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 about interest rates are a short-term risk for Japan's real estate stocks and REITs, because of the very strong rallies seen to date and over the past two years. This notwithstanding, we believe Japan’s property market is now in a strong secular rebound after 15-plus years of secular decline, and that the secular bull market in Japanese real estate plays will not be easily derailed, despite periodic spurts in bond yields. Property prices in the commercial districts of Tokyo rose an average of 9.4% on the year as of January 1, 2007 .
UK consumers believe that interest rates will go up again in the next twelve months
TELEGRAPH UK: Job security hit by interest rate hikes
Workers' fears over further interest rate rises has led to a "big tumble" in confidence over job security, according to a new survey by Lloyds TSB.With confidence at an "all-time survey low", Lloyds' chief economist has warned that consumers may cut back on household spending, which will restrain economic growth
USA market recording 10th consecutive monthly fall
Yahoo Finance: Home Sales Hit Slowest Pace in 4 Years
WASHINGTON (AP) -- Reflecting further housing troubles, sales of existing homes fell in May to the lowest level in four years while the median home price dropped for a record 10th consecutive month.
Market at a turning point?
Reuters: Global property investment at a turning point
LONDON (Reuters) - Global real estate investment is still buoyant but a few cracks are starting to show as higher borrowing costs begin to bite, making 2007 a pivotal year after an extended bull run in property prices
Clear why Gordon wants election ASAP - economy is crumbling
Mail: Cameron: 'I'm ready for Brown's snap spring election'
Couple of thoughts... GB needs to seize the moment and go to the polls asap. In the meanwhile expect no actions: a) any decisions / actions by him would be risky and may expose his talent (or lack thereof), b) he will just sit and hope economy does not crumble in the meanwhile... what an outlook! But if he said in the spring, then expect the economy to deteriorate afterwards
how much more pain can we take from labour?
BBC: Council Tax Doubles IN 10 years
Labour have been bad for this country in so many ways, they have hammered the average person for taxes in many ways, we get less for more!! Go figure.. Potholed roads, rubbish everywhere, grass verges not cut, public services closing, road users being priced off roads, houses hitting highs beyond belief, the rich getting richer and mr and mrs smith cant eat for lack of money etc, then they claim inflation is not that high, how many ways can they gloss over the fact the UK is on the edge of a major crash and many people can barely live or get by on their poor incomes, this article is interesting... I only wish my wages went up at the same rate!! Who is milking our hard earned money from us? Whos pocket is the black hole?
Have prices gone as low as they can?
rightmove: houses at £0
Not sure how before they notice, this is a bargin at £0....
Negative equity
Home.co.uk News: Creeping beast stalks homeowners
The grim spectre of negative equity is rearing its ugly head again as thousands of borrowers take out new, bigger loans... In part, the trend is being driven by leading lenders luring first-time buyers with offers of loans worth anything from 100 to 125% of the price of a house.
US subprime woes start to spread
MoneyWeek: US subprime woes start to spread
Thanks to some bad bets on the US housing sector, two of US investment bank Bear Stearn's hedge funds look in danger of collapse... The funds both invested in securities related to the US subprime mortgage market - the elephant in the global economy’s living room that all the participants are desperately trying to ignore in the hope that it will just go away. So what exactly is the problem - and could this be the start of something bigger?
Kiss Goodbye to City Bonuses!
Bloomberg: Bear Stearns's `Friends' Reject Hedge Fund Rescue in LTCM Redux
Collapsed mortgage bond hedge funds. The other banks won't help Bear Sterns in their hour of need. Can they survive? Will this trigger a domino effect in global investment banking? I don't know. What I do know is that we are not see the big city bonuses early next year that we saw this year, because banks need to retain cash to ensure their survival through the rough period ahead. That means that a major driver of the London property market just got knocked out!
Public attitude change
Guardian: The middle classes have discovered they've been duped by the super-rich
Never have so many of us appeared so well-off yet felt so poor - and we used to believe obscene wealth was victimless
Suddenly almost over night nobody wants to hold this ticking time bomb in his hands/books
immobilienblasen.: Bear to lend $3.2 bln to one of its hedge funds But bank doesn't lend money to other, more leveraged, fund
Bear Stearns Cos. unveiled a rescue plan on Friday after a hedge fund it runs was hit hard by trading billions of dollars worth of mortgage derivatives this year. But the bank didn't offer much help to another of its struggling hedge funds which borrowed more money to magnify its bets in the same market. Both funds control roughly $10 billion in mortgage-related assets.
the day it happens some hedge funds will crumble
japan.seekingalpha.: What Will Unwind the Carry Trade?
We seem to be at an interesting period with the carry trade. There are some winds of change that are brewing, and I'm not so sure that the carry will carry on. We all have to agree that at some point, regardless of the circumstances, the carry will unwind. But, what would it take to get that started?In order to understand what might unwind the carry, first, look at what makes the carry. To begin with, in order to determine a yen cross rate, say the GBP/JPY, you have to multiply GBP/USD times the USD/JPY. That's the way the market determines the exchange rate of the crosses, off of the majors.
Bank of International Settlements Raises Concerns
Telegraph Online: BIS warns of Great Depression dangers from credit spree
Ambrose Evans-Pritchard reports the concerns of the Bank of International Settlements. Normal causes: Too much risk being tasken, high levels of debt, etc
A sharp correction in financial markets could also have a negative impact on the world economy, the BIS said.
forextv: A sharp correction in financial markets could also have a negative impact on the world economy, the BIS said.
The Bank for International Settlements said the yen's decline is "anomalous" and warned investors that the currency could rise sharply once market sentiment shifts. "There is clearly something anomalous in the ongoing decline in the external value of the yen," the BIS said in its annual report.
You really can't tell how this unwinding is going to play out,
forextv.com: Global economy faces 'chaos' - World Economic Forum
The international community faces a real risk of "economic chaos" arising from major imbalances in the global financial system, the World Economic Forum on East Asia was told Sunday.
Sunday, June 24, 2007
WITH DEFICIT AT 10% OF GDP ??? SOMETHING HAS TO GIVE
Stuff.co.nz: Auckland house prices overtake Australia's big cities'
Auckland's median of NZ$450,000 ranks ahead of Canberra on A$395,000 (NZ$436,000), Melbourne on A$380,000, and Brisbane on A$345,000
And they just keep spending?
Bloomberg: Home Sales Drop, Consumer Spending Gains: U.S. Economy Preview
June 24 (Bloomberg) -- Home sales dropped last month to a four-year low and consumer spending picked up, signaling the housing recession isn't rippling through the economy, reports this week may show.
Interesting debate
DaviNomics: The verdict on Brown
Interesting street fight is taking place in one of David Smith's blogs. The topic is "great achievements by Gordon" but the discussion quickly moves to BoE, MPC and house prices. This is proof, IMHO, that the market is becoming indefensible, and that even David has to keep saying to himself in the mirror that all is ok. David shows some figures of mortgage approvals that clearly show that the market was going south before the rate cut of August 2005, but the problem was not so much the 0.25% cut, but the fact that the IR was kept at the low level for the 12 previous months. However, read for yourself and post comments if you wish....
Faster planning decisions, slower house building.
Communities Department: Speedier local planning decisions
This, basically shows how planning departments are working hard to make quicker decision. Its hard to say that planners are causing a housing shortage and inflated prices when "86 per cent of Local Planning Authorities met or surpassed the Government’s target to decide 60 per cent of major applications within 13 weeks in the year ending March 2007". Believe me when I tell you that it is bloody hard work to make a decision on a major development within 13weeks, making sure that all locals and council specialists have time to comment, with councillors being given time to make decisions in committee.
Is This The Begining of the End
Daily Telegraph: BIS warns of Great Depression dangers from credit spree
S2R1, Is this the wave?
BBC covers the BTL
BBC: Tax call for buy-to-let homes
'Disastrous' Around 175,000 of the 1.3m homes sold with mortgages in 2006 went to buy-to-let landlords. Tax changes to discourage people buying property to let it out have been called for by a housing body. "We've got many examples now in many cities where properties are being secured on buy-to-let mortgages but are being kept empty." There is plenty of BTL coverage by BBC this weekend, I am posting more links in the comments
The N word...
Mail: Negative equity stalks buyers
Dedicated to all BTLers and various punters... "Some lenders, such as A&L, offer a mix of debt in the form of a mortgage and a personal loan that can take the total owed up to 125 per cent of a property's value." Geez, you start in negative equity!! "We gambled on our house - and won. Beautician Amy Hayward and boyfriend Michael Shorter believe they got on the property ladder just in time. Amy says had they not taken a gamble in February 2006, when they borrowed 105% of the asking price of their one-bedroom, end of terrace house in Kidlington, Oxfordshire, they would have missed their chance to become homeowners at all." Is this home ownership talk, or gambling... is there a Glen or a Paolo out there who still think it is sustainable, maybe with some supply and demand B/S**t...
The home owner's worst nightmare wakes from its slumber...
Mail on Sunday: Negative Equity Stalks Buyers
The grim spectre of negative equity - where homeowners' mortgages outweigh the value of their property - is rearing its ugly head again as thousands of borrowers take out new, bigger loans... The Mail on Sunday's Financial section is a feast of bearish articles this morning on the housing market and the lending industry that supports it. Even the most optimistic 'experts' are holding their breath now - something is happening, the only question is how bad it's going to get before it's over.
Mummy wheres my breakfast ? sorry honey just got to cover my yen position get your own
SMH: Housewives show a yen for trading to net riches
So far this year they have opened 600,000 accounts at brokerages that lend money at the low rate for currency bets, according to Tokyo's Yano Research Institute Japanese assets in foreign markets had risen 20 trillion yen ($190 billion) in the past two years
Did China cause the Giglobubu, Granddad?
bloomberg.com: Granddad, Did You Believe in Central Banks
``Granddad Benny, is it true that central bankers used to believe they could steer the global economy with quarter-point twitches in overnight rates?'' Granddad looked up from his GoogleSoft iSpreadsheet, where a flashing red ``health care'' box was blocking 2027's planned expenditure from matching the income cell. ``Yes, Joel. For about a decade we all believed central banks could ensure people had jobs, and could afford food and housing and such. That all changed after the Gigantic Global Bubble Burst of 2008.''
42% of the houses on the island of Arran are holiday homes.
The Herald: The worst housing crisis in Britain? It’s on our doorstep
The same old story: locals are stuck in rented accommodation, caravans and so on with no hope of ever buying a house. There's another short piece at http://www.theherald.co.uk/search/display.var.1493713.0.arran_people_priced_out_of_house_market.php
Cash cow is dead - or at least dying!
Observer: The signs are bad for buy-to-let amateurs
The price of new homes (a BTL favourite) in London had fallen by 3.7 per cent in just one month.
BTL Scapegoating HIPS in desperate attempt to blame anyone but themselves
The Observer: HIPS Fiasco causes chaos in flooded rental market
Wingeing BTL and Rental Agents carp on about HIPS - as if their own greed wasn't the problem
Saturday, June 23, 2007
Action time! OFT says supply not the problem!
Times: OFT opens inquiry into the state of UK housing industry
The Office of Fair Trading has launched an investigation into the United Kingdom’s £20 billion housebuilding industry amid concerns over both the quality and time taken to build the country’s housing stock. The investigation will examine any evidence of cartel-like behaviour that may restrict the supply of new homes and fuel house-price rises, although OFT inspectors insist that they are approaching the inquiry with “no assumptions”. Research from the Royal Town Planning Institute shows that the nine largest residential developers have enough land with planning permission to build almost 225,000 homes. That is more than double the number of houses they build annually.
Inflation stalking the housing market
Independent: The fight for the world's food
If there is one thing that comes before paying the mortgage its putting food on the table, if as was reported last week the average family only has a weekly disposable income of £35 if won't take much unavoidable 'food inflation' to kill the housing market.
Costa Del 'Con' News Report
CNN: Costa Del Con Part 1
Excellent film in two parts from CNN, having just come back from Garrucha & Carboneras in Almeria Spain (apparently the unspoilt bit) I can vouch that literally 40% of all the newbuild in the EU is going up in Spain! If youre looking for a Big Crash Spain will take some beating!
2bn BTL tax giveaway
Guardian: First-time buyers vs landlords? With £2bn tax relief, no contest
Buy-to-let investors enjoyed tax relief worth £2bn in 2006 - in stark contrast to first-time buyers, who do not qualify for a penny, research by Guardian Money reveals. The first analysis of the scale of tax reliefs received by landlords indicates that the annual subsidy is likely to rise to £3bn by 2008, eclipsing the total amount spent by the government on social housing.
Amazing that 'direct action' has taken this long - I can really see this spreading...
Telegraph: Lake District faces war on second homes
A self-styled "popular liberation army" has pledged to attack holiday homes in the Lake District in protest at "leech-like scum" whom they claim have pushed property prices so high that local people can no longer afford to live in the area.
For the love of god do something...
Guardian: First-time buyers vs landlords? With £2bn tax relief, no contest
Buy-to-let investors enjoyed tax relief worth £2bn in 2006 - in stark contrast to first-time buyers, who do not qualify for a penny, research by Guardian Money reveals.
How Noshbag will get out of jail free
Safe Haven: Predicting The Future
Good article explaining how mainstream economists/analysts will use an unforeseen world event to explain how they got it totally wrong.
Just like inflation was out of control in the 1970s before the oil crisis began
Amatuer BTLers - prepare for a hammer blow!
BBC: Call for action on buy-to-let
BTL mortgage tax breaks not available to BTL under scrutiny.
At last, some balance to the debate
Guardian: OFT launches investigation into £20bn housebuilding industry
This article is one of the few that actually looks objectively at all sides of the debate. In particular, it doesn't go to the lowest common denominator and blame planners for all ills of society. In particular, it cites a recent Royal Town Planning Institute that suggested the country's top 10 housebuilders were sitting on 14,000 acres of land with planning permission, equivalent to 225,000 houses. That RTPI report also stated (not mentioned here) that enough land is allocated in local plans or designated as brownfield land to produce 1million homes. It is pretty obvious to even the most novice of economists, that house builders have no interest in flooding the market with 200,000 to 1million houses, because that would send prices and profits crashing to earth.
Friday, June 22, 2007
Unbelievable, sickening press release
Assetz: First-time buyer plight brings buy-to-let opportunities
The difficulties first-time buyers have been suffering in trying to get on the UK housing ladder are well known. Rising house prices, particularly in the most expensive areas such as London, the impact of other debts on their ability to raise the deposit and the refusal of the chancellor to raise the stamp duty threshold in the last two budgets to take into account rising prices have all added to the growing woes of this beleaguered group of would-be homeowners.While such a situation persists, there is a clear opportunity for the buy-to-let market. The NAEA figures suggest many are giving up, at least for now, on any hopes of owning a home. Many may be biding their time and waiting for a market correction, or put off by the current level of interest rates....
Global Materials Famine?
Building Magazine: In times of famine
A lot of important information is traded over the UK’s garden fences. This summer however, the most important message concerns the fences themselves – or rather, the lack of them. Up and down the land, people are returning from DIY stores empty handed, or with their wallets considerably emptier than anticipated. “I’m having some fencing work done at home,” grumbles Brendan Morahan, a director at Taylor Woodrow, “and my fencer told me last night it was going to cost £150 more. Worrying Stuff?
Looking back at the carnage from 2027
Bloomberg: Granddad, Did You Believe in Central Banks Once?:
For about a decade we all believed central banks could ensure people had jobs, and could afford food and housing and such. That all changed after the Gigantic Global Bubble Burst of 2008.''
Pressure Coming to Bear from the Country Folk
Daily Telegraph: Lake District 'army' threatens second homes
"Following the example of disaffected inhabitants in Wales and Cornwall, the group today pledged to attack holiday homes in the Lakes." The walls literally might come crashing down!
fund had borrowed at least $6 billion in additional capital from a dozen Wall Street lenders,
nakedcapitalism: Troubled Bear Stearns Hedge Fund May Be Liquidating
Built on about $600 million in investor capital, $40 million of which came from Bear and a group of firm executives, the fund had borrowed at least $6 billion in additional capital from a dozen Wall Street lenders, say people familiar with the matter, including Merrill, Goldman Sachs Group Inc., Bank of America Corp. and Deutsche Bank AG. It was run by Bear executives alongside a larger sister fund with relatively little borrowed capital.
Now its getting interesting...
BBC News: Mortgage Loss Threatens US banks
"The US housing downturn may have major financial repercussions, experts have warned, as Wall Street faces up to the crisis in the sub-prime lending market. Bear Stearns, a leading US finance firm, is trying to prevent the collapse of two hedge funds with major exposure to the high-risk mortgage sector... Is that the sound of a stable door being slammed shut just a teeny weeny bit too late?!?
A public toilet in St Andrews sells for almost £200,000
BBC News: Golfing town's prized loos sold
The property market in Scotland has reached a new high with a public toilet being sold for almost £200,000. An unexpected bidding war broke out when the toilet block went under the hammer at a property sale in the Quality Central Hotel in Glasgow.
concern about a possible collapse sent
bloomberg.com: Bear Stearns Plans $3.2 Billion Fund Rescue to Halt Fire Sale
Bear Stearns increased efforts to salvage the fund, one of two that made bad bets on so-called collateralized-debt obligations, as concern about a possible collapse sent stocks and bonds of financial companies lower and pushed the perception of credit risk to a nine-month high. A loan agreement would prevent a fire sale, while increasing the risk to Bear Stearns, the second-biggest underwriter of mortgage bonds.
Bear Sterns and Sub Prime Worries
FT.com: FTSE dips on financials exposure worries
Not much interest here, but the first paragraph or so caught my eye: "London equities were losing ground by midday Friday, as financial stocks sagged with investor concern over banks’ and asset managers’ exposure to sub-prime mortgage assets in the United States."
Why it can only get worse for buy-to-let investors
MoneyWeek: Why it can only get worse for buy-to-let investors
The situation is looking bad for Britain's 400,000 buy-to-let investors. Not only are many finding that rental yields are failing to cover mortgage repayments, some are set to lose out on capital gains too...
