June 2007 Archive
Saturday, June 30, 2007 
Tesco making property websites twitchy
Firstrung: Tesco's plans to sell properties through its stores could be facing some difficulties
It's reported that Tesco has been seeking help from existing estate agents' internet sites to use their listings to help drive traffic to the stores homes for sale - prompting the agents to refuse...Warren Bright, chief executive of Propertyfinder, said: "We were approached some months ago but we have chosen not to participate, as their proposition is not in the interests of the estate agent, who is our customer.
Government and Private borrowing Turbo Charges the Economy in Q1
Scotsman: UK economy powering ahead
According to the scotsman the UK economy expanded faster than expected in the first quarter compared with a year earlier, as services and government spending grew more than previously estimated. Call me old fashioned but Services and Government spending are not what I would call a real economy.
Financially Squeezed Brits abandon Saving
Guardian Unlimited: Savings figure at 50-year low while incomes continue to decline
ONS figures reveal that the share of incomes that people save - fell to 2.1% in the first quarter, half the previous quarter's level and the lowest since 1960 during Harold Macmillan's "you've never had it so good" i.e. the lowest level of saving in 50 YEARS.
U.S., going pro-labor & tax the rich
Forbes: Blackstone And Taxes (Ours)
US gets sick of Super-Mega-Wealth?: The well-heeled everywhere are due for a pinching. Subprime mortgage paper is the market's immediate problem, but how the rich get taxed is a major policy issue Congress is gearing up to tackle.
Irish house prices continue slide (3 months in a row )
RTE News: Fall in house prices continued in May
New figures show that the average price of a house continued to fall in May, with a particularly sharp drop in prices paid by first-time buyers. The house price index compiled by Permanent TSB and the ESRI shows a drop of 0.8% in May. The average price paid for a house has now fallen by just over 2% in the first five months of this year to €304,166.
Derivitives spread risk (like a virus)
The Daily Reconing UK: Has this cheap money bubble finally croaked?
None of this would need to cause trouble beyond a mere house-price crash and consumer slump – if only it weren't for the credit derivatives issued against so much of the world's outstanding housing debt. Running up debt – a promise to pay in the future – can only last as long as the promise comes good. Squaring that promise by issuing a derivative against it only increases the chance – and the cost – of it failing.
Irish House Price drop, up to 10% in Dublin asking prices
RTE news: House report shows sharp Dublin drop
Property website Daft.ie says asking prices for houses have been slowing, with some sectors of the market showing drops of more than 10% in the last six months.
Labour councillor speaks against tax break
YorkPress: End tax break for buy-to-let
Sounds like public support for scrapping the BTL tax break may be growing. Agree, one councillor in York isnt much. But how can one catalyze that? Online petitions, polls? What can we do from this site? Any idea?
Banks are tightening BTL requirements... you wish!
CityWire: Standard Life tweaks buy-to-let line up
Standard Life has announced that it has tweaked its Freestyle buy-to-let portfolio with rental yield requirements down from 120 to 110%. The maximum available to borrow without verification of income has risen from 75 to 85% and landlords buying more than one property will get half price arrangement fees.
Fionnuala, if the demand / supply is strong, what do we have to fear?
Property: Caution urged on buy-to-let taxation
“If Gordon Brown were to do something radical in this area... A large withdrawal from the sector, either as a result of reduced ability to pay or because changes made yields much less favourable compared with other investments, could rapidly change the dynamic of the housing market. ...destabilise the market for all borrowers rather than just make it a more affordable prospect for new entrants.”
How about some regulation?
bbc news: Buy to let discount criticism
The Royal Institute of Chartered Surveyors is calling for action on the hidden discounts being offered to buy-to-let investors
House price in only 28% of the UK are still rising!
citywire.co.uk: House price growth halves in June says Hometrack
The housing market continued to apply the brakes during June Hometrack statistics have shown, with growth slowing to 0.3% from 0.6% in May. The annual rate of growth has now fallen to 6.4%, down from 6.7% in May. The number of UK regions reporting growth in June fell to 28%, from 44% in the month before.
Friday, June 29, 2007
HUNDREDS of families have been forced to sell their homes, or lenders have repossessed and auctioned them, in Sydney's west and south-west in the past year, property experts say.
SMH: Surge in families forced to sell their homes
Michael McNamara, an analyst with the company, said the spate of auctions pointed to a big rise in distressed sales and repossessions in the region. Mostly, sellers in Sydney's cheaper property markets were going to auction because they had to, not because they wanted to, he said. "The big rise in the number of auctions isn't because the market is going well," he said."It's jumped because auctions are the preferred method of sale of trustees in bankruptcy and mortgagees in possession. I think that's a very disturbing figure."
Even some at the BBC getting bearish ?
BBC: Crunch time?
The BBC finally seems to be reporting things that have been known for a while now, could we be in for a hair raising few weeks or months ? is this going to be finally it ?
Are We On a Knife End?
Times Online: Sub-prime mess tip of iceberg?
"The warnings from regulators over the dangers of excessive debt applied to complex financial instruments are coming thick and fast. Much too late, alas, for some investors and banks." The point of no return.
M4 money supply continues to accelerate
Reuters: Strong housing data helps pound rise
The central bank said its preferred M4 money supply measure rose by a monthly rate of 1.2 percent in May, with the annual growth accelerating to 13.9 percent. "Given that Bank of England deputy governor John Gieve this week highlighted excessively strong money supply growth as a significant risk to medium-term price stability, the data clearly bolster the case for interest rates to be lifted by a further 25 basis points to 5.75 pct next Thursday," Global Insight economist Howard Archer said
Not seasonally adjusted?
MoneyMarketing: BoE stats show net lending to individuals in May higher than April
New Bank of England statistics have shown that total net lending to individuals in May was higher than the increase in April, but still remains lower than the previous six-month average. The twelve-month growth rate fell 0.2 percentage points to 10.2 per cent. The three month annualised growth rate fell by 0.5 percentage points to 9.2 per cent.
