales and higher prices. Relati