Supersize My House: Tonight 8pm ITV1
ITV1: Supersize My House
Rising property prices have encouraged house owners to extend their homes rather than move to bigger premises. Fiona Foster investigates the ugly battles this can cause with neighbours and local authorities, and assesses the impact of the government's new planning strategy
the abyss into which the housing market is about to plummet
CNN News: UPDATE: Bear Stearns Hedge Fund Woes Stir Worry In CDO Market
The uncertain fate of two Bear Stearns hedge funds which loaded up on mortgage-backed securities that are now souring has cast a sharp light on the fragility of the collateralized debt obligation market, a strategist warned
Time for tumble?
Home.co.uk News: Property goes back to the 80s
The number of properties being sold in Britain has reached its highest level since the property boom of the late 1980s... Figures from HM Revenue and Customs (HMRC) show that 1,859,000 flats and houses were sold in 2006-07, reports the BBC. That was the largest number sold since 1988, the peak of the boom before property prices and sales crashed in the early 1990s.
The truth about Buy-to-Let
Home.co.uk News: Buy-to-let bubble 'will burst'
All is not well in the world of buy-to-let, according to one expert... James Hamilton, banking analyst at Numis Securities, said: 'A lot of people have made very good money in the past from buy-to-let. But if the housing market goes flat, there is every likelihood that many of them will want to sell up.'
Futurecast: here is how it will happen in UK
CNN: Out of touch with realty reality
Despite turmoil in the housing markets that includes record foreclosure numbers, mortgage rate increases and home price depreciation, homeowners don't believe there's a real estate slump, according to a new poll. The overconfidence of homeowners doesn't jibe with the findings of most home-price indices, which point to lower median single-family house prices of about 2 percent nationwide. "Americans [are] positive about their homes' value and believe in a bounce-back in residential real estate overall"... But II ask you a question... WILL BTLers HOLD THEIR NERVES?
They're buying less coffee...
KPLC-TV: Starbucks high end of '07 view "very challenging"
Starbucks Corp.'s (SBUX.O) chief financial officer on Thursday said meeting the high end of the coffee shop chain's 2007 earnings forecast will be "very challenging" due to rising dairy costs [they're getting creamed!] and [b]slowing sales growth[/b] in its U.S. business, sending shares to a 20-month low.
rumors will increasingly cause volatility'
forbes: Treasury's Lowery says sovereign wealth funds risk 'financial protectionism'
The rapid expansion of government-run investment funds could 'fuel financial protectionism' according to the US Treasury's Clay Lowery, given already rising 'sensitivities' to globalization.So-called sovereign wealth funds, investment pools of government foreign exchange or commodity revenues, are now estimated at 1.5 to 2.5 trln usd and reserves have been growing 20 pct a year.
The squeeze is already here
Times: Disposable incomes fall as rise in rates and energy prices take toll
Consumers’ disposable income has fallen by 17% over the past four years, according to a report that highlights the squeeze on homeowners from the increase in mortgage costs, fuel bills and other essential payments.
Spain property bubble
GulfNews: Booming real estate may be a ticking time bomb
"Recent news from Spain show the beginning of a possible property correction.Funnily enough, all along, experts were loudly trashing any suggestion of a Spanish bubble. Their sunny-side arguments included very low interest rates, rising real incomes, more households, rising demand from foreigners, high transaction costs that would discourage speculators, fixed supply of property in the short term and the attractiveness of property as a good investment."
The Big Squueze!!
Guardian: Rising bills erode disposable income
The amount of money UK households have left to spend after paying the bills has fallen by 10% over the past four years as increasing fuel prices and mortgage rates have started to take their toll, figures showed today. The typical family with two children aged under 16 has seen their level of disposable income fall by an average of £82 a month since 2002/03, according to accountants Ernst & Young.
OFT Begins Probe Into Housebuilders
biz.yahoo: OFT Begins Probe Into Housebuilders
"It had found cause for concern that the sector was "not working well for consumers"." No shit! New builds are a complete joke i.e. bricks made out of skip contents (including glass & wood), interior walls glued up, they even water the paint down to save a couple of quid.
Comparing the 4 biggest stocks bubbles
The Economist: How does China's bubble compare with previous financial manias?
Chinese A-shares now have an average price-earnings (p/e) ratio of around 45. At their peaks, the average p/e ratio of the Nikkei 225 in 1989 and the NASDAQ at the start of 2000 were both well over 100. This suggests that Chinese share prices could have much further to climb before the bubble bursts—unless China's policymakers are braver than Mr Greenspan and take bolder action to dampen the market now.
THIS GREEN AND PLEASANT LAND
REUTERS: ORIGINAL NEWS ARTICLE
Looks like Gordon and his mates aren't going to blame themslves for this mess. Its the planners stupid...
Thursday, June 21, 2007
Savings rates have dropped by £6bn compared to last quarter
Firstrung: Savings fall back sharply in 2007
UK consumers borrowed 41 pence for every pound they saved in the first quarter of 2007, according to Unbiased.co.uk's latest Savings Brake figures, which reveal the ratio of how much we are borrowing, not including mortgage debt, contrasted with how much we are saving...
Buy-to-Lose the first casualty
thisismoney.co.uk: Buy-to-let bubble 'will burst'
James Hamilton, banking analyst at Numis Securities warned that there were massive potential problems because many individuals have invested huge amounts of their total wealth in buy-to-let. Some retail investors have taken the very high risk strategy with such a high concentration of their money in a single asset class.
Inflation at 11000%+ - set to rise!
Gruaniad: Zimbabwe inflation 'to hit 1.5m%'
Title says it all - and puts UK/US HPI all in perspective
Record number of homes changing hands
BBC News: House sales matching 1980s boom
"Some commentators believe that even if house price inflation slows further, the buoyancy of the economy and continued immigration will sustain the current demand for new homes." "continued immigration"? Surely, they are not trying to blame the East European builders who came here because of the property boom for causing the boom in the first place!
The top of the rollercoaster
BBC News: House sales matching 1980s boom
Figures from HM Revenue and Customs (HMRC) show that 1,859,000 flats and houses were sold in 2006-07. That was the largest number sold since 1988, the peak of the boom before property prices and sales crashed in the early 1990s.
This surely must be a record low?
Firstrung: First time buyers now at alarming low of 8.9% - NAEA
"I am alarmed that month after month the percentage of first time buyers in the market is dropping and we are now faced with the worrying figure of just 8.9% of first time buyers in the marketplace" - NAEA President, Stewart Lilly
Lets change subject quickly!
BBC News: Bank acts on £5 note distribution
And your point being?
The markets don't like it
BBC: Latest world trade talks collapse
The latest negotiations to try to secure a new global trade deal have collapsed without agreement
Darling set to inherit a mess from Brown
Reuters: Next chancellor could face a tougher time
With financial markets now pricing in IRs of 6.25 percent by early next year, Brown's successor may be wondering if the job is all it's cracked up to be.
Spend the equity until it is all gone
Market Oracle: Irrational Housing: Insiders Out Early and the Duesenberry Effect
Good article about why the US consumers will keep spending despite falling incomes and falling home values
Having been in Ireland last week and seen friends spending 30K EUR on landscape gardening and 150K EUR on a kitchen extension, I can well believe the US consumers will spend until all their equity is all gone.
Up, Up and Away!
The Independent: Rates are going higher. Get used to it
The situation is much more like the late 1990s - when bank base rate rose as high as 7.5 per cent - than the era of poor world growth which has caused the low interest rate environment we have become used to. The British population may now be so in debt that consumption would indeed fall off a cliff if the tightening cycle proceeded much further. Yet there is not much evidence of a significant change in consumer behaviour. We are still at that stage in the cycle where most people's idea of economising is to swap champagne for prosecco in the weekly shop. The Bank of England gains nothing by delaying. On the stitch- in-time principle, it should be getting the pain over and done with now. It now appears clear that we are set for a period of significantly higher interest rates.
Let's print some money
BBC News: Bank acts on £5 note distribution
Bank governor Mervyn King said it had £1bn worth of £5 notes in its vault but high street banks did not want them. They found it cheaper to issue £10 and £20 notes and the shortage of "fivers" in circulation led to their "noticeably soiled and scruffy" condition, he said. But she added that with £100 being the average amount taken out of ATMs at one visit, it seemed "safer" to stock higher denominations, so cutting the number of trips to fill up the machines. An Average of £100!!!! Who did they ask? Where are these ATMs? I think someone is telling porkies...
More inflation down the road
Money Week: Metals shortages have a silver lining for investors
If the rest of the world catches up with America and starts consuming these minerals with the same enthusiasm, things look worse: there is only 19 years worth of uranium, less than 10 of silver, 36 of gold and 34 of zinc.
We are pushing planet earth to its limits
Selling up before the Crash?
STV: Little Piece of Middle Earth Goes on Sale
Fans of the Lord of the Rings trilogy could literally live the life of a hobbit if they stump up the estimated £600,000 price tag for a fantasy property in Aberdeenshire. His self-built Hobbit Hall is fit for any modern day Frodo Baggins or Samwise Gangees. The tiny 10ft x 8ft house boasts central heating, a working wood burning stove and comes complete with hobbit-sized furnishings.
You didn't get this much spin in the Bradford cotton mills
Daily Telegraph: Buy-to-let buoyant despite rising rates
The buy-to-let market has remained "very buoyant" in the first half of the year in spite of fears about the effects of higher interest rates, according to Bradford & Bingley
crazy lady living in a bag
sky news: riots on the streets
its like a jungle sometimes , it makes me wonder how i keep from going under, dont push me cause im close to the edge , im trying not to lose my head.
Even the bulls see it softening
FT.com: B&B stays bullish on buy-to-let
Despite the headline, we see this in the later paragraphs: "The group said that arrears had risen as a result of rising interest rates but the growth was within its expected range. Mr Cranshaw warned in April that rising interest rates had begun to dampen demand for mortgages, but the group was upbeat on Thursday, predicting buy-to-let demand would continue to outperform the mainstream market beyond 2007, supported by demographic trends. Shares in Bradford & Bingley have fallen about 8 per cent this year, underperforming the wider banking sector. They opened on Thursday down 3¾p or nearly 1 per cent at 417¼p."
mr buy to let(a real steel)
sky news: britains richest
and to think would all these people come here if they werent given the tax breaks? how longer will this fiasco go on and when will gordon balance the books so that mr and mrs uk will geta decent pension,health service and with children who can afford somewhere to live, rich poor gap widening, rioting on the streets again? thefts, robbery , violent crime, drug and drink abuse on the increase, sounds familiar doesnt it?
true intentions of MPC doves
The Telegraph: Governor's defeat last time heralds rise to 6pc
Might Mr King have been secretly doubting their true intentions? His first term as Governor ends next year, and some in the Bank suspect that a couple of the committee members are voting with half an eye on his chair, knowing that if Gordon Brown chooses not to reappoint Mr King he will baulk at appointing another hawk.
More evidence that the UK is struggling with base rates at just 5.5%
Firstrung: Credit squeeze bites as missed loan payments increase
More than 7,716 loan repayments are going unpaid every day as the recent Bank of England rate rises start to bite, new MoneyExpert.com research* shows... Up to 1,389,000 repayments on personal loans have been missed in the past six months, the independent financial comparison website says. That works out at around 231,502 repayments missed a month, or around 7,700 each day.
Why the IR are rising
Independent: The global squeeze on monetary conditions may not be over quickly
We need to figure out what a world of 6 per cent interest rates will be like.
A BIT LATE!!!! THIS GUY HAS SLAMMED THE DOOR - BUT HORDE OF PIGS HAVE STAMPEDED OUT OF THE STYE!!
BBC: Governor issues 'toxic' debt warning
The Bank of England Governor has warned the City that an explosive rise in lax loans and complex debt instruments now represents a major threat to global financial stability. Mervyn King at the Mansion House last night In a remarkable speech at the Mansion House last night, Mervyn King issued a caution to the corporate debt market, where banks have dramatically loosened their lending conditions and devised ever more advanced means of extending cash to customers.
Greed Greed and more Greed
FT.com: Warning on illegal Shanghai share deals
State-owned companies and government agencies in Shanghai, including those responsible for education and pensions, misappropriated Rmb6.3bn for illegal investment in the stock market over the past three years, according to a senior judge at the city’s highest court.
Wednesday, June 20, 2007
Strange how they can mess up our lives and get paid for it
FT.com: The Bank of England needs to set higher interest rates
The discussion at the Bank of England’s monetary policy committee must have been heated and, in the end, the wrong side won. This month’s 5-4 vote not to raise rates is even more notable because one of the dissenters was Mervyn King, the Bank’s governor. Though there are real divisions over what will happen to UK inflation, the data justify Mr King’s view that higher interest rates are needed, and sooner would be better than later
WAIT FOR THE FALLOUT ACROSS THE MARKET
FT.com: Subprime mortgage securities
One hunch is that a chunk of the losses are sitting in collateralised debt obligations, which repackage loans into securities. These are split into tranches, with those that will absorb the first hit dubbed equity, while the safest portions can be rated triple-A. But in CDOs, even triple-A securities can trip up investors if the riskier tranches are undermined by weak underlying collateral.
WHAT A COST
ABC news: Dark side of China's economic miracle
China's economic miracle is fuelling vicious labour practices - highlighted by a scandal over brick kiln slaves - that officials are actively supporting, rights activists say. State media reported this week that 532 slaves have now been freed from brick kilns and illegal mines in Shanxi and Henan, including more than 50 under the age of 18, some as young as eight. In recent months, both the "enslavement" of 100 migrants and the existence of labour camps in north-eastern Heilongjiang escaped serious punishment, Xinhua reported. Child labourCLB is due to publish a report in coming weeks on the use of child labour, based on interviews with more than 100 children, parents, workers and teachers in three Chinese provinces.
China going up in smoke
kyodo: China becomes top CO2 emitter, overtaking U.S.
Tony Juniper, from the environmentalist organization, Friends of the Earth, said China's "rocketing" carbon dioxide emissions are a "cause for global concern." "Preaching to them (the Chinese) about cutting pollution won't work while Western countries are still increasing theirs. Furthermore, China's emissions are linked to the manufacture of products that are being consumed in the West. We need to look at the overall levels of consumption worldwide, and not just the impact of individual countries," he said.
Anyone seen what UK Gilts are doing? Ooh boy.....
ChinaDaily: China sells more US T-bonds
That's a great euphemism for "dumping the toxic waste known as US Treasury Bills".
Diversifying
The worst is yet to come for the U.S. housing market.
bloomberg.com: Rate Rise Pushes Housing, Economy to `Blood Bath'
``It's a blood bath,'' said Mark Kiesel, executive vice president of Newport Beach, California-based Pacific Investment Management Co., the manager of $668 billion in bond funds. ``We're talking about a two- to three-year downturn that will take a whole host of characters with it, from job creation to consumer confidence. Eventually it will take the stock market and corporate profit.''
On the fast track to disaster but taking the rest of us with them
SMH: China outstrips US on greenhouse emissions
China has resisted international demands that it cut its greenhouse gas emissions more rapidly because this could slow economic growth and spark social unrest.CHINA has surged past the US to become the world's biggest emitter of greenhouse gases, beating even the most pessimistic predictions that it would take at least another year to outstrip the US.
Blood running in the streets
Forexfactory: Bear Stern Sub-Prime Hedge Fund In Trouble-Update
It's also the kind of thing that could light the fuse of a panic, not so much becasue of the loss but for the possible liquidity implications.$Billions of these sub-prime backed instruments are all over the street. If Bear's paper is seized and sold at a deep discount, everyone else's paper will get their price discounted as well, triggering more margin calls. It's basically a situation where all of a sudden-a lot of people are going to be holding paper that will be rapidly depreciating, with no ready buyers standing in line.
Silver gambling their pensions
Forexfactory: Carry Trades In Dangerous and Final Stage
As credit conditions tighten, there will be an outflow of longer-term capital which will leave asset prices increasingly dependent on more unstable flows to maintain current levels. High-yield currencies and carry trades will also be even more reliant on unstable flows to make further progress. Given these conditions, there is now an increasing threat that only a small shock will trigger a huge adjustment in global markets and a rapid reversal in carry trades. One possible trigger remains the collapse of a prominent hedge fund
More evidence we may have a BTL armageddon
Various: Calls for buy-to-let tax relief to be cut
Paul Diggory, president of the Chartered Institute of Housing (CIH): "Buy-to-let owners have a financial advantage over those trying to buy their first home, as well as pushing house prices even higher. We hope the new chancellor of the exchequer will remove this tax relief as part of the comprehensive spending review due in the autumn." Just for the records, mortgage interest expenses are a deductible expense on first homes in the US, where houses are seen as a family roof rather than speculation
Here it comes...
Bloomberg: Mortgage Rate Rise Pushes U.S. Housing, Economy to `Blood Bath'
June 20 (Bloomberg) -- The worst is yet to come for the U.S. housing market. The jump in 30-year mortgage rates by more than a half a percentage point to 6.74 percent in the past five weeks is putting a crimp on borrowers with the best credit just as a crackdown in subprime lending standards limits the pool of qualified buyers. The national median home price is poised for its first annual decline since the Great Depression, and the supply of unsold homes is at a record 4.2 million, according to the National Association of Realtors.
From one craze to another...
Telegraph: Buy-to-letters check in to room service
"Investors disillusioned with residential property are switching to hotels as the new asset class".. "If you have a spare $600,000 you could buy yourself a room in the Mandarin Oriental - a new 74-storey tower in Chicago. However, you will need a jaw-dropping $21m to buy one of the penthouses in the tower. Again, income is based on the occupancy of the room but BridgePoint, the private equity group in on the deal, guarantees a 15.6 per cent return above the open market resale price." The world must be full of stupid people, would you trust a PE firm's "guarantee"??...
Falling stars
Telegraph: Property at half-mast
Property funds "have returned just 0.38 and 0.43 per cent, excluding any initial fee, between January 1 and June 4, according to Morningstar, the fund analyst"... take out the 5% sign up fee for the "class A" fund shares and you have the full picture
More inflation - China to raise export taxes
Xinhua (Chinese official news agency): Business news
I got wind of this four days ago - now it's official. The exact changes to China's complex export tax regime will only be known on July 1st, but rough calculations suggest it will raise the UK inflation indices by between 0.2% and 0.3%.
what goes up must come down
.blackswantrading: CDO Containment? Watch the yen!