BTL menace in mainstream press
Guardian: A generation forced to pay rent
We are creating the first generation of highly educated individuals and families with good jobs who are excluded from the property market and face a lifetime of paying off a buy-to-let landlord's mortgage. The commets at the end are a bit depressing and it's easy to spot the BTLers amongst them (it's the free market, it's not us. stop moaning and work harder, etc.)
Govt. built 18,000 council houses last year
Firstrung: Council house waiting lists could soar to two million, Shelter warns
In 1966, the year Shelter was formed, the Government built nearly 200,000 council homes, but last year that figure was less than 18,000. Shelter has warned that council house waiting lists could soar to two million within three years - a rise of almost one million since Labour took power...At present the waiting lists stand at just
Build our way out of this crisis? No chance
Firstrung: 70,000 affordable homes per year over the next three years and beyond needed to tackle housing crisis
"The big housebuilders are sitting on enough land to build 225,000 homes; an area the size of Southampton. In the current housing shortage this is unacceptable." - David Orr, chief executive of the National Housing Federation
UK economic strength add weight to rate rise
BBC News: UK economy still growing strongly
The strong growth will reinforce expectations of a rate rise next week. The Treasury has estimated that the long-term sustainable growth rate of the UK economy is about 2.5%. Speaking to the Treasury Select Committee on Thursday, Bank of England governor Mervyn King said that inflationary risks were "still on the upside" despite "tentative signals" of slowing consumer spending. The Bank of England has raised interest rates four times in the past year to 5.5%, but some analysts expect rates to reach 6% by the end of the year.
Squeezing them for every penny!
Guardian: Savings rate hits 47-year low
When did the public become so hopeless over money management. "The new figure will stoke concerns that with consumer debt at record levels, many people are running down their savings in the face of higher interest rates and spending beyond their means".
Markets fear global 'credit crunch'
Telegraph: Markets fear global 'credit crunch'
Fears of a global 'credit crunch' have engulfed markets as the sub-prime shake-out claimed yet more victims and the Bank of England Governor warned investors to 'think before you lend'.
Do you really want to pay £1m+ for a mediocre house in a war-zone?
BBC News: Suspected bomb found in London
Looks like London is still a target for terrorists. And it looks like terrorists are still active in the UK. Very unpleasant/frightening for those of us who have to live with this threat, but when you consider that you have to pay in excess of £1m to get a decent house around London, you have to question the sanity of the people paying those prices.
Summary of US Subprime and possible wider implications
MSN Money: Why the US housing market should be the world’s biggest worry
Not totally objective (as typical of MSN editorial), but an interesting summary of what we already know here
Banks in China Get a Caning
TIMES UK BUSINESS: BUSINESS ARTICLE
Well, I didn't know that you could actually prevent the meltdown of your economy through speculation! Gordon Brown take note - a cautious lesson to adopt over here?
Alastair, my son, one day all this will be yours!
Bloomberg: Darling Inherits Fraying U.K. Economy
June 29 (Bloomberg) -- Alistair Darling, Britain's new chancellor of the exchequer, faces what may be the toughest task in Prime Minister Gordon Brown's government: steering a fraying economy with Brown looking over his shoulder.
Does this matter? Almost certainly it matters a lot, because it is cheap credit - encouraged in part by the creation of these complex structures - that currently underpins the biggest mergers and acquisitions boom the world has ever seen. That in turn bol
TELEGRAPH UK: Confidence in cheap credit could be fading fast
Whisper it quietly, but the world's financial system is held together by nothing much more substantial than confidence. The whole fragile structure is dependent on our continuing belief in the integrity of the system. If we lose faith, as when the dot.com bubble burst or the leveraged takeover boom of the 1980s ground to a halt, the fallout can be devastating
Bill Gross, head of the giant bond fund Pimco, blames the rating agencies for failing to price the risk correctly in the first place, saying they fell for tarts in "six-inch hooker heels".
TELEGRAPH UK: Credit crisis threatens markets as funds topple
A credit crunch is menacing world markets. As funds exposed to the US sub-prime debacle start to topple, contagion is quickly spreading through broad swathes of low-grade debt. Investors have refused to stump up $4bn (£2bn) for the KKR buy-out of US Foods Service; Carlyle has pulled the float of a fund that planned to borrow $17bn to splash on sub-prime debt; and MISC gas tankers has delayed a $750m bond issue, to name just three.
Analysts are worried that the problems experienced in the sub-prime market could spread to the wider debt markets, causing easy credit to dry up across the globe. They also fear a pick-up in inflation both in the US and Europe.
TELEGRAPH UK: Markets fear global 'credit crunch'
Fears of a global 'credit crunch' have engulfed markets as the sub-prime shake-out claimed yet more victims and the Bank of England Governor warned investors to 'think before you lend'.Ben Bernanke announced he had left interest rates at 5.25pc A London-based hedge fund announced it is to close, after racking up crippling losses on the troubled US sub-prime mortgage market. It also coincided with news that at least eight companies have been forced to withdraw major bond sales.
Let's not fool ourselves, the mortgage credit squeeze has started
Times: American sub-prime mortgage ills infect UK markets
Readers like David_2004 will take some comfort looking at last month's Nationwide index, seasonally adjusted to omit any bad news, but just turn a couple of pages to find about the real prospects of property. Let's not fool ourselves, banks will protect their interests, and homeowners will be squeezed mercilessly
Thursday, June 28, 2007
Make money with Judith and Yolanda
Times: The London property market (webcast)
Just listen to it... sooooooooo entertaining. Makes me wonder why this link (which is really just promotional communication) is posted in the news section of the Times.
It all boils down to vested interests
Times: Brown: Friend or foe?
"Brown: Friend or foe? Britain’s 18.5 million homeowners will soon find out which." This is irresponsible writing by the Times. "Currently there is much focus on individuals who are unable to clamber onto the property ladder, but Mr Brown will also wish to show that he is a defender of homeowners’ interests"
Early wobbles hit London based fund
Ft.com: London fund latest subprime victim
London listed Caliber Global Investments today anounced it is to wind down it's £900 million hedge fund after initial losses of £4.4 million from subprime investments, a subsequent internal review that found “insufficient demand currently” through listed investment companies exposed to this asset class.