Do Treasuries catch a bid on a CDO problem or are they sold as a hedge? We can never get that right. But we could find out soon as two big Bear Stearns Hedge Funds holding CDOs might be going belly up.There no doubt the system has weathered the subprime problem very well so far. But this may be another test. It could generate some urgency on the part of other hedge funds to reduce some of their overall market leverage. And in the currency market, much of that has been created thought tubiquitous carry trade (Japanese yen and Swiss franc being thkey funding currencies).So continue to watch Japanese yen.It seems now to be playing the role as the risk-gauge for the global economy. massive one-way bet in the yen, as you can see in the huge open interest level in the currency futures mare
BTL Exit Turns from Trickle to Gush
themovechannel.com: Global threat to house prices
survey from the Royal Institute of Chartered Surveyors shows that more than five percent of buy-to-let investors threw in the towel in the first quarter of this year, the highest proportion in two years. This trickle could turn into a gush in the coming months as the cheap fixed-rate mortgage deals expire. "A large number of people will be remortgaging in a rising interest rate environment," said a spokesman at the CML. "We expect this will contribute to a slowing housing market."
Robust and/or cool?
Guardian: Robust mortgage market starts to cool
Robust or cool does not matter, facts are clear: "According to the Building Societies Association (BSA), approvals for mortgages (loans agreed by building societies but not yet completed - a useful indicator of the short-term future of the housing market) have fallen from 13% in April last year to just 8% in April 2007. During the same period actual lending also dropped by 17%, the figures show"... looks like a duck, walks like a duck...
Horses, boats and houses
MoneyWeek: Why Britons are selling their boats and horses
Good piece by Merryn... isn't she great? "A woman who told me that she and her husband had interest-only mortgages on both a London house and a country house that they were struggling to pay. Another was with a woman who told me that her buy-to-let investment (which she considers her pension) was actually costing her a whopping £600 a month" "a retired stockbroker who lives in Notting Hill. Eighteen months ago he and his wife thought they might move to the country so they put their house on the market for £850,000. They got no response so they decided to stay put. Last week, after a visit from their local estate agent they changed their mind again – and their house is now on the market for £1.65m"
Second time King outvoted
FT: BoE decision webcast
King worried that delaying rate rise now will force rates up much higher later. King obviously decided to be outvoted and his power is now questioned... will it lead to confrontation with Brown or King's resignation? obviously King will not want to chair an MPC that has let country inflation run out of control and consequent knee-jerk reaction to raise IR to 8%.
Warnings over leveraged debt
FT.com: UBS chief warns over lending boom risks
The chief executive of UBS, the Swiss banking group, warned that the growing number of risky loans investment banks are making could lead to lawsuits and damaged reputations. The warning by Peter Wuffli highlights increasing concern among senior executives that a boom in leveraged finance could drag banks into litigation and damaging disputes with clients if the credit cycle turns.
Next month for sure
BBC: BoE divided over interest rates
The Bank of England's decision to keep interest rates on hold at 5.5% this month was agreed by a vote of just five to four, minutes have revealed
Rate rise in July then...
BBC News: BoE divided over interest rates
The Bank of England's decision to keep interest rates on hold this month was agreed by a vote of five to four, released minutes have revealed.
US housing 'Blood Bath'
Bloomberg: Mortgage Rate Rise Pushes U.S. Housing, Economy to `Blood Bath'
``It's a blood bath,'' said Mark Kiesel, executive vice president of Newport Beach, California-based Pacific Investment Management Co., the manager of $668 billion in bond funds. ``We're talking about a two- to three-year downturn that will take a whole host of characters with it, from job creation to consumer confidence. Eventually it will take the stock market and corporate profit.''
The locusts are out there...
Yahoo: Rise in companies buying debt-hit homes
Dozens of fledgling property companies specialising in buying homes from homeowners struggling with mortgage repayments have started up in recent months in another sign of the growing level of indebtedness in the UK. There are now more than 200 companies that buy houses at discounted prices from distressed homeowners. In some cases, the companies rent them back to the sellers.
Big Bank Write Offs will be the Norm
Daily Telegraph: Bear Stearns to rescue ailing property fund
Bear Stearns has proposed a $1.5bn (£755m) rescue package for one of its asset management funds facing imminent collapse after betting heavily on US sub-prime mortgage debt.
Personal Debt Still Rising
Reuters: Consumers step on savings brake
Consumers borrowed more and saved less in the first quarter of this year, adding to the nation's perilous personal finances, figures show.
Average 3.6% yields............
landlord expert: Latest report on the buy-to-let market
......should we be surprised, especially when one of the report's most prominent conclusions is that average letting portfolios are "worth 498,000 pounds and the average gross rental income stands at 18,000 pounds"? Any would-be landlords can see that those figures simply do not stack up. They show that the ratio of gross income to property valuation is just 3.6pc...........
Poor buggers
nzherald: Home loans less affordable in May
A home loan affordability index shows the cost of a mortgage rose in May to 79.3 per cent of the average weekly take-home pay.
slowdown bites
TELEGRAPH UK: Tesco slowdown sparks warning over rate rises
Tesco, the UK's largest retailer, reported a slowdown in sales growth and gave warning that four interest rate rises in less than a year have hit consumer confidence.
The risk
bloomberg.com: N.Z.'s Cullen There's Risk of `Significant Downturn' in Housing
New Zealand's Finance Minister Michael Cullen said there's a risk of a ``significant downturn'' in housing after the central bank raised its benchmark interest rate to a record to cool demand. ``There's a risk if what could kindly be called a technical correction or a significant downturn,'' Cullen said at a meeting of the parliament's finance and expenditure committee in Wellington today.
Tuesday, June 19, 2007
Inside Track ads
Advertising Standard Authority: Complaint
HPC Webmaster, please can we post this link permanently on the home page. Among Inside Track ads: "FREE! 'How You Can Give Up Work and be a Propery Millionaire Instead'" "Do you think the purpose of life is to slave for forty-five years, pay off a mortgage on some pitiful little house and then huddle in front of a 1-bar electric fire, struggling to make ends meet? ... I don't know whether to laugh or cry at people's complete lack of financial savvy. They are heading for a lifetime of drudgery and lack, and a poverty-stricken miserable old-age"
Property seminars
Mail: Are property seminars a good bet?
"At a recent Whitney introductory seminar attended by This is Money, their representative outlined a way to obtain the finance for a buy-to-let deal. Delving into the dark arts of leveraged financing, he explained - along with a set of figures – how to go get a deposit by sticking your costs on short-term credit card borrowing, then turn an almost immediate profit on a £150,000 property."... talking about subprime!! But do mortgage lenders do any credit check? Are they asleep at work?
seems like he has covered everything except a housing slump
TELEGRAPH UK: Master of home economics
The figures for Julian's portfolio are enough to make even hardened buyto- let investors wince. His mortgage is a little over £25 million, and expanding, even though he says the typical rental yield on his properties has fallen from 20 per cent in 1996 to as little as 6 per cent today.
you will soon need a chit for a sh......t
Daily Mail: Sellers rush to beat delayed home packs
Homeowners continued to rush to put their property on the market in June to avoid home information packs, despite the delay to their launch. Sellers rushing to beat the launch of home information packs brought 10% more property onto the market
Silver Sushi Surfers Ride the Last Wave
Daily Telegraph: Japanese grannies trounce Kiwi bank
"Japan's day-trading grannies and housewives have overwhelmed New Zealand's central bank, driving the Kiwi dollar to record highs against the yen despite heavy intervention".
A shift in attitude
Landlord Expert: Renting is better than buying...
There has been some evidence recently that the housing market is nearing its peak, as the average price of a house countrywide went up by only 500 pounds or 0.3% in May...
US housing slump persists
bloomberg.com: US housing slump persists
despite their best hopes sales keep falling as buyers wait for bigger falls
BTL VI spin?
Home.co.uk News: Landlord confidence remains high
Research by Mortgage Express has revealed 88 per cent of landlords plan to increase or maintain their property portfolio... This is compared to 86 per cent at the same time last year. The survey of nearly 5,000 landlords by Mortgage Express found confidence to be highest among landlords with the largest portfolios.
CGT loophole "exposed"
Times: Spree by super-rich raises prices even for first-time buyer
Gabriel Rozenberg and Helen Nugent think they've exposed the nom-dom CGT loop hole, but the fact of the matter is there are plenty of financial savvy natives using off-shore "businesses" to purchase sub million houses, to escape CGT, and hence push up prices outside of Chelskigrad. And what do the treasury do ?
NZ Government to remove property tax advantages.
New Zealand Herald: Government Considers tougher rules for rental properties
The Government is considering removing the ability of rental property investors to claim losses against their taxes. Finance Minister Michael Cullen told Parliament he was considering the move as a part of the Government's wider concerns about monetary policy.
So you've identifed the problem now try and execute the solution
Firstrung: New report outlines what must be done to end affordable housing crisis
The National Housing Federation and Shelter are calling on incoming prime minister Gordon Brown to commit to building 20,000 extra social rented homes each year to tackle the country's critical affordable housing shortage...
Victorian England here we come
Firstrung: Rural housing shortage turning countryside into "theme park for the rich"
England's countryside will become a "themepark for the rich" unless the Government, local councils and other public bodies raise their game on tackling the rural housing shortage, the National Housing Federation has warned...
Is this a bit strange when food inflation so high??
Channel 4 News: Asda & Tesco In Price War
So as food seems to be causing the CPI a problem, big business steps in to have a price war?
"Fuel pushes up US inflation rate" - UK's curiously unaffected
BBC "News": Fuel pushes up US inflation rate
Uh-oh. Look like a CPI "recalculation" might be needed again.
"Help for people in mortgage trap" - but only if you're old
BBC "News": Help for people in mortgage trap
MPs and campaigners have been successful in getting Barclays to cancel Shared Appreciation Mortgages, where the mortgagee forgoes a percentage of the future value of their property for a loan. While tantamount to usury on the part of the banks, it is interesting to contrast this with the years younger people have been complaining to MPs (the majority of which are property-rich themselves) about rising property prices and getting absolutely no response. Remember when Gordon Brown talks about cutting IHT and spending on the NHS, he's basically taxing the young and swelling the elderly's coffers.
ITS LIKE A DISEASE SPREADING EVERYWHERE
SMH: More bankrupt despite top job market
There were 6940 bankruptcies, debt agreements and personal insolvency agreements in Sydney last financial year, an increase of 16.4 per cent on the previous year. Another 5250 were registered between last June and February, suggesting the total this financial year could push towards 8000. That compares with just 4544 in 1999-2000.Labor has used the figures from the Insolvency and Trustee Service Australia to highlight a rising trend in personal insolvency over the past six years.The total debt burden on Australian households has reached almost $1 trillion and the ratio of household debt to income has reached 160 per cent, one of the highest in the world.
Monday, June 18, 2007
Debt Correction
Channel4 News: The effect of lending
One of Britain's leading economists is increasingly concerned by the way banks sell on billions of pounds of corporate debt to private investors, including hedge funds. Professor Willem Boyter told Channel Four News that the system was facing a correction that would be "ugly" (follow video link).
Focus chain in trouble
BBC News: Troubled DIY firm set for £1 sale
The UK's third-largest DIY chain, Focus, is set to be sold to US hedge fund Cerberus for just £1 after suffering serious financial problems. Current owners Apax Partners and Duke Street Capital have agreed to sell their Focus shares for a nominal sum to end their involvement with the firm. The proposed deal would also see Cerberus pay off about £225m in debt amassed by the retailer. Rising interest rates and a weak DIY market have hurt the 250-store firm.
Will Yolanda be proven right or wrong?
Times: Listen to the house price debate (Webcast)
Let us face it, this is the only country in the world where "experts" presenting to a crowd of BTL idiots are in fact estate agents! Do they have some vested interest? Do they talk sense? Nooooooo....
End of Cheap money
moneyweek: Why you should be worrying about bond yields
Why does this matter? Well,“It may seem esoteric to you, but the yield on government bonds is the foundation on which all asset values rest.”Basically, if you can get a yield of say 5.5% by putting your money into a UK or US government bond then anything riskier (which is just about anything) needs to offer a better return than that.So yields on everything from commercial property to emerging market debt need to rise. And for yields to rise, prices have to fall.“I suspect the era of very low real rates is coming to an end we may be about to enter a period of high real rate this would have profound consequences for asset valuations everywhere. Bootle’s far from being the only worried voice.“the writing is on the wall” and that the era of low interest rates and cheap money is finally
London takes silver medal in expense olympics
Firstrung: London second in worldwide cost of living survey 2007 - city rankings
Moscow is the world's most expensive city for expatriates for the second consecutive year, according to the latest Cost of Living Survey from Mercer Human Resource Consulting. London is in second position, climbing three places since last year. Seoul moves down one place in the ranking to take third place, followed by Tokyo in fourth. Asuncion in Paraguay is the least expensive city for the fifth year running...
UK performing badly in quality of life survey
Firstrung: The 2007 world-wide quality of living survey - Mercers
Mercer's overall ranking for quality of living has revealed that Zurich again ranks as the world's top city, with a rating of 108.1. The city narrowly out-ranks Geneva, which scores 108. Vancouver and Vienna follow in joint third place and score 107.7. Cities in Europe and Australiasia continue to dominate the top end of the rankings for overall quality of living. Auckland and Düsseldorf share joint fifth place and score 107.3 points. Frankfurt and Munich follow with scores of 107.1 and 106.9 respectively. Bern and Sydney both score 106.5 points and share joint 9th place
Ooops... market not that stable after all!
Guardian: Why homebuyers face a bond bombshell
Words like "bust" are used here in the Guardian. Is the fate of the UK housing market is in the hands of the US bond market (mostly controlled by China) and the BoJ rate decisions? And re creating incentives through taxation... "If the proceeds of a land tax were used to lower income and corporation tax, it might pay Britons more to work or start a company than to own property, which is ultimately an unproductive asset. Food for thought." uhmmm... maybe Labour will eventually do something progressive and less feudal some day (... after Gorge W's poodle leaves no 10)
Prices down in many boroughs
Times: London property prices start to slow
"The June index of asking prices from Rightmove, the website, shows month-on-month falls of 1.7 to 2.8 per cent in the boroughs of Haringey, Hounslow, Lambeth, Southwark and Tower Hamlets" "exuberance persists in such metropolitan locations as Camden, up 7.4 per cent since May" "smarter postcodes - hot spots where most buyers are less preoccupied by the increases in interest rates"... this is horse-poo-poo... everybody knows that prices in every neighbourood have maxed out affordability at current IRs (with the sole exception of some oil-tycoon and Mr Abramovich). So IR rises will bite Camden and South Ken as well. Why cant the press be more objective.!?
We have heard much about planners restricting supply and supporting high prices. This well researched report from the Royal Town Planning Institute (RTPI) argues that:
Royal Town Planning Institute: Opening up the Debate: Exploring housing land supply myths
Developers have an incentive to accumulate land with planning permission as a balance book asset, to secure against loans, to block rivals from flooding the market, to support prices or both. - The UK's top ten housebuilders are withholding land with planning permission for nearly 225,000 homes. Taylor Wimpey alone has enough for 2.6yrs of supply. - 27,000ha of brownfield land either has permission or has been allocated in local plans for housing. Enough for 1,000,000 homes. "While we build up this blame culture for planning, people are getting the impression that no land is available at all. We need to open the debate to find out what the blocks are to actually developing this land" Kelvin MacDonald, RTPI policy and research director.
This is looking really bad for the economy
Timesonline: Cerberus buys debt-laden Focus DIY for £1
If the people who do this for a living cannot get it right, why would a bunch of financiers have a better chance? There are timebombs all over the Private Equity marketplace.
Global Food Crisis Emerging
organicconsumers: Lowest Food Supplies in 50 or 100 Years
Not directly related to HPC but food for thought. No pun intended
Something of a paradox? - posted on their own site
The Corporation: BBC 'must become more impartial'
The BBC needs to take more care to ensure it is impartial, according to a report commissioned by the corporation
LOL!! Its no good back peddling when the wheels are about to come off!!
Forbes.com: UK inflation expectations may not fall back as quickly as CPI - BoE
Looks like panic is setting in at the BOE, but slipping out a disclaimer wont help at this late stage of the game. I think this planned statemeant's only purpose is to act as a historical marker to which they can point once the $hit has hit the fan, and they can say "well we did say back in 2007 inflation may not deminish as fast as we'd like"..........LOL!!!!! you could set your watch by these buffoons.
The Days of Cheap Money are Over
Daily Telegraph: Business comment: The latest bond adventure is essential viewing
"At the end of last week the world's major bond markets stabilised after what had been a torrid time. Over the past three months, UK 10-year bond yields have risen from 4.8pc to 5.5pc. And US 10-year bonds have jumped from 4.6pc to 5.2pc in only six weeks. But the game is not over. Bond yields have further to rise."
Slow down continues
Timesonline: Rightmove signals house price slowdown
More of the same, prices falling back slightly
Blaming it all on Hips again
Guardian: Hips rein in rising house prices
A couple of interesting quotes "London fell behind the national average with more than half of London boroughs showing a fall in prices." and "Ironically, those that sought to save a few hundred pounds by avoiding Hips have contributed to a glut of property on the market, which will actually cost them money as they will have to discount their prices to sell."
Prices falling in more than half of London
Reuters: House prices show small rise
More than half of London boroughs showed a fall in prices on the month and annual inflation in the capital slowed to 23.1 percent from 24.8 percent. A sharp rise in the number of new properties coming on the market helped to keep a lid on property inflation. "More property available is good news for buyers, as sellers that need to sell urgently will have to drop their price," said Miles Shipside, Rightm
BOJ Should step in . they are helping push up rates with inflation effect faking it
bloomberg.com: Housewives Outmaneuver UBS, Deutsche Bank Trading Yen
Japanese businessmen, housewives and pensioners betting against the yen in their spare time are wrecking the forecasts of the world's biggest currency traders. Yukiko Ikebe, a 59-year-old housewife in Tokyo, in April was indicted for evading about 139 million yen in income taxes while earning 407 million yen trading foreign-exchange, according to the Tokyo District Public Prosecutors Office. ``She must have earned more money than us,'' joked Yuji Saito, head of the foreign-exchange sales department at Societe Generale SA in Tokyo. ``I said to my colleagues, `let's find her and hire her!'''
Has the driver for house price inflation finally hit the buffers?
Firstrung: House prices up in June although London house prices begin to stagnate - Rightmove
House prices in London rose more slowly than the national average for the first time this year, up by 0.7 percent month on month compared with 0.8 percent for the country as a whole. More than half of London boroughs showed a fall in prices on the month and annual inflation in the capital slowed to 23.1 percent from 24.8 percent.
Matt Simmons and John Kilda discuss a US report on oil depletion.
You Tube - CNBC: Oil Supply Shock
Matt Simmons on CNBC a month ago talking about a US government report on Peak Oil. Gives a balanced view and suggests that supply and demand may diverge this summer.
Sunday, June 17, 2007
1990s all over again
Stuff.co.nz: Australians raiding super savings to pay debts
Tens of thousands of Australian families are raiding their superannuation savings to pay off personal debts. "These figures are more evidence that all is not rosy in the Australian economy. Interest rate increases and petrol prices are all taking their toll."The amount of money taken from superannuation accounts to pay off debt has quadrupled in five years -- going from A$35 million ($39.4 million) in 2001 to A$135.3 million last year, Australian media reported.
UK should take a look at it to curb the out of control specs
Stuff.co.nz: Reserve Bank suggests house-sales tax
The Reserve Bank has again floated the notion of a capital gains tax on rental investment property once it is sold, but at half the normal tax rate.A capital gains tax has been repeatedly proposed as a means to dent the demand for property, one of the factors that has fuelled rising property prices.
No more free rides
FT.com: A fright in the bond markets may end the cheap funds era
Now the question is how great the impact will be. US Treasury bond yields in effect set the “risk-free” rate used when pricing securities – from corporate credit through derivative contracts to equities – across the world. They form the financial world’s clearest expression of risk.
Will borrowers be saved last minute?
Times: Borrowers face £1bn mortgage shock
Article signed by "chef Franco Beer" (have they run out of journalists at the Times?). Old info: 800,000 borrowers in for a nasty shock in the second half of 2007, but broadcasted full-page in the Sunday Times. For your information, did you know that the total number of repossessed homes from 1990 to 1993 was "just" 247,000? and the number of outstanding BTL mortgages is 800,000...
Good news: cost of borrowing is down!!
Guardian: Rise in number of 100% mortgages
Sympathetic with FTBs and BTLetter struggling to put a toe nail on the property ladder, banks have decided to give back to society and extend the 100% mortgage offer to anyone able to sign a self cert form (emailed and faxed forms are also accepted). The additional good news is that the offer rates on the 100% mortgages has been set to a very low level and is fixed for the first 1500 minutes (then reverting to the standard-variable-rate-that-will-shock-you). "The improved value of this type of mortgage is a result of stiffer competition among lenders, and will continue to attract the "maiden homebuyer", said MoneyExpert.com."
Property news, the week that was...
Firstrung: Firstrung, first time buyers the week in focus
Property news over the past week appeared to be exclusively dominated by one subject, first time buyers. In some respects the Firstrung team exhaled a collective sigh over internet connections each time we received another press release with the title header "first time buyers". Moving aside the re-cycled obvious comment there were three main newsworthy discussion points that emerged: many first time buyers have given up hope of ever owning, the crisis in the housing market is getting worse and perhaps the most poignant of the news stories - the decade long run on house prices has finally ruined successive government ambitions of creating a sustainable home owning democracy as the first time buyer ladder appears to have been kicked away...
Britain's debt splurge coming home to roost
Telegraph: £1.3 trillion in debt
The day of reckoning has come for a debt-soaked society that has seen outstanding household loans double to £1.3 trillion in just seven years. In a deliberate new policy of blunt-speaking, Mervyn King eschewed the normally equivocal language of central bankers to warn that if we don't change our free-spending ways, he will - by pushing up interest rates until the growing threat of inflation is eliminated. A quarter point rise is as much as the market can take. Anything more will precipitate a serious crash," says Robert Bryant-Pearson, of Allied Surveyors. "Everyone seems to forget what happened between 1990 and 1993: the repossessions, the negative equity. The problem now is that people's borrowing in relation to their income is extremely high."
Bearish article from the Times
The Times: Boom Times and Doom Mongers
One disturbing aspect of the present situation is that comparisons are being drawn with the early 1970s. Then, as now, commodity prices were booming, while economists were warning of the dangers of the soaring money supply. Then, of course, it all ended in tears. The global economy’s four-year boom may have been the result of the easy monetary policy adopted by central banks in the wake of the last global mini-recession in 2001. Central bankers would blanch at the idea that they are a cartel but their message has been remarkably uniform recently, whether it is Mervyn King at the Bank of England, Ben Bernanke at the Federal Reserve, or Jean-Claude Trichet at the European Central Bank.
Need to keep an open mind to investing in CHINA
VOA: China Opens Investigation Into Slave Labor Scandal
China has opened a national investigation into a slave labor scandal in central China, where as many as 1,000 people are believed to have been forced into a brutal human trafficking ring.
The end of cheap credit
Telegraph online: £1,300,000,000,000 in debt
Mervyn King announces that individuals may have borrowed unwisely. Pundits wonder if the housing market will survive Christmas.
Saturday, June 16, 2007
Silly CBI being over-optimistic
Sky News: Interest Rate Rise Predicted
The CBI's quarterly economic forecast predicts a quarter point increase to 5.75% this autumn (err... I thought everyone was agreed that a July rise was definite?.) However, it does not see IRs reaching 6%, and says the Bank should have room to cut interest rates back down in 2008. _____ From the press release: Other key points of the economic forecast include: -Favourable economic conditions -Consumer spending will grow -Manufacturing output is forecast to grow -Unemployment will fall Global economic growth remain benign with signs of a soft landing in the US Cloud cuckoo land... http://www.cbi.org.uk/ndbs/press.nsf/0363c1f07c6ca12a8025671c00381cc7/9ed67ab6c0cc7bf08025729d0033de50
Costa del Back Garden this summer
Times: Put the summer holiday on hold
Economy is growing, we are one of the wealthiest nations on earth, but... "Depressing statistics from the Council of Mortgage Lenders (CML) this week showed that mortgage interest payments are now eating up a bigger chunk of homeowners’ income than at any time in the past 15 years. And that’s just the interest. The 68 per cent of first-time buyers with a capital-repayment loan will be handing over an even bigger chunk of their monthly salary to feed the mortgage monster. If interest rates rise again, as is widely predicted, finances will become even tighter still"
BTL far west
Guardian: Nottingham's forest of housing despair
"The city's buy-to-let boom has created whole areas where local parents and young couples are outgunned financially by landlords, many of whom do not live there. And in some parts of the city, such as Lenton and Dunkirk, the council is considering shutting schools. Primary school children who should arguably be living in the three and four-bedroomed homes are simply not there." These social and community issues will worsen and attract regulatory scrutiny (central and local governments). Easy to predict that more regulations = more costs = heavier BTL losses = market crash
Friday, June 15, 2007
Prices have fallen in commercial property
FT: Cracks show in secondary retail market
According to this year's closely watched Midsummer Retail Report from agents Colliers CRE, transactional prices have fallen sharply from last summer on "secondary" properties; by about 10 per cent. More alarmingly, Colliers predicts a further fall in prices of the same order by the end of the year. Andre James, head of investment at Colliers, said: "There has been a dramatic turnaround since the start of this year, really since Christmas." A factor in the new climate is the jump in interest rates in the past year, which has reversed the prices buyers are willing to pay.
How much longer can facts be ignored?
The Market Oracle: We are on the Brink of a UK Housing Market Crash Warns Fool.co.uk
Household finances in British homes are at breaking point.
Land Usage in the SouthEast of England
Times: Gatwick advert lands in trouble
Planning officers in the southeast of England have their work cut out and it's not just houses!!!! It is Friday.
First serious cracks in the wall
Times: Mind the price gap: the North-South divide
There is wealth of evidence (see article) that sentiment is turning. How quickly will that happen in London? Never, they say. "The South is set to outperform the North until 2016 and London will dominate for the next 6 to 18 months. Yolande Barnes Director of Savills Research" My, my, Yolande... 2016? How do you know about that? Why should London be immune from credit squeeze? (please do not mention city bonuses, you know the bulk of the market is made out of overstretched BTLers). In any case one reason to be jubilant is the following: "it seems likely that activity, not prices, will bear the brunt of any slowdown"... I think it will be activity AND prices, however sure we ll see huge layoffs among the EAs!
Spanish house prices still have much further to fall
MoneyWeek: Spain rues the day it joined the euro
The numpties at the Banco de Espana must be rueing the day they joined the euro. They have three reasons for regret. The country’s housing bubble has burst, the economy is less competitive than ever and the current account deficit has mushroomed to the world's second largest. And there’s little to nothing they can do about it. Except, of course, look on helplessly...
London property prices outstrip Monte Carlo
Telegraph: London property prices outstrip Monte Carlo
London property prices are rising at the fastest rate for more than 30 years, with many houses fetching more money per square foot than Monte Carlo, a study disclosed yesterday.
seven percent, six percent, five percent...pattern emerging?
Firstrung: House prices receive confidence knock in June - propertyfinder.com
The extent to which people expect house prices to rise fell in June to just below 5%, down from over 6% in May. The main cause for the shift in people's expectations is the May interest rate rate rise, together with the well publicised probability of a further hike to 6pc before the end of the year. 88% of people stating that a further cooling of the market would be primarily due to rate hikes...
53K for a "house" oh we forgot, 150K for the land....oh well...
Firstrung: First time buyers unit 'SLAMmed'
Another version of the '60K project' which was hastily brushed under the carpet by the former office of the deputy prime minister. "SLAM, a group of architects who have devised a home design that costs only £53,000 to build yet includes outdoor space and can be adapted to include up to two bedrooms..."
Large multiples in the debt fuelled takeover business led to problems last time too
Washington Post: The Takeover Boom, About to Go Bust
To understand why there's a credit bubble, how it's inflating the price of stocks and what it will mean for you when it bursts, let's consider the acquisition of Avaya, a large telecommunications equipment maker, announced last week by two private-equity firms, Texas Pacific Group and Silver Lake Partners.
Avaya is expected to post revenue of about $5.4 billion this year. It has virtually no debt and has $825 million in the bank. Operating earnings -- profit before counting things like interest payments, taxes, depreciation and amortization -- are expected to reach $700 million. And if that's correct, it means the price being paid for Avaya, $8.2 billion, is 12 times operating profit, making it one of this season's richest deals.
The real MPC are in the US and Japan
Mail: Two million to be hit by fixed-rate rises
"Mortgage lenders have dramatically increased the cost of fixed-rate deals despite interest rates being kept on hold"..of course, why shoud they mind Gordon's puppets? "30 banks and building societies have increased their rates by up to 0.7%...a 6.09% two-year fix last month, replaced with one at 6.79%. difference is £56 a month on a £130,000 mortgage or £1,344 over the two-year period. Some 820,000 borrowers will come off cheap two-year fixed rates as low as 4.29% between August and December and two million in the next 18 months" From 4.29% to 6.79% means a difference of £271/month or £3,250/year on £130k... good luck!!
A nation dependent on debt
thisismoney.co.uk: From frugality to £34,000 debt
But everything changed when I started university. Teachers, careers advisers and the Government started telling me debt was nothing to worry about, that it was simply an 'investment'. To cope with my uneasiness, I told myself it wasn't 'real money' and tried to forget about the future when it would need to be repaid. Right now I owe, in total, £34,000 - yet I don't feel anxious. Primarily, that's because it seems normal: almost everyone around me is in a similar situation and taking credit was a conscious choice.
The Torygraph has quite a few bearish articles today
Telegraph: The Questor column: Sharp rise in bond yields raises spectre of return of big bad inflation
"Markets are telling us that a long period of deflation, and the cheap money that goes with it, is over."
The Torygraph has quite a few bearish articles today
Telegraph: Wet May and rate rises fail to dampen spending
This article doesn't really do its title justice. Most of the column inches are given to the reports of uninterrupted spending despite rate rises, but the last paragraph predicts reduced spending by the end of 2008.
The Torygraph has quite a few bearish articles today
Telegraph: Commercial prices 'will fall 12pc by 2010'
They predicted a downturn between 2005 and 2007 and they're now predicting it again. One could argue that they might have been right last time, had it not been for the IR cuts. Is there any way of justifying a rate cut this time...? There's also a short "this time it's different" comment at the end.
Cheap credit supply to continue
Reuters: BOJ keeps rates on hold
TOKYO, Japan (Reuters) -- The Bank of Japan kept interest rates unchanged at 0.50 percent on Friday in a unanimous decision by its Policy Board, though expectations are growing that it will raise them in the coming months.
Crippled and divided, MPC is out of control
Reuters: BoE's Tucker: Publishing future rate path problematic
"Tucker, in his speech, repeated the BoE view opposing publishing individual entries in minutes of the MPC's meetings. "My reluctance to go down that route stems from a concern that we would slip towards a degree of individualism where members were no longer listening to each other," he said" Lately the MPC sounds crippled by internal differences of opinion. Beside (in)dependence, one wonders if MPC can perform basic duties. And in any case, the individual entries in the minutes should be published as a matter of transparency.
Difficulty for first time buyers to get on property ladder due to house pricing situation
1mortgagesuk: More parents help kids get on the property ladder
The current house price situation is making it extremely difficult for first time buyers to get on the property ladder, so more and more parents are offering their kids help.
Brent crude nearly reaches $71
BBC News: Oil price tips over $70 a barrel
Oil prices tipped beyond $70 a barrel in London, fuelling fears over supply. The prices were reacting to earlier US data showing disappointing inventories. Brent crude rose $1.02 higher to $70.96 after breaching $71 a barrel. New York sweet crude was $1.39 up at $67.65.
Thursday, June 14, 2007
Capital Economics turns bear (again)
Times: Commercial property bull run 'is over'
A price crash in commercial property is just around the corner, one of the City's leading independent firms of analysts is warning clients. From offices to shops and industrial warehousing, Capital Economics is forecasting capital values to fall each year starting in 2008 for three years, resulting in a cumulative 12 per cent decline over the period as higher borrowing costs take their toll.
A crippled MPC on the brink of irrelevance
Times: Rate rise ever more likely as inflation fears grow
Bank of England's inflation survey shows expectations are at highest level since survey began despite rate rises “The Bank is running out of excuses for dragging its feet - we believe there is a strong case for a hike at the July meeting,” said Alan Clarke, an economist at BNP Paribas. MPC's credibility is low, doubts on its independence are high.
Peak Oil Is Back
Independent: World oil supplies are set to run out faster than expected, warn scientists
This could cause the world economy some problems. Ya think?!!
Good for them!
rentfreecornwall: Over 1000 Cornish holiday homes squatted
The craze for squatting holiday homes in Cornwall has increased in popularity in recent months, as over 1000 residences are now in full-time occupation by squatters. The huge upsurge in squatting second homes or holiday homes in Cornwall has brought about peace and stability for local communities, according to local residents. *** [Poster Comment] And I can see this spreading, and why not if local families have no chance of getting on the property ladder due to rich cityfolk - remember Ireland.
Secular cycles are recognised
The Telegraph: Fears mount on regression to Seventies inflation woe
Good graph showing the k-summer and k-autumn in the western economies
The UK and US et al are entering a k-winter
China and India et al are entering a k-summer.
Both are tough times. This will be very tough for us as the China effect will not allow our rates to go down soon enough to prevent a depression. The USD and GBP are totally doomed. Germany may make the EUR crash les painful. Really depressing stuff.
Ho hum - Do you think we're wrong?
Telegraph.co.uk __: Buy-to-let market defies the 'slowdown'
I don't believe we are wrong; the economic garden is far from rosy and there are some serious weeds growing in it. However, the BTL Brigade may prove more tenacious then we expect and that could prevent the anticipated decline in house prices.
It would appear that disposable income isn't what it used to be
Timesonline: First Choice losses widen as job cuts loom
First Choice Holidays has reported a widening of first-half losses, ahead of its planned merger with Thomson, which could result in thousands of job losses. The package holiday group said that operating losses increased 26 per cent to £82.5 million in the six months to April 30, as a string of acquisitions pushed up financing costs.
Trouble on the Horizon for Fixed Rate Borrowers
Daily Telegraph: Credit fears after bond yields hit 7-year high
Deutsche Bank said 820,000 UK mortgages were due to be reset in the second half of this year at a rate now likely to be 1.4 percentage points higher, entailing an average 7pc cut in disposable income for borrowers.
London buyers down 35%
BusinessOnline: Demand for London property finally runs out of steam as rate increases begin to bite
DEMAND for London homes is finally beginning to wane as sky-high prices increasingly chase away all but the wealthiest buyers, a report to be published this week will warn. The news suggests that the housing market is finally coming off the boil, after undergoing a remarkable boom over the past 18 months.
Signs of a doomed market
Guardian: Rise in number of 100% mortgages
Further good news for first-timers is that, despite a 1% rise in interest rates over the past year, 100% mortgages have lagged behind in price. The typical initial rate now payable on a mortgage for someone without a deposit is 6.49%, compared with 5.89% a year ago.
Views of the future
Guardian: US bonds are following, not pointing the way
The piece of news that has been lost amid the excitement about bond yields is that the US sub-prime housing market seems to be getting worse, not better. It's a reminder that rising interest rates usually cause pain in the end.
Lib Dems get on the Housing Band Wagon!
Guardian: Campbell Pledges Social Housing Revolution
The Liberal Democrats were promising a council house "revolution" today, pledging 1m new social and affordable homes over the next decade. Sir Menzies Campbell said it was a "national disgrace" that some British cities had become best known for their sink estates. The Liberal Democrat leader wants to introduce a building programme of 100,000 affordable homes per year and enable councils to control the price of some houses.
Blame HIPs of course!