No change for US base rate
BBC News: Fed keeps rates steady at 5.25%
The US Federal Reserve has left its main interest rate unchanged at 5.25%, saying it had concerns that inflation may fail to "moderate". It was the eighth time in a row that the Fed had left interest rates unchanged, and many analysts said rates may now stay where they are this year.
Banks restrict lending to the poorest borrowers, causing the average price of houses sold to go up!
Bloomberg: U.K. House Prices Rise More Than Forecast in June
Yet another article misrepresenting the exclusion of low-priced-house borrowers by banks as a genuine surge in property prices. Banks and building societies are finally becoming more selective about who they lend to. They are less keen to lend to the 'sub-prime' market who usually occupy cheap housing. They are demanding higher deposits and giving lower multiples of salary to first-time buyers, who usually buy relatively cheap properties. They are shying away from individual But-to-Let investors, who also go for cheap flats and houses. With these groups largely now excluded, the average price is now made up of transactions at the middle and high end of the market (who have a lot of equity, which protects the banks' collateral) - so, it's no wonder the 'average' price has gone up!
HPC is named 3rd best property blog in the world!
Times Online: Top 25 property blogs
"No prizes for guessing the slant of this blog. There is a veritable mountain of information and news as it breaks updated throughout the day."
Closest ally gets poisoned chalice
FT.com: Cabinet survivor succeeds Brown
Alistair Darling has long been Gordon Brown’s closest cabinet ally and has been widely tipped to succeed him at the Treasury. Competent, unflappable and unswervingly on-message, this 53-year old Scottish lawyer and MP for Edinburgh South West since 1987 is one of only a handful of survivors from Tony Blair’s first cabinet. Poor guy..
Jumping on to the Titanic as it hits the iceberg?
Belfast Telegraph: People flash the dough for Ormeau devlopment
Over 100 luxury apartments at the former Ormeau Bakery site in Belfast were snapped up in a few hours, generating £35m worth of sales - without any advertising - it was revealed today. A one-bedroom apartment at The Bakery ranges in size from 550 to 650sq ft, selling for £250,000, while two-bed flats (800 to 1,000sq ft) cost between £300,000 and £360,000 for the lucky few who got in on time. Note the prices - the 'lucky' few?
A totally announced disaster
Telegraph: Interest rates: is a storm ahead?
The revelation that the Governor of the Bank of England, Mervyn King, voted for an increase in interest rates this month has prompted analysts to proclaim that a rise in July is a nigh-on certainty - and it may not stop there, with interest rates of 6 per cent looking ever more likely. With disposable incomes at a five-year low, according to a report from Ernst & Young, many people may want to prepare for harder days ahead. For a start, thousands of homeowners who have cheap fixed-rate loans coming to an end could be in for a shock, as rates are two percentage points higher than they were three years ago.
3 months of falls in the North East
www.landregistry.gov.uk: Land Registry Figures
Third month of real falls in the north east! National prices 0.7% up on the month 8.9% on the year
Northern rock share drop maybe not a sign of an imminent crash?
Telegraph: Worth ascending the rock-face despite rising interest rates
Interesting article about northern rock and its recent share price drops. Seems to suggest that it's not that bad, they've called rate rises slightly wrongly and their share price has plummeted as a result, but their growth is still there and they're repackaging some of their riskier debt. Not sure they can mind you, the appetite for CDO has probably fallen.
More King Talk
Bloomberg: U.K.'s King Says Inflation Risks Tilt to `Upside'
5.75% 5th July. Else big embarassment for King.
More reason for an increase in base rates?
BBC: House price growth 'bounces back'
According to the Nationwide Building Society house prices bounced back last month. Prices rose by 1.1% over the month which is twice as fast as the rate during 2006.
Northern Shock
Telegraph: Northern Rock shares drop on warning
Boo Hoo: "Northern Rock, Britain's fifth largest mortgage lender, has warned that profits for this year will be lower than the City expected this year as rising interest rates make it more expensive to borrow."
How and why to downsize now
MoneyWeek: What Country Life can tell us about the property market
Not only are the prices of middle class indulgences falling fast, the property pages of Country Life are also beginning to fill up with houses for sale once more. Merryn Somerset Webb looks at why now is a good time to downsize...
Signs that interest rate hikes are squeezing the UK consumer coming thick and fast
MoneyWeek: Gordon Brown gets out in the nick of time
The new PM is now ex-chancellor, just as the signs that interest rate hikes are starting to seriously squeeze the UK consumer are arriving thick and fast. John Stepek reports on the problems piling up for his successor.
The brakes are definitely being applied but there is no danger of a crash just yet
Times: The brakes are definitely being applied but there is no danger of a crash just yet
No one has lost money in recent times betting that Britain’s house prices will confound predictions of gloom and keep motoring ahead. The property boom has rolled on relentlessly even as the thwarted predictions of sundry commentators forecasting a crash have piled up. But with interest rates at a six-year high and growing signs that the market is losing steam, the Cassandras are emerging again to prophesy collapsing prices. The big question is, will they be proved right this time?
Gary Duncan tries to calm the housing market ... Ah, how nice.
Times Online: The brakes are definitely being applied but there is no danger of a crash just yet
Gary Duncan admits that the housing market is cooling and predicts the cooling can not turn into a crash. His reason: There is no trigger to cause the crash. Oh dear.
6% this year?
Telegraph: Nationwide warns rates may hit 6pc
Nationwide reckons the risk of a move to 6pc has increased "significantly" after house prices rose 1.1pc this month
Paulson, 61, reiterated separately today that rising interest rates and increased volatility in financial markets was a ``wake-up call'' to market participants.
bloomberg.com: Paulson Reviewing Finance Regulators, Fund Practices
Treasury Secretary Henry Paulson began a formal review of how the U.S. regulates financial markets and hedge funds amid concerns over competition from overseas trading capitals
Link to abbrieved snapshot on todays release from Nationwide
Firstrung: House prices rise by 2.5K in June and continue to defy interest rate rises and fundamentals
"The resilience of the housing market will be another component to add to the rate rise camp's argument. Earlier house price data had shown the start of a slowing in the market, but while too much emphasis should not be placed on one month's figures, the fact that today's data shows a bit of a bounce will add to the upside risks being counted up at the Bank of England. While we expected interest rates to increase to 5.75% in August, this news, together with the revelation that rates remained on hold by only the narrowest of margins in June, will set the stage for that rate rise to move forward to July and for the risk of a rise to 6% to increase significantly.