BBC: Home packs 'led to selling rush'
"RICS added that a combination of higher interest rate and borrowers worried by the ending of fixed rate mortgage deals was leading to a cooling in the UK housing market. Nevertheless, nearly 24% more surveyors reported house prices in their area rising rather than falling." They tried to spin the figures, in reality 24% means that, over the total number of surveyors, the percentage of surveyors reporting rises is 5.4% (NOT 24!!) larger than the percentage of those reporting a fall. We should complain with RICS and BBC about this cheap spin
Article assumes housing downturn
iii: House prices won't trouble market
As regular readers of this blog will know, we’ve been discussing the timing of the end of this bull market. People fear it’s imminent, but the fundamentals are more reassuring. Judging by comments like this one from Stuart, a property crash is the catalyst we fear most
Falling house prices wouldn’t trouble stockmarket
Interactive Investor: Falling house prices wouldn’t trouble stockmarket
Getting the spin ready just in case?
World housing crash - UK part of the World?
Thisismoney.co.uk: ABN fears world housing crash
Nice - Families have taken on 'unsustainably large' mortgages, leaving them vulnerable to the sharp increases in bond yields and official interest rates seen in recent weeks, wrote economist Dominic White.
House prices start to drop in Ulster!
The Irish Times: NI house prices 'falling' in places
House prices are dropping in parts of Northern Ireland amid new evidence that the heat has finally gone out of the market, a report claimed today.
Market activity down
Times: House price inflation slows
The number of new properties coming onto on the market increased at the fastest pace in the survey’s history.After falling for five consecutive months, buyer numbers stabilized in May. Confidence fell for the seventh consecutive month to the lowest level since August 2005 - well below the survey’s long run average. Capital Economics said that the RICS report signalled the early stages of a marked weakening in activity, if not yet prices.
Amazing propensity to spend! IRs to climb further?
BBC: US consumers go on shopping spree
US consumers have surprised analysts, as official figures revealed that retail sales grew 1.4% in May.
PR exercise?
BBC: Brown 'opens up MPC appointments'
Gordon Brown has announced changes to the way members of the interest-rate setting Bank of England monetary policy committee are appointed.
Slowing, but still rising.
Bloomberg: House Prices Grow at Slowest Pace in a Year, RICS Says
U.K. house prices rose at the slowest pace in a year in May, a sign higher interest rates may be starting to cool Britain's property boom, the Royal Institution of Chartered Surveyors said. "Affordability conditions are set to worsen across the board and will herald a cooling market,'' Jeremy Leaf, a spokesman for the London-based institution, said in a statement today. ``The full impact of rising rates is yet to be felt.''
Are global market bubbles set to blow?
BBC News: Are global market bubbles set to blow?
There is a strange fascination in blowing a bubble, when despite your better judgement, you keep willing it to get bigger regardless of the dangers. Then, suddenly, the violent pop that leaves you picking bubblegum off your eyebrows, or crying soapy tears.
The runaway train
Telegraph: House prices
When is this train going to stop in the station for a while?
They got it every which way, exporting themselves to wealth at the expense fo the rest of us
guardian: US Treasury report lambasts China
Strongly backed by the US manufacturing sector, the hawks on Capitol Hill say that the Chinese currency is undervalued by 40%, leading to a surge of cheap imports that cost US jobs. Rob Carnell, economist at ING bank in London the data continued to "put upward pressure on already elevated bond yields, and it further raises expectations of Fed rate hikes later this year or early next".
Oh Oh Antonio !! he gone away
www.expatica.com: Spanish tax authorities to blitz real estate fraud
A failure to declare or pay property-related taxes is one of the biggest sources of tax evasion in Spain. This could have a significant impact on foreign buyers.
There hiding in the Attics and buying all the houses
sky news: Sky Uncovers Passport Loophole For Terrorists
Sky News has uncovered worrying shortcomings within the Identity and Passport Service. On the day the Government introduces tougher safeguards to crackdown on ID fraud, Sky's investigation reveals just how easy it is to obtain multiple passports, under different names, without the authorities questioning the process.Our investigator then used his certificates to obtain passports under his new identities.n less than a year, he held four passports under different names. He also travelled to Yemen, Morocco, Egypt and the Indian subcontinent, all areas on the Government's terror watch list.
Wednesday, June 13, 2007
HUGE ACCIDENT
twnside: As long as they remain unregulated, more crises emerge
The recent tremors in world financial markets were caused by the huge trade involving speculative funds. As long as they remain unregulated, more crises emerge.These recent events have highlighted the prevalence of speculative funds. The “carry trade” alone is estimated to involve US$1 trillion outstanding in currency-to-equity and currency-to-currency swaps, according to Vong. These funds are volatile and can switch from asset to asset, currency to currency and country to country in response to events and in anticipation of developments that may hit or help their positions and profits. There is a “herd mentality” -- sudden shifts of perception by some market leaders can cause others to move in tandem, thus causing the capital movements to be sharp and large.
Affordable my @...!
T-graph: Mortgage squeeze worst for 25 years
"With interest rates having plumbed to historic lows over the past five years, panglossian economists have long been able to argue that mortgages have remained affordable, despite house prices rising to record levels in comparison to peoples' salaries"... panglossian economists... ahahahah! This is a great definition... let me not make names here
Glad I missed the boat
spanishpropertyinsight: The Spanish Government
The Bank of SpainAverage Spanish property prices are overvalued by 24% and the rate of Spanish property price increases need to slow rapidly to avoid a hard landing for the property market, according to José Luis Malo de Molina, director general and head of statistics and research at the Bank of Spain.British banks reduce lending to Spanish developers British banks are reducing their exposure to Spanish developers, according to an article in the Spanish daily ABC. British banks, such as the Royal Bank of Scotland, Halifax, and HSBC, are reported to have been some of the biggest lenders to the Spanish real estate sector in recent years, but have now changed strategy and are avoiding the sector. According to a banking source quoted in the article, the change in policy
Our resident property expert Mark Stucklin warns the market does not look healthy for sellers in Spain
expatica.com: Storm clouds gathering: Expatica's property expert on the Spanish market
downturn might catch short-term property speculators with their pants down, but the rest of us will benefit from a healthier economy in the medium to long term. I'm confident that buyers of quality property for long-term personal use have nothing to fear from this market, and if anything, should see it as an opportunity.
The great unwind
bloomberg.com: Fukui Pressured to Raise Rates as Yen Is Sent Abroad
The concern: The longer they wait, the greater the chance that external forces lead to a sudden, sharper rebound that might cripple Japan's economy and shake consumers like Takeda. ``A jump in the yen could cause a disaster,'' says Hiroshi Shiraishi, an economist at Lehman Brothers Japan Inc. in Tokyo. ``It would probably hurt the whole economic cycle, starting from exports.'' The trigger might come in the form of a shock overseas that prompts fund managers to dump risky holdings financed by the so- called carry trade, in which yen borrowed at low Japanese rates are invested in higher-return securities in other countries.
???????
bloomberg.com: What Are China Stocks Worth? Singapore Shows 65% Less
``Fair valuation has got to be several multiples lower,'' said Robert Doll, who oversees $1.15 trillion as chief investment officer of global equities at BlackRock Inc. in Plainsboro, New Jersey. ``To the extent there's a good barometer, Singapore's probably the place to go.'' Domestic investors have been shrugging off the warnings about China's stock market. The CSI 300 took less than a month to erase a 9.2 percent plunge on Feb. 27 that was sparked by the government's approval of a special task force to clamp down on illegal share offerings.
Forget the Spin - Economically Inactive Rise as those In Work Falls
This is Money: Number of 'economically inactive' hits record high
Forget today's 'Official' spin on Unemployment based on 'Jobseekers' Allowance figures the real information is contained within the figures for the total number employed and those who are classed as 'economically inactive'. For a country subject to mass immigration the figures are amazing, economically inactive rise by 77000 and the total number of people in work actually dropped by 10000. Figures reveal that there are 1.7m 'hidden jobless' who should be added to the official claimant count of 900,000 and the real jobless rate for London and the South-East should be 4.6% not 1.6%.
Say it like it is Alison !
Orange Money: House prices set to fall
From ITV’s Homes & Property and Don’t Move, Improve, property expert Alison Cork reveals why house prices could finally be set to fall, in our exclusive column
More evidence cost of borrowing is beyond MPC's control
Times: Dollar soars on fears of rate rise
"Yield on 10-year UK gilts above 5.5 per cent for the first time since May 2000 as UK bonds following US bond sell-off" Here we go... add to this the very likely, long-awaited repricing of credit risk and you won't find any mortgage for less than 7% this summer.
Hopefully this will become another nail in the BTL coffin
Guardian: Tenants living under threat of eviction
I saw this on the BBC as well. How disgraceful that we are one of the few countries where landlords can evict tenants for requesting necessary repairs. The National Landlords association said "the government should be careful about "meddling with section 21" as it could be the final straw for many of the nation's landlords". I say "lets hope so"!!
US Subprime Crash Squeezes Out First-Time Home Buyers
Bloomberg: Subprime Crash Squeezes Out First-Time Home Buyers
Subprime mortgage lenders have tightened credit guidelines so much they're squeezing about 500,000 first-time buyers out of the market. - This is just an example of how when prices start going down, they slowly enter a downwards spiral - the reverse of a Boom - BUST.
Nearly There?
Farming UK: Housing nightmare is already here, says Rural Watchdog
More articles like this should do the trick.
NIMBY? (see 130 comments to the article)
Times: Build on the green belt, and build now
"We will have to accept a lot of building on greenfield sites and green belts and it will have to be low rise and low density. People overwhelmingly hate flats and long for houses with gardens. We will have to accept the suburbanisation of whole swathes of the country. However, it may not be quite as bad as we imagine."
What are the most powerful blogs in the UK and guess which is one of them???
The Times: Have your say in a forum that is growing in power and influence
CONSTRUCTION AND PROPERTY 8. House Price Crash The name says it all. Sample quote: “To have an idea of the timing of the crash in the UK, look at the Irish market example. Very nice charts . . . soon showing in our country!”
Housing policy (if there is one) is in crisis
Firstrung: Decade long surge in house prices is undermining ideology of a "property owning democracy"
The lack of affordable housing has become a political crisis for the main parties. For over a quarter of a century, the policies of British government have been geared towards a single goal - encouraging private home ownership. Ever since Margaret Thatcher introduced the "right to buy" for council tenants in 1980, both Tory and Labour governments have promoted the idea of a "property owning democracy" where housing is decided by the market rather than the state...
Coming to the UK soon ?
Winknews.com: Town houses a steal
Classic reponses form the gullible lot who paid "market value" and were told the prices wouldn't go down. Laugh, I nearly shat.
"Negative equity"-word creeps up in mainstream press
Mail: Supersize mortgages: Worth the risk?
"If house prices take just a marginal dip, borrowers with 100% loans can quickly end up in negative equity. Borrow more than 100% and you are in negative equity from day one, with a property automatically worth much less than your borrowings. This shouldn't matter as long as you are happy in your home and prices ultimately pick up. But having little or no equity from the start can make it harder to climb the housing ladder in the future. In a real economic crisis, it is worth remembering that homeowners in negative equity cannot simply return their keys to their lender and walk away. If the property is sold for less than the value of the mortgage, the borrower is still liable for the difference"
One day all this will be multi-occupancy units
BBC: One day all this will be multi-occupancy units
The charity Garden Organic is leading the fight against the phenomenon. It says an area the equivalent of 2,755 Wembley pitches will be lost to new housing in Britain over the next decade.
HALIFAX Mortgage Crash. Down 50%
The Sun Online, Money section.: Who gives you extra? Not us
HALIFAX stunned the stock market yesterday — by confessing it had lost almost HALF its share of new mortgages in three months.
We are now below affordability levels of late 80s
Mail: £115,000 just to get a foot on the housing ladder
"Britain's 3.8million first-time buyers were paying an average of 18.7 per cent of their gross monthly income on mortgage repayments in April. This is the highest figure since the beginning of 1992. Rising rates are also affecting home movers, who were paying 16.3 per cent of their income on mortgages in April - also the highest level since 1992. These figures will worsen because they do not include the quarter-point rise in the base rate in May." Good luck to all home owners!!
ANOTHER FINE MESS YOU GOT ME INTO !!
TELEGRAPH UK: Mortgage squeeze 'worst for 25 years'
Many families cannot keep up with their debt payments and insolvencies are at record levels. Citizens Advice said that over the past year there was a 20 per cent increase in people seeking help over housing debt.
Banks in danger of meltdown?
Times: News Article
Chance would be a fine thing, however we do of course note that all the banks without exception appear to have been involved in this pyramid selling and if HSBO is making a loss now, god forbid in the latter part of this year and early next when Interest Rates actually do start rising properly.
Is this the end of the era of cheap borrowing?
BBC News: We're all doomed?
"...the rise in these long-term market interest rates pushes up the price of borrowing for our big banks and building societies and will probably feed through to the interest rates on new fixed-rate mortgages. Which could prick the housing-market bubble."
Swerve owns up on Channel 4
Channel 4 News: News Article
Well he's finally pretty much accepted it...the smoke and mirrors must end...he hasn't acted quick enough...we are borrowing far too much and particularly on mortgages...inflation is far too high (particularly in foodstuffs)...IR's at 6% by xmas... OH WHAT A TANGLED WEB.... OH WHAT A MESS.... OH DEAR, OH DEAR, OH DEAR....
Get out of this one Mervyn!
Telegraph: Consumers warned as food prices rise and rise
The era of cheap food is over, as prices of basic ingredients on the global markets continue to climb, consumers were warned yesterday. It came as official Government figures showed that food inflation is running at five per cent higher than the growth in wages.
Nu Labour champions dodgy landlords - again
BBC "News": Eviction fear looms over tenants
"Retaliatory eviction" as it is known is legal as landlords do not have to give reason for wanting a tenant out.
Tuesday, June 12, 2007
The fat lady is about to SING !!!
FT.com: City predicts further rise in rates
Falling household energy bills helped trim inflation in May to its lowest level in seven months, but a warning from the Bank of England left the City convinced interest rates have further to rise
Hedge funds causing market crashes and financial loss yet again
FT.com: US Treasury warns on hedge fund risk
Hedge funds and those doing business with them were on Monday warned by the US Treasury not to operate “under the false allusion” that systemic risk from their activities was not a “real possibility” in spite of the increased sophistication of risk management.The comments are the strongest sign yet of US policymakers’ concern that markets should not take undue comfort from the relative lack of fall-out from last year’s multi-billion dollar losses at hedge fund Amaranth.
Oil and house prices
oildrum.com: Oilwatch Monthly - June 2007
Wonder why oil prices keep high? and why inflation is here to stay? Peak oiler's have been predicting this for ages, this report from the oil drum summarises a terrible situation for the economy. If true, it means that inflation, interest rates and asset prices are in for one hell of a battering. 1) Total world exports of all fuel liquids have been on a plateau since the end of 2004, and declined slightly in the last year, despite production increases. 2) Liquids exports from non-OPEC countries as a whole have declined since the beginning of 2004. 3) OPEC liquids exports have increased until the end of 2005, followed by a short plateau after which a slow decline set in, mainly due to declining production in Saudi Arabia.
The peak reached for N. Ireland houses?
Belfast Telegraph: Marketplace missing first-time buyers
Now, however, Pauline claims there are signs that the Northern Ireland market is stabilising, with investor numbers down: "This year they are few and far between. With mortgage repayments of up to £1,000 a month for a rental income of £400, the figures don't add up once you pay the rates and other costs."
Time bomb
Guardian: Mortgage affordability hits 15-year low
"Month on month we see affordability constraints for first-time buyers worsening, and with the impact of May's interest rate rise still to be felt, many borrowers face higher costs in the coming months. ... But with 2m fixed-rate loans coming to an end over the next year-and-a-half, many borrowers should anticipate that their mortgage costs are likely to rise and should be planning ahead."
Market is vulnerable, beyond MPC control
Reuter: Bank of England boss says house prices at risk
Asian household savings contributed to push up the UK housing market. But that flow of money can slow down
Market is slowing
Times: House price inflation may have peaked
The figures are based on house prices at the transaction stage and therefore lag recent surveys from lenders that have suggested the market is slowing. The Halifax, the UK's largest home lender, said last week that property prices rose last month at their weakest monthly pace this year. Meanwhile, data from the Bank of England showed approvals for new mortgages fell for a third month running in April.
A look back at how naive we were!
BBC News: Is the housing slowdown good news?
At first glance, the slowdown in house price inflation revealed by the Land Registry may disappoint the millions of people who own their own homes in England and Wales and who have got used to seeing the value of their properties rocket in recent years. But it is in fact the best thing that could happen to the property market and the economy at present, according to economic experts. This article is from 2000 - the irony of looking at it now!
First-time buyers crippled by supply
Telegraph: First-time buyers crippled by supply
Mr Donnell said: "Nothing other than a sharp re-correction in house prices is going to provide instant relief from the affordability problems facing first-time buyers."
More woes for BTL
The Times: Buy-to-let landlords 'must help disabled’
Thousands of buy-to-let landlords will be have to build ramps and lifts for disabled tenants in their properties under the Government’s proposed new equality law. The Single Equality Bill would require all landlords to improve access to their premises on request, with a new duty to make alterations to common parts of the property, such as the stairs and halls.
Education,edukesion,hedukayshone.
Telegraph: Jobless rise masks acute skills shortage
Welcome to London, the capital of the knowledge economy - the best in the world for top class business investment we have high level and low level qualified workforce with competitive rates of pay reducing your labour costs, property premises offering good value for money at £500,000,000 per cubic inch. So as Gordon and Ken and the whole of London would like to offer there open invitation to your business to compete in the world market and maximise your profitability and growth. Terms and conditions apply. Please note the value of your investment can fall as well as rise, past performance is not necessarily a guide to the future.
Endless and relentless
Firstrung: UK house prices up 0.9% in May London house prices up 2.3% in May
Asking prices for houses in England and Wales rose by 0.9% last month and 2.1% in the first quarter of 2007. Greater London prices rose by 2.3% last month and by 8.1% over the last six months...
Pigs flying anyone?
Firstrung: Buy to let landlords report demand for rented properties outstrips supply - ARLA
Demand for rented properties seriously outstripped supply and rent levels rose during the three months to the end of May according to the latest quarterly survey of ARLA Member Letting Agents published today, June 11. These results show the shortage of properties and the continuing need for investment in the private rented sector at all levels...
Well, about time....
Independent: FSA alarmed by leverage in buyouts
The City watchdog yesterday voiced fresh concern about potential market abuse by private equity firms and the "excessive level" of borrowing they use to buy out public companies.
In a report released just a day before the Treasury Select Committee begins an inquiry into the increasingly controversial industry, the Financial Services Authority said it believed its statutory objectives were at risk from both.
But it stopped short of imposing new rules, preferring instead to increase the supervision of private equity companies and the banks that lend to them.
More blether from swervin' Merv
Home.co.uk News: BoE sounds rate rise alarm
There may be another interest rate in the pipeline, says the Bank of England...Governor Mervyn King signalled the possibility as he warned householders over borrowing and the continuing concern over inflation. There was a list of worrying inflationary pressures which remained "elevated" and may lead to action by the Bank's Monetary Policy Committee, Mr King told business leaders.
First-time buyers' record burden
BBC: First-time buyers' record burden
The finances of first-time home buyers are being stretched to record levels by rising house prices. Figures from the Council of Mortgage Lenders (CML) show that first timers are now borrowing an average of 3.33 times their incomes to buy a home.
Yet more smoke and mirrors
BBC News: UK inflation slows to 2.5% in May
Talk about complete cobblers, this article goes right up ts own jacksee in the last paragragh "Lower food prices, particularly for vegetables and meat, also helped to keep inflation in check." with the following sentence "However, food prices are still rising at 5%, twice the inflation rate."
Rents rise as more buy-to-letters sell up
MoneyWeek: Why buy-to-let sales are bad news for the property market
...The UK housing market is creaking and there are some important signals. A sharp slow-down has been reported in buy-to-let purchases coupled with a big increase in buy-to-let property offered for sale. This is hardly surprising bearing in mind that rental yields are pathetically low; after taking account of voids and other ownership expenses, rents are insufficient to cover interest rate charges...
Unstoppable food price inflation!
Telegraph: Dairy crisis hikes price of cheese and butter
The price of cheese and butter in shops is expected to shoot up over the next month as the full impact of a crisis in the global dairy market reaches shoppers' pockets in Britain. Time to reduce the weighting on food items Merv!
juice house prices in Britain
TELEGRAPH UK: juice house prices in Britain, Europe, and America.
New Zealand is just a small part of the yen carry trade, a $500bn (£254bn) worldwide flow of Japanese savings and cheap credit into the global system - a trade big enough to lower global bond yields and juice house prices in Britain, Europe, and America.Japan's finance ministry says $100bn of this is hedge fund money, which he believes is a manageable level that can be "unwound" without causing a systemic crisis. The rest is "sticky", involving longer-term investments by Japanese pension funds, insurance companies, and private savers, or mortgage loans to eastern Europe. For better or worse, most of the money is trapped where it is for now.
China of abusing the world trading system
TELEGRAPH UK: The yuan is linked to the dollar through a crawling peg, and so Europe is bearing the full brunt of currency manipulation.
The yuan is linked to the dollar throughcrawling peg, Europe is bearing t full brunt of currency manipulation. EU blasts China over $22.4bn surplusPeter Mandelson, the EU trade commissioner, accused China abusing the world trading system, warning bluntest language to date Europe will not sit idly back while exporters are blocked from Chinese market.Peter Mandelson, EU trade commissioner, accused China of abusing world trading system, warning bluntest language to date t Europe will not sit idly back while its exporters are blocked from the Chinese market.The outburst China's trade surplus ballooned $22.45bn (£11.4bn) April increase of 73pc over year before. The surplus risen tenfold in three years, much expense of Europe."Europe's trade deficit with China
deeper and deeper
The Telegraph, London: The bank's quarterly report
The Bank for International Settlements has warned that the current takeover boom across the world is being funded by ever greater levels of debt, storing up trouble should rising inflation lead to a sharp rise in interest rates.The bank's quarterly report, released today, said merger and acquisition activity had reached an unprecedented $1,100 billion (£560 billion) in the US over the first five months of this year, and $1,000 billion in Europe."Instead, companies have been taking on more debt to finance deals: total signings of syndicated loans for leveraged buyouts surged to $82.3 billion in the first quarter of 2007, almost double the amount in the previous quarter," it said.
"But what about my mortgage , its under water??"
dailymail: Families warned to brace themselves for ANOTHER interest rates rise
Britain's top banker has warned families to brace themselves for further interest rate rises. Bank of England Governor Mervyn King said an alarming number of economic indicators - including property price rises - remained "elevated
Would you put your savings in China !!
Reuters: Two jailed after bridge built by blind man collapses
A Chinese court has jailed two officials after they let a blind contractor build a bridge which collapsed during construction and injured 12 people,
Monday, June 11, 2007
Commercial property sinks
Times: Workspace dives as rate rises bite
After so many profit warnings and one aborted IPO we can safely say that the commercial property bubble has burst here in the UK. I anxiously wait for Glorious Sunshine, David_2004 and other "bulls" to concede defeat on the "commercial" side. Jury is still out for "residential". "We continue to acquire where we see good long term value" 'long term' has become the latest property mantra...
Swervin' Mervyn knows the game's up
Reuters: BoE's King warns rates may need to go up
Interest rates may need to rise again if signs of price pressures and capacity constraints stay high, Bank of England Governor Mervyn King said on Monday. He warned Britons it would be unwise to borrow so much that repayments are only affordable at initial levels.
The by to let market in UK is still going to be strong
1mortgagesuk: The buy to let market still looking strong
Even with the recent interest rate raises the buy to let market looks strong with UK investors being drawn to the rental sector in the search for strong returns.
Mervyn Speaks...
The Times: Bank chief gives warning of even higher rates
In a hawkish speech to business leaders in Wales, Mervyn King reinforced his tough message with a reminder to businesses and households that they must factor in the prospect of dearer borrowing in their budget plans............ “It is unwise to borrow so much that the repayments are affordable only if interest rates remain at initial levels,”
American Dream
WEB: Foreclosure Featured Live Auction
Site showing number of homes in USA being repossessed etc and how you can bid for them. Gives you an idea how bad thing have got.
Ooops...
Forbes: UK lenders with specialist mortgage exposure may face rating pressures
This is fresh news: "S&P estimates that the specialist mortgage lending accounts for one-third of all new lending, and more than one-fifth of the total UK mortgage market stock, the release added." Then Professor Nickell said: "Nooo, it is not pooovsible, how can vnemployment and IRs go up? iiit is a new eeera, and ve vneed house prices to hit 10x salaries... but I have an idea... Gooordon, let us slash the saalaries. That will wooovk too"
For house and rental prices, the only way is up... and up, and up
Daily Mail: For house and rental prices, the only way is up... and up, and up
It seems in the UK property game, the only way to play your cards right is to guess higher, and higher again.
Rising long term interest rates
Independent: We've lived for today. Now it's time to start worrying about where the world will be five years
Rising long-term interest rates will hit households, industry and public services - and they remind us that inflation isn't dead, after all.
A BTL re-thinking?
Times: Only the brave
It is article like this in the mainstream press that do more harm to the housing market than anything else. If I am BTL investor, content with my returns to date, I would certainly decide to stand still, possibly to sell one or two flats to take profit. Believe me, just that change of mood will make a HUGE difference to demand. Let us not forget, BTLs have been 20%+ of all transactions last year. “Developers are panicking. You can see it in all the inducements to buy. Guaranteed rents for two years, furniture packs and so on.”
Our house (was our castle and our keep ... )
Investment Postcards from Cape Town: Our house (was our castle and our keep ... )
The unwinding of the US housing situation has some way to go still before the system rids itself fully of all the excesses accumulated during the multi-year upswing. But what about the UK residential property market? Is this a scary monster or am I missing something?
Latest DCLG figures depressing news for FTBs
Firstrung: House prices rise by over 11% as first time buyers pay 17K more than in 2006
The latest house price survey from the government department (the DCLG) has revealed that first time buyers are now paying 11.2% more for a property than in 2006. This equates to approximately 17K, a huge increase for those on below average salaries. First time buyers actually paid 1.3% more for a property in April 2007 than in the previous month of March. The average price paid by first time buyers across the whole of the UK was £159,977...
No cut and run for BTLers
BBC News: Concerns over new debt law
Loophole closed that would let BTLers cash in without paying back their mortgage. Not that anyone would do such a dishonest thing. This will also mean that people can't cash in houses but keep paying the mortgage to avoid paying early redemption penalties. This will probably make no difference to the market but might stop some of the foreign fraudsters.
ABN is a bank not a doom-monger
Mail: ABN fears world housing crash
"Soaring borrowing costs could spark a housing slump on a 'global scale', investment bank ABN Amro has warned. Families have taken on 'unsustainably large' mortgages, leaving them vulnerable to the sharp increases in bond yields and official interest rates seen in recent weeks, wrote economist Dominic White." ... how does this compare with house prices to grow to 10x salaries?!
Slump feared in Ireland
Finfacts: AIB says Irish housing market is entering crucial period
To have an idea of the timing of the crash in the UK, look at the Irish market example. Very nice charts... soon showing in our country!
Credit will be more expensive
Times: Markets fear fresh turmoil with sell-off in bonds set to continue
A 50 to 100 basis point increase on mortgage rates (floating, fixed and you name them...) is on the cards... tough times for borrowers ahead!
Humpty Dumpty had a great fall.
FT.com: NZ dollar tumbles as intervention confirmed
NZ dollar tumbles as intervention confirmed The New Zealand dollar tumbled from a 22-year high versus the U.S. dollar on Monday after selling by the Reserve Bank of New Zealand raised concerns about how much longer carry trades would continue. The dollar was little changed against the euro and the yen, holding onto gains versus the euro after hitting a two-month high late last week when the benchmark U.S. Treasury yield jumped to its highest level in around five years
Time Bomb
larouchepac.com: Mortgage Carry-Trade Insanity
Millions of people throughout the world,Eastern Europe, are using carry-trade, usually preserve big-time gamblers, take out home mortgages.,investor borrows money from one country, where borrowing cost low, invests it in another country, where investments yield a high rate of return (see yen carry trade). Now, households are insanely engaging in this risky practice, taking out a home mortgage in a foreign currency at low interest rates, sometimes half the rate of interest charged in their home country. Wall Street Journal reported the case of Tamas Bencze,Budapest, Hungary, took out foreign-currency mortgage loan 5.75%, whereas if he took out that same mortgage loan in Hungary, interest rate o loan would be 14%. if the Hungarian currency, florint, sharply depreciatN
The yen carry trade is a huge, perhaps $700 billion-$1 trillion engine for worldwide speculations
larouchepac.com: A U.S. Economist Warns, Close the Yen Carry Trade Before It's Too Late
In a surprising editorial in the Japan Times, Thomas Palley of the U.S.-China Economic and Security Review Commission, calls on Japan to shut down the "dangerous" yen carry trade before it triggers "global contagion" upsetting the world financial markets. Most notably, Palley says it is this carry trade--and not the value of the Chinese yuan, which is triggering huge trade imbalances with the United States, and "generating worldwide asset inflation." Palley also says the carry trade has pressured other Asian countries to undervalue their currencies, costing jobs and growth elsewhere in the world.
Hope there plenty of lifeboats
oberver: Asset boom set to bust as investors wake up
Last week's wrenching sell-off in bond markets around the world could burst asset-price bubbles in sectors from fine wine to property as investors wake up to a world of higher interest rates, analysts are warning. Yields on benchmark 10-year US
Global liquidity and Asset prices ( including house prices)
Deutsche Bank Group: Research: Global liquidity "glut" and asset price inflation - Fact or fiction?
see chart on page 7 of PDF file downloadable from their front page or use this link http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000210917.PDF
Like rats from a sinking ship
Telegraph: Pension funds rush to beat market crash
Pension scheme trustees are now rushing to sell their scheme before the equity markets follow the bond markets into collapse. A dramatic fall would cause pension deficits to widen again.Fears of a stock market crash have prompted dozens of British pension schemes to put themselves up for sale. The bond markets went into meltdown last week, pushing yields on European and US government stocks to their highest levels in five years.
Sunday, June 10, 2007
Kelly Threatened by HIP Companies
The Times: HIPs team seeks reassurance
The Home Information Organisation are to demand (monday) a precise timetable for the rollout of HIPs and have threatened the Communities Secretary with a multi-billion claim if she scraps the scheme. Just shows how the smell of homeowners money can whip the property sharks into a bloodthirsty lather.
Brown to stamp on private equity’s ‘unfair’ 10% tax
timesonline: A little too late as usual,
GORDON BROWN is to clamp down on the tax breaks enjoyed by private equity that allow its executives to pay as little as 10% tax. His switch of policy follows a growing furore over how private equity is using capital-gains tax (CGT) relief to minimise its liabilites.
``The Bank of England has been doing a bad job of controlling inflation.'' Prices just look like they're going to keep going up
bloomberg.com: BOE May Need to Move Faster on `Sticky' Inflation
The Bank of England, which left interest rates unchanged yesterday, may have to move faster to curb the U.K.'s worst bout of inflation in a decade. ``Inflation is high and sticky,'' said Alan Clarke, an economist at BNP Paribas in London. ``Underlying prices will continue to accelerate throughout this year. The bank is behind the curve.'' ``The Bank of England has been doing a bad job of controlling inflation.''
Should you sell your home and rent?
Sunday Times: Should you sell your home and rent?
People who believe the housing boom is over are putting their properties on the market in preparation for a crash. Should you join them?
Twisted logic, how can ten times salary be afforded?
Firstrung: Ten times salary for first time buyers could be on the radar - Mortgage Talk
Mortgage Talk believes that the National Housing and Planning Advice Unit (NHPAU) forecast, that first-time buyers will face house prices equivalent to ten times the average income, is entirely credible...
77% of consumers expect slowdown
Firstrung: Interest rate rises begin to hit consumers sentiment on job security and house prices
UK consumers are gearing up for a further rate rise this year, according to the latest Consumer Barometer from Lloyds TSB. Despite a rate rise freeze for June - 77 % of consumers surveyed in May (when rates increased by 0.25%) said that they thought interest rates would be higher still in 12 months' time...
First-time buyers have to spend half their salary on mortgage payments
Observer: Business Article
If first-time buyers have to spend half their salary on mortgage payments and they are about to come out of fixed rates AND rates are going up..........?
Where is the market going?
Scottsman: Rates remain steady but housing market looks shaky
Good little article only because it asks questions about the governments plans to tackle the housing market and first time buyers. Given their recent efforts with HIPS they are sure to be a laughing stock again, especially if they put their top trouble shooter on the case, Ruth Kelly.........
Pretty gloomy picture!
Times: Boom or gloom?
I have this feeling that in a year's time cheerleaders like Professor Nickell and David Smith will be laughing stock. Read the article at this link. The situation is gloomy just anywhere outside London with house prices next year predicted to grow at something like the CPI. But even these pretty flat forecasts heavily rely on assumptions that (a) the employment rate stays 100%, and (b) there continue to be strong demographic pressure from economic immigration. Economic migrants are a bit of a question mark - they may leave in no time the first sign of a downturn here or when the economy of their countries improves (and it is improving fast). I do not have a crystal ball, but one thing for sure, inflation is going up and it is dragging interest rates.
Saturday, June 9, 2007
MSN:House prices: what’s going on?
MSN: House prices: what’s going on?
Diana Choyleva of Lombard Street Research says: “We are now clearly at the end of the house price boom. We think there will be a correction next year, although it is unlikely to be as severe as the last crash.”
Inflation to return - How Governments Cook The Books
MoneyWeek::: Why it's time to take the inflation threat seriously
A good article which explores how inflation might return. It outlines how Governments have cooked the inflation books - and why!
More than one million fixed rate mortgages set to end this year
1mortgagesuk: Over one million fixed rate mortgages set to end this year
An estimation made that there are over one million borrowers who took fixed rate mortgages two year ago and now they are set to end this year
Locusts!!
Guardian: Laid to waste by a feeding frenzy
"The one common theme is that the buy-to-let brigade, helped by tax breaks and easy lending, are able to outbid local first-time buyers and then, all too often, fail to maintain their properties or monitor their tenants" "we even had landlords who wrote telling us of the "obscene" profits they've made and agreeing that tax breaks should be removed" "the two flats to the council as emergency accommodation. He charges £750 a week" 750 a week!!!!! "The neighbour has lost much of its best housing stock, sold off at a discount to tenants, who have subsequently sold to buy-to-letters. Ironically, the council, she says, is now forced into renting back the same homes - at double or triple the cost - to house those on its waiting list." "'Dunno,' he said. 'A load of asylums, I reckon.'"
The BOE horse continues to bolt
MSN: Economy gathers pace
The economy picked up pace in the three months to May, keeping up pressure for higher interest rates, the National Institute of Economic and Social Research said on Saturday. The thinktank estimates GDP rose by 0.8 percent in the three months to May compared with the previous three months (0.7%) - the fastest rate of growth in almost a year.
Friday, June 8, 2007
A bad outlook for the BTLs
Times: How to be a buy-to-let survivor
After the triumphant b/s from Professor Nickell, this article is far more realistic picture of a market that is not crashing perhaps, but where making profit going forward will be very difficult. "Investors must learn to protect themselves as the going gets rough. The optimist: Ezekiel does not believe in worrying about rental returns, which in few cases seem to cover management and agents’ fees: “They are a zero-sum game. The only way to make money from property is by one day selling up at a profit.” ... sorry I am missing the optimism...
Nice to see prices falling in parts of UK
FT.com: London property market still buoyant
The cost of an average London home increased by 1.2 per cent in April compared to the previous month, to £343,508. But the FT index showed that outside London, monthly house price inflation either slowed or stagnated, with the exception of the north-west and the south-west. Prices fell in the north, west Midlands and Wales.
Mortgage Rates Bound to Rise - Whatever BoE Does...
Financial Times: Markets regain poise after bond rout
The markets are in the throes of a mini-market meltdown right now. Bond markets have caught a cold this week and now seem to be passing it on to stocks. Where do mortgage lenders get their money from? The markets think that money is too cheap and the era of easy money is over......