What goes up must ???
Thisismoney: Property prices surge again
Nationwide said today that property values increased by 1.1% during the month, more than double the rate of increase seen in May.
Bearish turns
The Economist: The subprime meltdown, continued
"But perhaps the most worrying thing for financial institutions holding mortgage-backed paper is not the subprime market itself, but the unnerving parallels with an even bigger one to which they are also exposed: leveraged loans to companies. As Daniel Arbess of Xerion Capital Partners points out, corporate lending's giddy leverage echoes the high loan-to-value ratios in subprime; the explosion of “covenant-lite” deals and payment-in-kind notes mirrors that of interest-only and negative-amortisation mortgages; and leveraged buy-outs have their own form of mortgage refinancing in the so-called dividend recapitalisation. Subprime, says Mr Arbess, might well be “a dress rehearsal for something bigger and scarier.” Liquidity crisis is near
Unless you want to end up at the end of a creditor's line in bankruptcy court you best get your money and run like the wind...
cftc.gov: The last few weeks has seen the NFA foreclosing on a lot of forex dealers who are undercapitalized.
The last few weeks has seen the NFA foreclosing on a lot of forex dealers who are undercapitalized. The following firms have been shut down as a result:1) United Global Markets, LLC Today the CEO just sent an email out to clients saying they were going out of business because they could not meet their capital requirements.2) Trend Commodities Limited On June 19 the NFA shuttered Trend Commodities due to fraud and for failing to meet their capital requirements.3) Spot FX Clearing Corp On June 14 the NFA shuttered SpotFX due to fraud and for failing to meet their capital requirements 4) FX Option1 Inc.On June 7 the NFA shuttered FX Option1 due to fraud and for failing to have adequate security deposits for customers. 5) Spencer Financial LLCOn May 17 the NFA shutter
Prices up, volumes up on year on year comparisons
Firstrung: House prices rise by 0.7% in May average price now £180,594 - Land Registry
London sales continue to drive house prices in England and Wales (May 2007 average price increases 0.7 per cent to £180,594). The data from residential property transactions that completed in May 2007, shows a continued growth in house prices. The 0.7 per cent rate of monthly increase is similar to the previous month. The change raises this month's average house price to £180,594. The annual change in house prices is 8.9 per cent.
Here we go!!!!!!!!!!!!!!
Mail: Bank chief: 'Rates must go up next week'
"Interest rates need to rise next week to help head off an unsustainable boom in the City and the property market, one of Britain's most senior bankers warned last night" The PROPERTY MARKET... did he say that.... MPC: what a f@*k up!!
Wednesday, June 27, 2007
UK mortgage banks in deep s...
Forbes: Northern Rock In A Hard Place
Shares in Britain’s eighth-largest bank dropped by 11.8% today. Northern Rock’s news also hit its competitors. Shares in HBOS were down 23.50 pence, or 2.3%, to £9.79 ($19.53), while Bradford and Bingley fell 14.75 pence (30 cents), or 3.6%, to £3.95 ($7.88). I posted the links to these stocks in a comment. Look at today's but also past year performance... very telling, the tide has turned.
Gordon is Great
Labour Party Website: New Labour For Britain
I think he has what it takes and he is sincere. He cannot be held responsible for everyone taking out stupid loans and driving up house prices. You cannot blame a man for the herd's behaviour. Corporate greed is the real culprit. Support Gordon.
Well this is only a surprise to those with an IQ below room temperature (°C)
FT.com: Worries grow about the true value of repackaged debt
As head of the financial stability unit at the Banque de France, Imène Rahmouni-Rousseau travelled to America this month to look at the current turmoil in the US subprime mortgage world. Although initially that had seemed an all-American saga, Ms Rahmouni suspected that French and other European investors also held assets linked to subprime securities. So on behalf of her central bank she wanted to assess the risks. What she discovered surprised her. There was little confidence about how to value the holdings. “Pricing data are difficult to obtain,” she says.
Fixed-rate mortgage bank warns profits will be hit by delays in passing higher interest rates on to their customers
The Times Newspaper: Northern Rock shares plunge on warning
This is a clear indication of the pressure that Banks are under to raise mortgage rates. Investors are voting with their feet. We may see stock prices tumble, leaving banks vulnerable to takeovers and more likely to punish those who default.
Iranians believe that in an oil-rich country, with the second largest oil and gas reserves in the world, they have a right to cheap energy.
FT.com: Iran sticks to petrol rationing in spite of riots
Iran is forced to import about 30m of the 75m litres of petrol it consumes a day because of a lack of refineries. It imported $4.9bn of petrol during the last Iranian year, which ended on March 20. The government is authorised by parliament to import only $2.5bn this Iranian year and some officials have warned that this budget will run out in less than two month’s time.
“The bigger risk now is that it calls into question CDOs as a financing vehicle in the corporate credit market
FT.com: Debt deals pulled as banks feel subprime chill
Companies are pulling financing deals across the globe, in one of the clearest signs yet that investors’ worries about rising interest rates and US subprime mortgages could be infecting other areas of the credit world and driving up the cost of corporate borrowing
The BBA approved 77,443 house loans this May compared with 80,298 a year earlier, although the average house price was up 9% to £157,100.
thisismoney: Housebuilders sound rates warning
The slowdown in the housing market was laid bare today as rising interest rates put off potential buyers. Housebuilders George Wimpey and Taylor Woodrow, which recently agreed to merge in a £2.5bn deal, warned that the growing cost of mortgages will damage business in the second half of the year. It came as the British Bankers' Association said there were 4% fewer mortgage approvals last month than inMay 2006. The BBA approved 77,443 house loans this May compared with 80,298 a year earlier, although the average house price was up 9% to £157,100.