100 energy assessors laid off
Guardian: Hips fiasco descends into farce as trainer pulls out
The troubled introduction of home information packs took a farcical turn today when one of the biggest trainers of energy assessors pulled out of the business and sacked more than 100 staff.
boom poses risks to financial stability as rising interest rates increase the cost of capital
FT.com: IMF head warns over merger boom
The IMF chief indicated that rates would have to rise further in order to contain inflationary pressures. “The long and sustained expansion constitutes an environment in which inflationary dangers should not be overlooked”, he said, quoting higher food and commodity prices and an acceleration of wage growth in some countries.
buy-to-let or let-to-buy?
Times Online: The future of buy-to-let
RATES are rising, rents are falling, which is all bad news for the 400,000 buy-to-let investors in Britain. Or is it?
Coming to a town near you?
Reuters: Frenzy of risky mortgages leaves path of destruction
The fallout from US subprime
Life in the 8 foot cube - not the concrete jungle ...
BBC News: Testing out a compact house
It's a BBC podcast. It only costs £50,000 and is just like living in a very small caravan, but without wheels. And you have to pay Council Tax, Water Rates, etc. There is even room to swing the proverbial cat (toy bean bag variety) as demonstrated. But with only a microwave cooker, it'll be cafe-culture for breakfast/lunch/supper. And this is cost saving ???
House prices 'will soar to ten times salaries'
Mail: House prices 'will soar to ten times salaries'
The average house will cost ten times people’s annual earnings within 20 years, experts have warned.
UK house prices not overvalued - NHPAU
Firstrung: UK house prices not overvalued - NHPAU
Article from Bloomberg with quotes from Stephen Nickell, who is to chair The National Housing and Planning Advice Unit (NHPAU). It is disappointing to read direct quotes from Mr Nickell suggesting that he believes house prices are not currently over valued.
House Prices To Boom For Twenty Years
Sky: House Prices To Boom For Twenty Years
20% falls in prices amounts to - in a number of areas - little more than the last 12 months' worth of gains...A 20% decline in many instances wouldn't even take us back to the prices of two years ago.'
Smartnewhomes calls for interest rate 'stabilisation'
Firstrung: "If first time buyers stay away the market could go into freefall" Smartnewhomes
David Bexon, Managing Director of SmartNewHomes.com, comments on this month's decision from the Bank of England's Monetary Policy Committee (MPC) to hold interest rates at 5.5%: "The decision to hold interest rates at 5.5% will only offer a temporary reprieve for many homeowners struggling to cope with escalating mortgage repayments and increasing levels of debt. However, with further rises predicted before the end of the summer this month's reprieve may be short lived.
Majority of these borrowers will face increases of between 0.75% and 1.5% on their mortgage rates
Firstrung: CML warns borrowers to plan for higher mortgage payments they will almost certainly face
The Council of Mortgage Lenders has welcomed the Bank of England MPC decision to hold rates. Even so, the CML urges borrowers who will be coming to the end of fixed-rate deals in 2007 or 2008 to plan ahead for the higher payments they will almost certainly face. Using data from its regulated mortgage survey, the CML estimates that about 1.3 million borrowers took out fixed-rate mortgages in 2005, and a further 1.5 million in 2006. Most, but not all, of these mortgages would have been fixed for two years.
The big lie!
Times: How the mortgage market has changed
This affordability story is a scam. Huge debt overhang and no chance to repay the principal. Really only two options going forward, a life as a debt slave, or default... your choice. Let us hope the crash is soon.
I suspect we are going to see alot more of this
Daily Mail: Squatters take over £10m mansion
The squatters are a multi-national bunch, from eight countries. "We get on with our neighbours and we try to keep the place tidy," explains Calin, 30, who left Romania 12 years ago and now runs his own gardening business. "I don't need to squat. I have a business, I have an accountant, I pay taxes," says Calin. "I prefer to call this a houseshare." In due course, he has been joined by more friends but with 12 people, including a few couples, the house is now full.
BTL's are fuelled by 10p in the £ Tax, perks, etc
Times Online: Tax perks for a few are adding to the property have-nots’ sense of injustice
"The pace of growth in the housing market may have taken longer to slow than all the experts predicted at the beginning of the year." ... "– especially those contemplating more onerous repayments as the super-discounted fixed-rate loan deals taken out in the summer of 2005 expire." ... "Some buyers of these Chelsea mansions are partners in firms in the lucrative private equity sector and thus permitted to pay tax at 10p in the pound on some of their earnings." So how do I get on this gravy train and pay only 10p in the £ on my income Tax. This is one for GB(H).
Wait and See
Bloomberg: Bank of England May Need to Move Faster on `Sticky' Inflation
Article reflecting more concern on BOE's decision - noticed FTSE fell yesterday after holding at 5.5%, because markets and investors would have preffered a rise. Don't know what CPI report the BOE was reading but it doesn't matter this is based on old news. The future for inflation is high and Mervyns gang need to take a proactive stance else - ``The longer the Bank of England takes to get this burst of inflation under control, the worse the news will get,'' said Tim Congdon, a professor at Cardiff Business School and a former adviser to the U.K. government on monetary policy.
Another nice mess you got me into
bloomberg.com: A $12 Trillion Monster Threatens Globalization: William Pesek
A $12 Trillion Monster Threatens Globalization:For years, globalization's discontents have hoped to derail the free movement of goods, capital and people. Most governments held firm, betting there's more to gain than lose from the phenomenon. Wouldn't it be rich, then, if many of those governments are unwittingly setting the stage for globalization's demise? They may be doing just that with the proliferation of so-called sovereign wealth funds.
ABOUT TIME TOO ( SORRY THE PUN
FT.com: EU aims at holiday property rip-offs
Holiday property rip-offs estimated to cost consumers more than £4bn a year are being targeted by a European Commission crackdown on timeshare scams. Victims are most often lured in to tempting offers of a place in the sun while they are on holiday. They pay a deposit but find it is impossible to cancel or get their money back when they get home and back to financial reality.
Thursday, June 7, 2007
Let the truth be known
FT.com: Fitch highlights hedge fund risk to credit boom
Hedge funds are helping to fuel a global credit boom, but their growing influence on credit markets is likely to have negative consequences, a new report by Fitch Ratings has found.Such funds now account for almost 60 per cent of trading volumes in credit default swaps – derivatives that provide a kind of insurance against non-payment on corporate debt. The CDS market has more than doubled in the past four years, according to Markit, the data group.
UGLY UGLY
FT.com: Bond yields see biggest jump in years
Some analysts suggested the dramatic rise in yields could herald a sustained period of higher interest rates, increasing the cost of borrowing for companies, deflating borrower-friendly credit markets and eventually crimping the outlook for equity markets. “Stocks need to reflect what bond yields are saying,” said Michael Kastner, portfolio manager at SterlingStamos. “Rate cuts have been taken away and if yields start to reflect that rate hikes are likely this year, then it will get pretty ugly for stocks.”
Gonna be interesting in the Asian trading session
FT.com: As stocks falter, Beijing mulls the chances of an investor backlash
As stocks falter, Beijing mulls the chances of an investor backlash By Geoff Dyer The remarkable rise of China’s stock market in recent months has left the government mulling two bad alternatives: let the market surge too high and the subsequent crash would be ferocious; but act too aggressively to cool it down and the authorities would be blamed for the losses.With the Shanghai exchange again showing signs of fragility since the government increased the tax on share trading last week, there are many reminders that if the market turns sour, investors will consider it the government’s fault.
BTLers should seek medical help
Times: The Future of Buy-to-Let
"Determined to find a means to bolster her pension savings, she found an apartment in Florida within her price range. Even as the shine comes off the US market, Leteney sees the long-term value of hanging in." ... she is really "in" for the long haul! Who said "a long term investment is a short-term one gone south"?
Spanish property market grinds to a halt, killed by oversupply
Bloomberg: Ghost Towns Appear in Spain as Decade-Long Boom Ends
Spain built 750,000 houses in 2006; in the same year, Britain built less than 200,000. Average prices have stopped rising, and in the over-built areas prices are falling and ghost towns are appearing (sounds rather like all those new apartments in Liverpool). Just as in the US, large price falls aren't yet being seen because sellers are refusing to cut prices; instead properties just languish on the market for months. "One estate agent was selling nine houses per month; now he's selling one per month." While the economy is still strong and people are still in jobs there is no pressure on sellers. "The problem here is that people have this unshakeable conviction that prices simply cannot fall." Sound familiar?
Another SPIN attempt...
BBC News: Homes 'to cost ten times salary'
UK house prices could rise to the equivalent of ten times average salaries by 2026, a newly-established government think tank has said.
Even more good news...
EstateAngels: No disguising BTL 'scrap-heap'
"This is body-blow for the buy-to-let lobby and a wake-up call for intermediaries, as It looks like buy-to-let chickens are finally coming home to roost"... WOW what a language!
More good news for the cause
Telegraph: Housing market starts to slow
Artical goes over old ground but still nice to see. Buyer can not afford to pay current market prices and exisitng owners can nt afford to trade up. Someone should the estate agents this!
Unemployment: Forgotten issue?
BBC News: Unemployment: Forgotten issue?
Although the way unemployment is measured has changed over the years, both the ILO measure, which counts the number of people seeking work, and the claimant count are roughly the same as they were in 1979. In percentage terms it is slightly higher at 5.5%, compared with 4.7% in 1979.
Japan economy is better than they would have you think Yen to head higher
TELEGRAPH UK: Goldman Sachs warns of 'dead bodies' after market turmoil
Goldman Sachs warns of 'dead bodies' after market turmoil Jim O'Neill, the bank's chief global economist, said investment firms playing the "carry trade" had been caught on the wrong side of huge leveraged bets against the Japanese yen.There has been an amazing amount of leverage on currency markets that has nothing to do with real economic activity. I think there are going to be dead bodies around when this is over," he said. "The yen carry trade has reached 5pc of Japan's GDP. This is enormous and highly risky, as we are now seeing."
UK property stocks takes a hit
Hargreaves Lansdown: FTSE 100 fallers
Not an article, but I note that two UK property related companies have taken a battering today. Persimmon PLC and Land Securities (both down around 3.3% so far today) currently top the league of biggest FTSE fallers. I wonder what investors know that we don't, which has spooked them into selling. Any ideas?
House prices 'rising to 10 times earnings'
Telegraph: House prices 'rising to 10 times earnings'
The next generation of homebuyers will struggle to get even a toehold on the property ladder because houses will be worth ten times average earnings in 20 years time, according to a Government-sponsored report.
The Bank's error fuelled inflation. Now it must restore its reputation
Independent: The Bank's error fuelled inflation. Now it must restore its reputation
t would be far wiser for the bank to raise rates to 5.75 now, to show its determination Published: 07 June 2007 If the Bank of England is going to have to put up interest rates in the next month or so, why not do so now?
Sit on the hands, boys.
FT.com: BoE keeps interest rates on hold
The Bank of England left interest rates at 5.5 per cent on Thursday, a decision the City believes represents merely a pause in the tightening cycle. By not increasing the cost of borrowing by a further 25 basis points in June, the Bank’s rate setting body has signalled it is prepared to wait and see how effective previous rate rises have been in cooling inflationary pressures.
Chickens
Bank of England: Bank of England Maintains Bank Rate at 5.5%
The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 5.5%. The minutes of the meeting will be published at 9.30am on Wednesday 20 June.
Cooling houing may stay the rate rise according to Halifax
FT.com: House prices rise at slowest pace this year
Recent rises in the cost of borrowing have started to temper activity in the housing market, Halifax said on Thursday, as it revealed prices rose in May at the slowest pace so far this year. In its latest survey of the residential property market, the lender said the average price of a home was £196,893 last month, an increase of 0.3 per cent from April. The survey chimes with other recent data that have shown price rises cooling and lower demand for mortgages.
The thing that risk brings to the table
ABC news: North Korea Fires Off Series of Missiles
North Korea fired several short-range missiles toward the Sea of Japan on Friday, Japanese media reported. Japanese Defense and Foreign Ministry officials said they could not immediately confirm the reports. Japan's public broadcaster and other media, citing Japanese and U.S. sources, reported that the missiles were surface-to-ship.
No FTBs = impending crash
Daily Express: 4 MILLION THINK THEY WILL NEVER AFFORD A HOUSE
THE next generation of home-buyers face average house prices 10 times their salaries, unless more homes are built, an independent housing organisation warned yesterday. With the property boom forcing average prices up more than £22,000 in the last year, four million young people think they will never be able to afford their own homes, the new National Housing and Planning Advice Unit said.
The recession we just had to have AGAIN
Brisbane times: Housing slump hits construction industry
The Australian construction industry remains in a subdued state with a leading indicator showing the sector contracted in May for the second month in a row. The Australian Industry Group-Housing Industry Association performance of construction index fell 2.8 points in May to 45.1, to be 4.9 points below the base level of 50 that separates expansion from contraction.
People classed as having poor credit records who are suffering
Firstrung: Borrowing less is costing more as lenders boost rates
People looking to borrow less than £5,000 are finding affordable loans increasingly difficult to come by, according to MoneyExpert.com. Average rates for personal loans of less than £5,000 have increased dramatically in the past six months while rates for £5,000 or more have fallen or barely moved...
Ever wondered why asking prices for houses keep going up?
Foxtons: Foxtons: Houses for sale
I first noticed the house shown in this link on the market last year at £750,000. It didn't sell. About 6 months ago, they increased the price to £850,000. It still didn't sell. I recently saw that they have increased the asking price again - to £950,000. (It has been on findaproperty and rightmove - does anybody know of any way of accessing past price listings on either of these?) The house is a wreck and remains unsold. It is a very interesting selling strategy to say the least. It clearly hasn't helped to sell this house, but it sure will have contributed to the impression of house price inflation in its local area. P.S. As I have always said, Foxtons are disreputable sharks!
Oh yeah, 10x pay, this is just a rental society in the making.
Times Online: The future of house prices: 10 times pay
"The average home in England currently costs seven times annual earnings, but that is set to rise to ten times by 2026 even if the Government succeeds in its aim of sharply increasing the rate of homebuilding" ... "Campaigners said that the developing crisis would “stop social mobility in its tracks”. " ... We'll need 99 year morgages, to afford this one. Oh is that to go with the 99 year leases (long term rents, paid up front !!! ) on flats anyway.
Yeah, yeah, Yvette says 10 times salary!!
Mail: Homes rise by just £500 in May
Listen to the market, not these government jokers: "House prices rose by just £500 in May as homebuyers tightened their belts, according to Britain's biggest mortgage lender. Falling demand for property and the fourth interest rate rise in nine months led to prices increasing last month at the slowest pace this year, Halifax revealed today."
Houston, we have a problem
Payslipsp60.co.uk: 'Genuine' P60 payslips available online
Don't earn enough to get the mortgage you want? Don't worry - go to Payslipsp60.co.uk. They will provide you with 'genuine' payslips stating whatever salary you need. ........If the UK banking system has been basing its lending on this, then we really do have a problem!
how can I pay my huge mortgage???
Reuters: Murdoch's News International cuts UK editorial jobs
Rupert Murdoch's News International said on Wednesday it was cutting jobs at its four national British newspapers to reduce costs amid ongoing revenue pressures in the industry. 100 jobs were being cut from an editorial staff of nearly 1,400 working on the Sun, News of the World, the Times and Sunday Times. A spokesman for the company declined to comment on the number of job cuts.
Yeah, yeah 20 years of boom! You wish...
Times: Fears for property prices after £2bn Vector float sinks
On second thoughts, this government spin of "boom forever" is really pathetic and counterproductive, and may generate yet again a liquidity-driven mini-rally. But the market sees through this B/S: "Prospective investors worldwide shunned Vector — which was to be Britain’s largest property flotation this year — over fears that property prices are set to go into reverse"... who do you believe: the yesterday-launched government agency or the market?
BBC begs MPC not to raise rates any more
BBC "News": House price inflation easing off
The BBC puts their main vested interest posterboy Martin Ellis' comments up in lights "The recent slowing down in monthly house price inflation, together with further evidence of moderation in housing market activity, suggest that the interest rate rises since last summer are having an impact on the market," said the Halifax's chief economist Martin Ellis."
Sellers should pay stamp duty
Guardian: Sellers should pay stamp duty to help first-time buyers, says Hain
Part of Hains "vote for me" deputy leadership spiel but interesting to note that housing difficulties are starting to be acknowledged by more and more people.
NZ base rate rises to 8% !!!
Bloomberg: New Zealand Raises Key Interest Rate to Record 8%
New Zealand's central bank unexpectedly raised its benchmark interest rate a quarter point to a record 8 percent, saying housing demand and consumer spending are fanning inflation. The currency rose to a 22-year high.
NHPAU call for new homes to be built
SKY News: House Prices 'To Reach Ten Times Pay'
The next generation of homebuyers could face average house prices that are 10 times their salaries unless the number of homes being built increases, an independent housing body has warned. Research from the newly-established National Housing and Planning Advice Unit (NHPAU) found that more than a third of non-homeowners think they will never be able to buy.
A 20 year housing boom??????
The Guardian: Britain faces 20-year house boom that will split nation, says report
The long housing boom is causing growing economic and social problems because it has made housing unaffordable for many people, particularly the young, according to a report from a new thinktank, launched today. Strong demand and limited supply of housing means the problem of affordability is likely to get much worse over the next two decades, said the National Housing and Planning Advice Unit. The report forecasts that by 2026 the cheapest 25% of houses will cost 10 times the average earnings of the poorest 25% of people. At the moment these houses cost seven times earnings; a decade ago they were only four times.
Time to sell and go on holiday
forbes: The Bears Sharpen Their Claws
It's closing in on summer, but the bears on Wall Street aren't ready to hibernate just yet. On Wednesday, just as they did the day before, investors cashed in some of their recent gains in the stock market, worried that central bankers aren't likely to cut short-term interest rates in the
Pushing it too hard
forbes.com: What Happens In China Does Not Stay In China
The Chinese market is sizzling. A colleague recently told me his friends in Shanghai stayed home during the Chinese national holiday week in May to read up about investing in the stock market. Chinese investors are opening brokerage accounts at a rate of 300,000 per day. Locals believe it's easier to make money in the stock market than by working.