Feeling the pinch in Boston, are we next?
Boston Globe: Hopes for real estate revival wilt
Single-family home sales drop by up to 9% in May, cap disappointing spring By Robert Gavin, Globe Staff | June 27, 2007 Maybe next spring. With the key selling season for the real estate market nearing an end, the hoped-for rebound in Massachusetts home sales hasn't materialized. Sales of single-family homes fell by as much as 9 percent in May from a year ago, accelerating from modest declines in April, according to data released yesterday. "There were a lot of high hopes pinned on this spring season," said Terry Egan, editor in chief of publications at real estate data publisher Warren Group, "but these numbers tell us the longed-for recovery isn't here yet."
Britain all Borrowed Out
Times Online: High street and housing market bit by rising rates
The Era of cheap money is over along with the equity funded high street spending spree, the hangover starts here and now and will last for years as Brown (Mr Prudent) leaves his former job of chancellor behind and takes the top job in the land.
Council tax bills have risen by 91% in last ten years
1mortgagesuk: Council tax bills have risen by 91% in last ten years
According to the figures provided by Halifax building society, shows that the average council tax bill has risen 91% over the past ten years. While at the same period of time the average earnings have been increased by 51%.
Here it comes like a big wave across the ocean ...
Times Online: Housebuilder takes big hit as sub-prime woes deepen in US
"Lennar reported a dramatic swing in its fortunes, as it announced a $244.2 million (£122 million) loss for the second quarter, down from a $324.7 million profit the year before. " ... "House prices have suffered as a jump in defaults among high-risk sub-prime borrowers has combined with Federal Reserve interest-rate increases to push the average rate for a 30-year mortgage up to 6.60 per cent, reducing demand for properties." ... Oh it grieves the heart so ... can't wait ...
The Japanese Yen is at lows against anything you care to mention - why?
Money Week: Why does everyone hate the Yen?
The thing driving currency markets is Interest Rates.
Stalling before the plunge
Times: Analysis: Why the market is stalling
... "Suddenly renting doesn't seem so bad"
Molinaro said on the call. "Obviously we didn't envision market dislocation of this degree."
bloomberg.com: Bear Stearns Turns to Marano for $1.6 Billion Bailout
Thomas Marano, the 45-year-old global head of mortgages and asset-backed securities, was appointed after Bear Stearns agreed to provide financing to its High-Grade Structured Credit Strategies Fund, said a person with knowledge of the decision. The New York-based firm said in a statement yesterday that it won't rescue a second fund, which borrowed more and sustained bigger losses.
A well overdue reality check
Belfast Telegraph: Is your property safe as houses? Maybe not ...
Missed this article from June, with the Belfast Telegraph at last pointing out some home truths. "You can't go wrong with property - so believes a generation of home owners in Northern Ireland who have only seen gains. Well, you can go wrong - indeed disastrously."
The Truth About Property: Have your say on the BBC
BBC: Hassled by housing?
"The Truth About Property, a new BBC2 Series for the Autumn, would like to hear how your lives have been affected by the property market." A forum for the truth, 5 years too late ? Is this a sad attempt to redress the endless durge of sludge they pump out on TV in the day encouraging chavs to become property developers/investors by paying too much and borrowing money they can't afford ?
FED up with inflation?
Washington Post: Inflation Target May Be Shifting
As they meet today and tomorrow to review monetary policy, Bernanke and his Fed colleagues appear reluctant to declare victory, even though inflation has eased in recent months.
Reading between the porkie pies
Stuff.co.nz: A UK town where house prices go down
Something strange is going on in the ancient Midlands market town of Melton Mowbray – house prices are falling.
Sub-prime woes deepen in US
Timesonline: Housebuilder takes big hit as sub-prime woes deepen in US
The fallout from mortgage woes in the United States continued yesterday as the country’s biggest housebuilder reported an unexpected loss and made a gloomy forecast in the face of mounting evidence that the housing crisis will ricochet across the economy. About time!
BTL now 'bad boys' of property
Home.co.uk News: BTL investors under attack
“Growth in the buy-to-let market is contributing to the housing crisis by pricing first-time buyers out of the market. Tax relief received by buy-to-let investors is to blame and should be scrapped immediately”.
significant reduction?
Firstrung: Mortgage lending for house purchases down 4% - BBA
Mortgage Lending; when compared to May 2006, house purchase approvals were down 4% by number but up 9% by value; remortgaging approvals were up 13% by number and 25% by value; while approvals for equity withdrawal were down 3% by number but 6% higher by value.
VIs know the game's up
Bloomberg: Wimpey Say U.K. Housing Market May Slow
U.K. homebuilders Taylor Woodrow and George Wimpey said the British housing market is poised to deteriorate, just days before the pair combine in a £5 billion merger. "In the UK, we currently anticipate less buoyant market conditions in the second half of the year, due to the impact of recent interest-rate changes and the effect of these on customer confidence," Woodrow and Wimpey said in separate statements. In the U.S., orders are more than 40% lower than a year ago amid the worst housing slump in more than a decade, they said. The cautious tone contrasts with positive comments from Persimmon, Britain's largest housebuilder, which said the UK market remained resilient, and more interest rises would not be detrimental. 700 jobs will go following the merger of Wimpey and Woodow.
Huge currency misalignments are leading to enormous current account imbalances. The Turkish and New Zealand current account deficits, for instance,
FT.com: Carry trade threatens a deflationary global collapse
Concerns that the credit cycle may be turning down are growing. But so far, the impact on stock markets has been fairly limited. Investors take comfort in three misguided beliefs. They believe that equities are not expensive and that there is no sign of any diminution in the flood of global "liquidity". Furthermore, they believe that if the worst happens, the US Federal Reserve will come to the rescue.
What does Nationwide actually want?
Oracle: Nationwide Calls On Gordon Brown to Make a Difference...
Very confused statement from Nationwide... "Nationwide Building Society calls on Gordon Brown to: Ensure fair tax treatment for all child savers, Provide more help for hard pressed home buyers [i.e. reduce stamp duty], Increase the limits on annual ISA savings"... Unclear what Nationwide wants to achieve, but I suspect they are setting expectations for softening house price index to be released tomorrow.
Northern Rock struggling as rate hikes bite them
BBC News: Profit outlook hits Northern Rock
Obviously some effect from recent hikes being felt by high street lenders. Whether or not this has any material impact remains to be seen.
In case we were in any doubt...
BBC News: Rates too low, Bank deputy says
UK interest rates are too low and are helping to drive demand for loans and credit, Sir John Gieve, deputy governor of the Bank of England, has said.
Pen in a rate rise for July
BBC: Rates too low, Bank deputy says
UK interest rates are too low and are helping to drive demand for loans and credit, Sir John Gieve, deputy governor of the Bank of England, has said
Defaults are at their highest in the 37 years records have been kept;
FT.com: Market insight: Liquidity under threat
The Bear Stearns hedge fund fiasco removes the paradox. Banks’ capital is about to be slashed, and with it excess liquidity in the global system. Look at mortgage-backed collateralised debt obligations -– pools of debt assets, in which investors take stakes with different levels of risk. Suppose the CDOs held by banks were valued at “market” rather than “model” levels (a fancy new euphemism for illusionary historic book values). Their capital would turn out to be lower. Preservation of capital ratios against loans would require fewer loans: liquidity would have imploded.
Looks like the grannies are buying back the Yen quick while they still have a profit in their trades
nikkei.net: INSIDE VIEW: MOF No Longer Sees Weak Yen As 'Acceptable'
INSIDE VIEW: MOF No Longer Sees Weak Yen As 'Acceptable'TOKYO (Nikkei)--Growing concern over the weak yen has caused Japanese monetary authorities to quietly shift their stance on yen-dollar rates to being "watchful," after long deeming them as "acceptable." The change in policy indicates that the Ministry of Finance is not only concerned about mounting pressure from foreign countries to strengthen the yen, but is also worried that further weakness in the currency may reduce Japan's global competitiveness.
Tuesday, June 26, 2007
Move over MEWers - here come the OFFSETTERS!!
BBC: Offset home loan numbers 'surge'
Last year, 170,000 offset mortgages, worth nearly £30bn, were taken out, a 49% increase over the past year.
USA Looks Depressed
FT: Lennar warns housing slump may deepen
Lennar, the second-largest US homebuilder, on Tuesday warned the market may deteriorate through the rest of the year despite cutting prices on homes by an average of 15 per cent in a bid to clear unsold inventory.
Will imports from China become more expensive
China Daily: China to adjust export tax rebate mechanism
China will reduce tax rebates on exports of high energy-consuming, resource-intensive and environmentally-harmful products, Chinese officials say. The as-yet unreleased policy is scheduled to take effect around September or October despite strong protests from domestic companies and traders, according to China's Caijing magazine. Could this affect inflation here ?
George Monsoon's Favourite Picture
B3TA: Message 7338504
Look everyone, here's the picture that 'George' has been shovelling into just about every story that mentions Gordon Brown. I know it's a very lovely image and it's well crafted and humorous, but now, since it's made it to the lofty heights of 'Blog Story', can you pack fscking spamming every blog page with it? Thanks very much!
Social housing budget to go up buy 50%
1mortgagesuk: Social housing budget to go up buy 50%
Speaking on BBC’s Politics show the soon to be prime minister Gordon Brown pledged that the government would look to address the current housing crises of affordability for first time buyers.
The Consumer is Waning
Bloomberg: U.S. Economy: Consumer Confidence, Housing Weaken (Update2)
Consumer confidence in the U.S. dropped more than forecast and two other reports signaled that demand for houses is still falling in the second year of the home-building slowdown.
Lies Yet More Lies
Bloomberg: U.S. Stocks Gain on Easing Subprime Concern; Freddie Mac Rises
``The whole subprime mess has been basically looked over and not taken as a big concern,'' said Ted Parrish, who helps manage $1.3 billion at Henssler Financial Group in Marietta, Georgia.
Renewable energy industry fears the worst
www.carbonfree.co.uk: Renewable Energy and the Property Market Crash
Currently the UK construction industry is in relatively good shape - a situation that could change in the near future. The UK property market is heading for a crash. Several factors will contribute to a house price market collapse, these are; economics, demographics and the nature of the existing housing stock. If renewable energy systems seems too expensive to incorporate within a house priced at $400,000 then it will look even more expensive in a house worth only $280,000 suddenly those in built solar panels will make up 7% rather than 5% of the value of the property.
Seems like the government are taking some action in helping house prices remain within the range of first time buyers
The Landlord Association: Gordon Brown and government to address UK house prices
Gordon Brown has stated that he is going to inspect the UK housing market and assess why first time buyers can't get on the ladder. I suspect he will tax the priviledged in order to pass on some form of masked leg-up to first time buyers. I'm off to sell my assets and become a beneficiary too!
This is MISLEADING information
Reuters: Property investors double money
"The eastern European country has retained its place at the top of Assetz quarterly property investment tracker, giving a total return on cash invested of 100 percent in the past year." "As a buy-to-let investment location, Britain also continues to prosper, lying in third place behind Poland and Bulgaria, with gross yields of 6 percent and a total return on cash invested of 68 percent" But... "The five major UK house price indices point to average annual house price growth of 11 percent" Well, yields of 6% is a pipedream, amd were returns 68% or 11%? The answer is that Assetz has assumed investors put down 25% equity, and so the "cash returns" become (11%+6%)/ 25% . What b@s..ds!! The FSA should regulate this market, and Reuters should know better!
Yen carry trade will cause hedge fund collapse
cnbc: Warning About Carry Trade
The yen rebounded on Tuesday, after Japanese Finance Minister Koji Omi warned about the risk of markets making one-way bets against the yen. Eisuke Sakakibara, "Mr. Yen", Professor at Waseda University and CNBC's Christine Tan, discuss if the government should intervene in the yen carry trade.
Agents sound like they are sh**ing themselves
RealityTimes: Local Market Conditions
Sounds like the tip of a very large iceberg, some interesting articles in Vegas one of the fastest growing cities in the USA.. wont be long before the same happens in UK
The Great Big Dipper Ride of Showbusiness
Telegraph: Madonna buys £6m house next door
Whens the world going to hit you in the face, Madonna? Theres a poisoned chalice that comes with money and fame - will you handle it, when the parties over? Your next place of residence will be the depression clinic.
junk and more junk
lombardstreetresearch: Daily Notes
Bear-faced Wall Street denial crumbles:liquidity crunch Financial sector to be pummelled, aggravating US economic hard landing; misconceived recent Treasury sell-off to be reversed.Bear Stearns hedge fund rescue arose because banks not prepared to bid over 85% of face value for CDOs generally rated A or better.lower-rated,"toxic tranches" of CDOs largely held by banks US commercial have $750 billion of CDOs, versus $850 billion of capital. Major losses of banks' capital would force credit shrinkage,and could implode recently soaring liquidity. (Charles Dumas)Think Dambusters.The huge growth in M4 money supply which is running atan annual pace of 13.8% in the U.K. and 10.4% in the eurozone has been disproportionately driven by other financial corporations" ie hedg
As usual
minyanville: The Street Was Wrong
The Street’ said don’t worry, the meltdown in the sub-prime ‘space’ would not extend into mainstream investment banks, and that the impact of the meltdown in sub-prime would not cause a domino effect, within the financial markets.
Sentiment is turning?
Firstrung: UK consumers believe interest rates will rise again, fuelling a slump in confidence about job security
This expectation of rate hikes has not been fuelled by a rise in inflation fears, since the balance of consumers expecting prices to rise rather than fall this year remained steady at 74 per cent in June. However, one of the consequences of this is that consumers' confidence about their own job security has taken a big tumble. Just 18 per cent of consumers feel more secure in their own job than a year ago - the lowest figure seen since June 2006, and represents an all-time survey low.
This condition will escalate if (when) base rate reaches 6%
Firstrung: Money worries - South East and Scotland have highest percentage of people afflicted by 'Money Fear'
Around 6% of the adult population, suffer from 'Money Fear', a condition that sees many purposefully ignore the state of their finances, according to research from Sainsbury's Bank...
Unsustainable borrowing
Mail: Families' £100bn bill to pay interest
These debt levels are the highest in the developed world, which will add to concerns that the economy is propped up by a fragile credit bubble. The figures explain the surge in bankruptcy and house repossessions over the past six months.
Apparently, what goes up must come down - news to me!
MoneyWeek: The trouble with interest-only mortgages
You could walk up to a guy with a spider’s web tattooed on his neck and offer an unsolicited critique on his selection of face studs, or you could invest in property; in either case, the result will be painful. Right now, the world economy is like Wile E. Coyote when he’s just chased Road Runner off a cliff; only his disbelief keeps him hovering, defying gravity itself. After the 9/11 terrorist attacks, US Federal Reserve chairman, Alan Greenspan, flooded the world with money and the UK followed suit. This may have been a decent strategy at a time when the world economy was under threat and they reckoned stuffing loot into our pockets would take our minds off the bogey man; but they forgot to turn off the tap.
BuyToLetCrash.com
Guardian: Brown can't talk like he does and ignore this debauchery
"For those with nothing, Brown promises affordable housing. So help everyone who wants to become an owner, middle-class first-time buyers and social tenants alike: a home is a bank for credit, help for children. Ownership bestows respect and independence. End buy-to-let mortgage tax breaks to burst the bubble"
What have we been telling them
FT.com: Market Insight: Carry trade threatens a deflationary global collapse
Concerns that the credit cycle may be turning down are growing. But so far, the impact on stock markets has been fairly limited. Investors take comfort in three misguided beliefs. They believe that equities are not expensive and that there is no sign of any diminution in the flood of global ‘liquidity’. Furthermore, they believe that if the worst happens, the US Federal Reserve will come to the rescue.
Cheap cars this summer
Times: Rate fears ‘will put brake on car sales’
Pendragon, which trades under the Evans Halshaw and Stratstone brands, gave warning that continuing uncertainty over whether borrowing costs would rise further would adversely affect sales of “big ticket items such as motor cars”.
It's not just the weather that's cooler in Scotland
Landlord Expert: New statistics show that Scottish property prices have fallen
Recent statistics published by the DCLG (Department of Communities and Local Government) suggest that the average house price in Scotland fell by 2.2% in the first three months of 2007 - nearly 3k pounds.
When Landlords go Bear....
Landlord Expert: House price crash will be much worse second time around!
Something has got me fretting recently: if house prices do crash, what are the chances it will be even more painful for families than last time round? The Bank of England predicts that fewer households will suffer negative equity - where your mortgage becomes worth more than your home. But there is another aspect to the mortgage market which could compound the blow. And, even more worryingly, few people know how serious the effects will be.
Bad news for US Optimists
Telegraph Online: Banks 'set to call in a swathe of loans'
"Excess liquidity in the global system will be slashed," Lombard Street Research said. "Banks' capital is about to be decimated, which will require calling in a swathe of loans. This is going to aggravate the US hard landing." Report By Ambrose Evans-Pritchard. Will this effect the UK?
PERHAPS THIS IS THE START OF THE TURNING OF THE TITANIC
Reuters: Yen jumps as Japan's Omi warns on one-way risks
The yen jumped on Tuesday, pulling away from a 4-1/2-year low against the dollar hit last week, after Japan's finance minister warned that markets should be aware of the risks of one-way bets.The comments by Koji Omi echoed remarks made by officials at recent Group of Seven meetings referring to carry trades and suggested some concern about the pace of the yen's slide.
In this phase of the bubble, it is as if your neighbors were throwing a wild party - and you weren't invited
beearly.com: And a bubble is still a bubble
A kiss is still a kiss. A sigh is still a sigh… And a bubble is still a bubble When a kiss is over, it's over. When a bubble pops…well…that's all she wrote! All kisses end - even the wettest "French" kisses. And so do all bubbles - even sloppy mega-bubbles of liquidity
Be nice on the way up cos you meet them on the way down !!
Reuters: Bear may have to bail out second fund -analyst
That fund could have a loan exposure of as much as $7 billion, Moszkowski wrote. But at current valuations, Bear Stearns shares offer an excellent value, he added.
Monday, June 25, 2007
Great Depression fall looms
SMH: A Beijing sale ... some 40 per cent of China's state-owned enterprises are losing money, exposing the banks to likely stress.
The BIS said China may have repeated the disastrous errors made by Japan in the 1980s when Tokyo let rip with excess liquidity. "The Chinese economy seems to be demonstrating very similar, disquieting symptoms," it said, citing ballooning credit, an asset boom and "massive investments" in heavy industry.Some 40 per cent of China's state-owned enterprises are losing money, exposing the banking system to likely stress in a downturn.
Not perfect but is this a step in the right direction?
Firstrung: First time buyers get chance to buy their ‘Own Place’
As prices have raced away from incomes, would-be buyers' only hopes of getting on the property ladder have been shared ownership, clubbing together with a friend or relying on parents for a deposit or to act as a guarantor. But if you dream of owning your first home outright without sacrificing your space or independence, The Riverside Group might have the answer you're looking for. The leading social housing and regeneration organisation is introducing a scheme - aptly titled Own Place.
Hedge fund write offs and property markets
Times: London hedge fund feels sub-prime pain
"Falling UK and US housing market means Cheyne Capital has had to write €108m off its €400m Queen's Walk fund. Queen's Walk also had to write down the value of UK mortgage loans because of the possibilty of increased defaults as rising interest rates hit home."
And more to come
CNN Money: Weakest home sales in 4 years
NEW YORK (CNNMoney.com) -- Home sales slumped to a four-year low in May as prices slid further and the glut of homes on the market hit a 15-year high, a real estate group said Monday, noting buyers are being scared away by the weak housing market.
7 billion more
bloomberg: Bear May Have to Save Second Hedge Fund, Merrill Says (Update1)
June 25 (Bloomberg) -- Bear Stearns Cos. may have to salvage the second of its two teetering hedge funds after offering $3.2 billion last week to bail out the first one, Merrill Lynch & Co. analyst Guy Moszkowski said. Investors ``can't rule out'' the chance that Bear Stearns will ``stump up even more for a similar, more-leveraged, fund,'' Moszkowski, who rates the firm a ``buy,'' wrote in a note to clients today. He estimated that the second fund, the Bear Stearns High-Grade Structured Credit Enhanced Leveraged Fund, owes about $7 billion to its financiers.
“Old age is not so bad when you consider the alternative.”
times: Ageing population brings grave problems
There is, it should now be obvious, no simple or easy solution to Europe’s looming demographic transition. However, with fortune and fortitude, it also seems clear that a Europe with one foot in the grave is not – after all – quite dead yet. And, as Maurice Chevalier observed: “Old age is not so bad when you consider the alternative.”
OLD ARTICLE BUT LOOKING IN THE REAR VIEW MIRROR ??
times: City hedge funds head for domino collapse
May 15, 2005 BAD investments by some of the biggest hedge funds in London have triggered unprecedented losses, record demands for money back and talk of a death spiral weighing heavily on stocks and bonds. GLG, a hedge fund started in 1995 by a group of former Goldman Sachs bankers, has in recent weeks had demands for more than $500m (£270m) from investors wanting to pull out of its $4 billion market-neutral fund.
Like skittles in a bowling alley
times: London hedge fund feels sub-prime pain
Two of the highest paid dealers in the City, Stuart Fiertz and Jonathan Lourie, today had to admit that the value of their listed fund investing in mortgage-backed bonds had fallen by a quarter in three months, hit by the fall-out from the housing market on both sides of the Atlantic.
Let s see if EAs still blame the HIPs
Times: Borrowers urged to fix as lenders pull deals
"Fixed rates have been going up because the City expects the Bank of England to raise rates by another quarter point to 5.75 per cent this summer – possibly at next week’s meeting – and some commentators think they could even hit 6 per cent before the year is out." More than 800,000 borrowers face a £1 billion ‘payment shock’ in the coming months when fixed rates they took out two years ago end."The sharp rise in payments faced by borrowers will almost certainly put downward pressure on house price inflation and could also slow consumer spending as households struggle to absorb the extra costs". Almost certainly!!
What goes around comes around
bloomberg.com: Bear Stearns's `Friends' Reject Hedge Fund Rescue in LTCM Redux
Bear Stearns Cos. is getting a taste of its own medicine. It was Bear Stearns, the biggest broker to hedge funds, that nine years ago declined to join 14 other investment banks in the bailout of Long-Term Capital Management LP. Then last week, as New York-based Bear Stearns pleaded for help to rescue two of its hedge funds teetering on the brink of collapse, many of the same firms refused to come to its aid.
Asia risky
bloomberg.com: Treasuries Rise as Hedge Fund Risk Leads Traders to Safest Debt
Treasuries rose amid speculation hedge fund losses linked to subprime mortgage loans will fuel demand for the world's safest, most liquid investment.
single event led to their downfall
nakedcapitalism.com: Could Bear Stearns Fail?
Despite their considerable prowess, investment banks are fragile organizations. It took only one major scandal to bring down Salomon Brothers, the king of Wall Street in the 1980s, and Bankers Trust, one of the top two derivatives firms. In each case, it took some years before the firm lost its independence, but in each case, a single event led to their downfall.
Inflation is soaring, and the Fed will respond soon
marketwatch.: The price is wrong
Will it take double-digit price hikes to convince the markets that inflation is rapidly becoming a major economic problem? Over the past three months, the annual rate of inflation has been running anywhere from 7% to 11%. That's no typo, folks: Since March, prices have gone up at a 7% clip at the consumer level and at an 11% pace at the producer, or wholesale, level. By contrast, last year consumer prices rose 2.5%, while producer prices inched up just 1.1%.
Time to buy Japanese?
Seeking Alpha: Japanese Property Market in Strong Secular Rebound
The recent spurt in global bond yields needs to be carefully watched because it has the potential to create another inflation scare that could trigger yet another global sell-off in equities. Shifting perceptions