Reports of higher wages
Telegraph Online: Pay rises fuel fears of growing inflation
Edmund Conway reports "Wages are rising at the fastest rate in six years, according to a new report, raising fresh concerns about inflation hours before the Bank of England's interest-rate decision." This follows the pattern of claim [for economic reality] vs counter-claim [for Fantasy Islanders] which appears in the mainstream press shortly before every MPC meeting. I wonder which will win?
Bit old
Business Magazine: Housing market bears the brunt as Ireland’s economy wobbles
Housing market bears the brunt as Ireland’s economy wobbles The number of new houses built in the last quarter of 2006 fell for the first time in 10 years, while separate figures showed that the economy’s export performance worsened severely in the same period. The figures underscore the warning to the country’s politicians from John Beggs, Allied Irish Banks’ chief economist, that delivering on expensive pre-election promises on tax without strong economic growth would lead to a serious deterioration in public finances.
Seems some of the big bond analysts got it sooo wrong!!
ft.com: Market insight: Is the party over for bond investors?
Market insight: Is the party over for bond investors? Global bond markets have been in a bubble for so long that many participants are in danger of forgetting it exists. Some recent investment decisions can only be rationalised on the basis of a belief in perpetually low and stable bond yields. To the extent that such expectations are extant, they are likely to be disabused over the next year or so.
Looks like 1990 all over again
FT.com: Global interest rates
The world is not yet exchanging wallets for wheelbarrows but there is a concern that inflation might be back. Since February’s wobble, yield curves in the big economies have shifted up by 50 basis points or so. Yields on 10-year bonds are heading to their highest levels since the end of the last tightening cycle in 2002 This yield shift is sharp but the fact is that consumer price inflation is below target in the eurozone (1.9 per cent year on year) and Japan (zero). Where it is above target, such as in the US (2.6 per cent) and UK (2.8 per cent), it is forecast to fall and there is no sign yet of a rapid rise in wages.
Not the place to buy a home
FT.com: UK warns of investing in Russia
The British government is stepping up its warnings to businesses about the risks of investing in Russia in the wake of Moscow’s moves to take control of energy assets from foreign companies. The Foreign Office is telling companies looking to invest in Russia that there is now more evidence of risks faced by outside investors.
Where now for housing market !!
stuff.co.nz: Bollard surprises economists with rates rise
Although the bank, as it invariably does, forecast house price inflation to come back to zero in a couple of years, it noted considerable "upside risk" to that prediction. "However, the further house prices rise, the greater the possibility that the eventual correction in house prices will be significantly sharper than assumed in our predictions." t noted house prices fell almost 38 per cent over six years in the 1970s.
Property investors' sentiment down!!
Reuters: UK property firm Vector postpones $3.6 bln IPO
Vector Hospitality said on Wednesday it had postponed its planned $3.6 billion initial public offering due to market conditions. An earlier decision by Spanish property firm Realia to cut the pricing on its IPO by around 20 percent partly cooled the sentiment for the sector.
Wednesday, June 6, 2007
Things are starting to look shaky!!!
ITN: FTSE closes at 6522.7
Shares plummet 2 per cent today and 14 % correction to come....
us house prices to fall further in 2007
yahoo: us house prices to fall further in 2007
sign of things to come here I guess......wonder how many buy-to-lets are crapping themselves?
19% drop in mortgage volumes!
RTE: 19% drop in Q1 mortgage numbers
Do not get too excited (quite yet)... that is in the Republic of Ireland, but I quite do not see what will be different here... we are an island, there are immigrants, strong employment... aaahh it must be the divorce rate!
Smelling the coffee
BBC "News" / Evanomics: Fixed-rate pickle
All good things must come to an end. And concern is brewing for people who took out fixed rate mortgages two years ago, and who are now coming off them to find rates far higher than they have been used to. That Evan Davies is awfully good y'know.
ECB jumps
BBC: ECB raises eurozone rates to 4%
The European Central Bank (ECB) has raised interest rates for the eurozone to 4% from 3.75%.
Just as HPC bloggers expected
Guardian: FTSE falters as housing woes weigh on Dow
The FTSE 100 closed down yesterday after a good start, falling 31.3 points to 6632.8 as Wall Street was affected by comments made by the US Federal Reserve chairman, Ben Bernanke, and concern over interest rates
UP UP AND AWAY
bbc: ECB raises eurozone rates to 4%
The European Central Bank (ECB) has raised interest rates for the eurozone to 4% from 3.75%. The increase takes rates in the area to their highest level for six years and means they have doubled in 18 months. The rise had been expected following a series of inflationary warnings from ECB members in recent weeks.
MPC - have they got the time to 'pause and reflect'?
Firstrung: Interest rate rise likely in summer but not tomorrow - Lloyds TSB
"We may well see a rate rise before the summer is out, but a move this month is highly unlikely. We've seen rates increased four times since August last year and the effects of these are only just starting to show through - inflation is coming off the boil, the housing market is cooling and signs of slower activity are appearing in the retail sector. However, it's still too early to judge the full impact of these cumulative increases, especially those that have taken place in the past nine months. The most likely outcome of this month's meeting is that the MPC will opt to hold rates and buy time to gauge the impact of recent increases, before making another move."
example shows how leverage can pile up in a
rgemonitor.: Fed Officials Fret Another `Russia' May Occur: John M. Berry
John Berry - a leading Fed watcher at Bloomberg - tells us that the Fed and the BIS are starting to worry about another systemic risk episode, like the one triggered by the collapse of Russia in the summer of 1998 that was then followed by the near collapse of LTCM. June 4 (Bloomberg) -- Nine years ago a default by the Russian government on part of its debt caused financial markets around the world to seize up as investors rushed to shed risk. Today, Federal Reserve officials are concerned something similar may happen. One major casualty of the 1998 crisis was Long Term Capital Management, a major hedge fund that failed. In order to prevent a disorderly closing out of LTCM's complex book of derivatives and other investments that could have done significant damage,
IR at 6% tomorrow?
Bloomberg: Bank of England Needs Shock Move to Tame Prices
"Where will U.K. interest rates peak? Most people in the market say it is somewhere between the current 5.5 percent and 6 percent. They are kidding themselves. When the Bank of England's Monetary Policy Committee begins its two-day meeting today, it should consider a shock half-point move straight to 6 percent. Meanwhile, the markets should be thinking about rates peaking closer to 7 percent"... straight talk, but it may be just wishful thinking...
Consumers confident now, but for how long?
Firstrung: House prices - expectations pick up sharply in May - Nationwide consumer confidence survey
Views about the housing market remain upbeat. People's expectations of future house price growth reached a new high in May*: they now expect house prices to rise 4.5% over the coming six months. These views are likely to moderate over coming months as consumers see evidence of earlier interest rate rises taking hold.
About time...
BBC: NI house price boom hits brakes
"Screeching to a halt." That is a description of the east Belfast housing market from two estate agents
Full House!
Daily Telegraph: Morgan Stanley issues triple sell warning on equities
Morgan Stanley has advised clients to slash exposure to the stock market after its three key warning indicators began flashing a "Full House" sell signal for the first time since the dotcom bust. Teun Draaisma, chief of European equities strategist for the US investment bank, said the triple warning was a "very powerful" signal that had been triggered just five times since 1980. Our model is forecasting a 14pc correction over the next six months, but it could be more serious," he said. Mr Draaisma said the MSCI index of 600 European and British equities had dropped by an average of 15.2pc over six months after each "Full House" signal, with falls of 25.2pc after September 1987 and 26.2pc after April 2002. "We prefer to be on the right side of these odds," he said.
Get ready to cut and run while you still have your pants on
FT.com: Spanish property
There is no better gauge of a market’s health than its appetite for initial public offerings. No surprise, then, that the price announced on Tuesday for the partial listing of Spanish property group Realia Business wound up 26 per cent below the mid point of the initial range targeted Since March, the sector has taken a battering – even its largest company, Metrovacesa, risks being bundled out of the Ibex 35 index. Astroc Mediterraneo, which has lost 80 per cent of its equity value in the past three months following concerns over its accounts, has also cancelled a €2bn equity raising. In spite of recent falls, many share prices are still more than 10 times above their 2005 levels.
Dont you just love it, looks like the oil barrons are getting worried the Goose that laid the Golden Egg testing its wings!!! Seems the world is being held to ransom !!
FT.com: The warning from Opec
Opec on Tuesday warned western countries that their efforts to develop biofuels as an alternative energy source to combat climate change risked driving the price of oil “through the roof”. Abdalla El-Badri, secretary-general of the Organisation of the Petroleum Exporting Countries, said the powerful cartel was considering cutting its investment in new oil production in response to moves by the developed world to use more biofuels. George W. Bush, the US president, has pledged to cut US petrol use by 20 per cent over the next 10 years through more efficient vehicles and a big increase in biofuel consumption. World production of biofuels, which are derived from agricultural commodities such as corn and sugar, was equal to 1 per cent of all road transport fuel in 2005.
Selling the family silver ? whats going in Spain is there something we should know??
bloomberg.com: Gold Futures Fall on Bank Sales;
Spain's central bank reduced its gold holdings to 9.9 million ounces in May, from 10.8 million ounces at the end of April, according to a statement on its Web site today. The ECB said two members of the Eurosystem sold gold worth 29 million euros ($39 million) last week.``Central bank sales have been holding gold back,'' said Frank Lesh, a trader at FuturePath LLC in Chicago. ``What a better time for central banks to sell than on the rallies.''
THE RAIN IN SPAIN STAYS MAINLY ON THE PLAINS - NOT ANY MORE
blanchardonline: Banks and Miners
Banks and Miners If the banking system in Spain is heading for a total meltdown as some economists now believe, they're running out of gold to plug the gap, having disposed ... If the banking system in Spain is heading for a total meltdown as some economists now believe, they're running out of gold to plug the gap, having disposed of 20% of their reserves in the March-April time frame (the largest set of gold sales in the market by any ECB member bank during the life the CBGA) and we will have an update soon if they have continued that selling into May.
Tuesday, June 5, 2007
Housing dream vanishing,
THE DAILY RECKONING: Housing Crisis Deepens As Australian Capital Reserve Collapses
Everything comes down to valuations and expectations,ACR slapped huge valuations on its property developments in Victoria and New South Wales.This put dollar signs in the eyes of investors who were prepared to believe that property is always a rock solid investment. When the company was cut off from financing by a stop order from the ASIC, the jig was up.And now, investors may lose everything.With global borrowing costs so low, you have to wonder why any credible firm would chose to raise capital in bits and bites from mum and dad investors.Most banks seem willing to open their chequebook to anyone with a pulse.Unless your intentions are less than honourable to begin with, why would you raise money for million dollar property developments from small investors?Hint,the answen
"a check with reality is no bad thing from time to time,"
Reuters: FTSE ends down on fears of US inflation, UK rates
said David Buik of Cantor Index. Housebuilders and retailers bore the brunt of interest rate concerns. Among housebuilders, Persimmon (PSN.L: Quote, Profile , Research) was off 2.6 percent, and Land Securities (LAND.L: Quote, Profile , Research) was down 2.2 percent.
Hopefully more house building
Guardian: Brown promises new house-building programme
"Mr Brown acknowledged that there was a "huge problem" with housing in the UK and pledged a new building programme, including council housing and affordable homes."
Nuclear, no solution to high oil prices.
www.peakoil.com - Bloomberg: Uranium May Reach $200 in Two Years
So, nuclear power will shield us from commodity price volatility? I think not.
Recession well maybe?
Daily Telegraph: Fed chairman warns on US housing market
The chairman of the US Federal Reserve has warned that the American housing market will remain in the doldrums for longer than expected as lenders make it tougher to get mortgages.
More bad news for Oil Prices
Bloomberg: Oil trades a near two week high
Tropical Cyclone Gonu is heading northwest at 15 kilometers per hour on a path U.S. Navy forecasters expect will take it across the Gulf of Oman, an important shipping lane for oil supplies from the Gulf. Brent crude oil climbed as high as $70.63 a barrel yesterday on the risk to tankers operating in the Gulf and the threat of further strikes in Nigeria, Africa's biggest producer.
Property is not overpriced
Times Online: Property is not overpriced
Nigel Terrington, chief executive of Paragon Group, Britain’s largest buy-to-let lender, on housing “The UK market is undergoing a significant structural change. There is a material increase in tenant demand now and into the future, which is driving demand for buy-to-let landlords. On the demand side, there is a rising population, particularly in population groups likely to rent. Buyers increasingly use property as a pension. There is a fundamental shortage of housing that will not be addressed quickly. Interest rates are higher but they are more likely to act as a greater constraint on first-time buyers. Any weakness in house prices will be seen as a buying opportunity for landlords . . . The redemption rate [for our borrowers] has been slowing as landlords are keeping their properties
The doom of UK commercial property
Times: Can rising rents offer cushion from fears of crash?
You know bad news is coming when CEOs disagree with the market. "Stephen Hester, British Land’s chief executive, said: “We are looking cheap as an investment. The market is saying that there will be a fall. I do not agree with that.” Better being frank: “There can only be one ending and we’ll look back and talk about how obvious the signs were.” (Gerald Ronson, founder and head of Heron International)
Price of one bedroom flat hits a record £3 million
Daily Mail: Price of one bedroom flat hits a record £3 million
Record price for property where any guests will have to sleep on the sofa
The big freeze has started
Times: The big freeze has started
Fionnuala Earley, Nationwide chief economist, on the housing market
BTL'rs Barely Treading Water (AND THIS IS BEFORE ANY FURTHER IR RISES?)
City Wire: BUSINESS ARTICLE
I recommend that one reads this article, but as they say looks like the chickens are coming home to roost!!! "...Already an alarming jump in %ages of BTL's being reposessed (8% to 25% of repossessions). In some BTL postcodes 50% of the auction properties are BTL's! The average price of a new falt increased by only 0.8% b/w 2nd quarter of 2004 and first quarter of 2006! Over the past five years the average price of older flats has soared in value by 59% while the average price of a new build flats rose by just 15%! The buy-to-let lobby is reluctant to admit there is a problem!..." I bet they are! Am I dreaming? Is this the UK? What is going to happen to all Mr. Prestcott's new built flats in the green belt? Are they telling us the full truth about the seriousness of this?
Still on for 5.75% by the end of the year
The Times: Prices grow at slowest rate for 15 months
We'll have to wait for the MPC to decide but there are as many indicies suggesting no reason for a rate rise as there are suggesting rates should rise. With all this uncertainty, the MPC will demonstrate clear and decisive leadership by voting for NO CHANGE and applying its WAIT-AND-SEE policy. I am no expert but I would not be surprised if the CPI basket was weighted towards measuring the cost of services.
The "Wait-and-See" policy strikes again
The Times Online: Prices grow at slowest rate for 15 months
The chances of another interest rate rise this week are dimmed as survey shows colling service sector prices
Foreign investors profit from our misery
LandlordExpert: The UK housing market - Whats the real story?
"investors from around the world are profiting by the current housing boom in the UK. The demand for homes in the UK has not been flamed by immigration or people moving to London. Homes in London have not breached the 1 million pound mark because people with City bonuses are moving closer to the square mile. Instead, several reports indicate that investors do not even live in the UK. The build of the big buyers are foreign investors who want a 'sure thing,' and the UK housing market promises that. In the end, who are they making a fortune from? The residents"
If this isn't a sign we've peaked, I don't know what is!
London Evening Standard: Price of one bedroom flat hits a record £3 million
Liam Bailey, head of research at Knight Frank, said: "We should not think of £3 million for a one-bedroom flat as being overpriced or extortionate. Sure Liam, whatever you say.
Financial Markets shortening odd's
Bloomberg: U.K. Pound Gains on Speculation BOE Will Raise Rates This Week
The U.K. pound advanced against the dollar on speculation the Bank of England will increase interest rates at its monthly meeting this week.
"I'm leaving on a jet plane, don't know when I'll see my off plan deposits again"
Firstrung: Will 'fly to letters' now turn their attention to Warsaw in Poland?
Ssshh..it's a secret, according to Property Secrets. There's a new fly to let destination to lose money and directly help to sickeningly 'price out' the local indigenous population, its called Poland. When will 'overseas investors' finally learn that prices only go up in these type of destinations due to invading Brits - who have generally re-mortgaged their principal residence in order to 'play houses' abroad? Quite frankly it's simply a grown up version of playing 'hot potato'.
Monthly repayments will increase by £185 or 33 per cent from £556 to £741
Firstrung: 178,800 borrowers, who took out mortgages in 2005, will face mortgage repayment increases of £185 a month
According to Mortgage Advice Bureau (MAB) 178,800 people, who took out mortgages in 2005, will face mortgage repayment increases of £185 a month as they come to the end of their fixed rate deals and move onto their lenders SVR rate this month - with a further increase should the base rate rise again this week...
FSA reveals BTL house of cards
Home.co.uk News: No disguising BTL 'scrap-heap'
Research by the Financial Services Authority (FSA) has revealed the extent of buy-to-let repossessions, prompting issues of repayment, regulation and lending...This is body-blow for the buy-to-let lobby and a wake-up call for intermediaries, as It looks like buy-to-let chickens are finally coming home to roost. More investors who bought new properties from developers at over-inflated prices are unable to cover mortgage payments with the rental income, have seen little or no capital appreciation, and are simply walking away.
SPAINS GOING DOWN THE DRINK AND TAKING EUROPE WITH IT
bullion vault: first signs of a housing slump are now emerging
Spain's current account is completely out of control has the worst deficit in its history, worse than any other country in the Western world. Should Spain face any form of banking crisis, the country will find it nearly impossible to handle.Should a housing slump occur, for instance, a banking crisis is likely to follow. And the first signs of a housing slump are now emerging.The Banco de España refuses to comment on these sales. Nor will it say why it's pursuing a policy of spending Spain's savings when they could have used other means to cover the trade deficit – which has now ballooned to 9.5% of GDP, reaching €8.6bn in January alone How serious could Spain's banking problems become? Its private sector has amassed the equivalent of $600 billion in foreign debts
On the bus, off the bus ...
The Indepedent: Tough month for retailers makes rate rise unlikely
An alternative view on the need to raise interest rates. Jane Padgham, writing in The Indepent, reports "In findings that will cement expectations that the Bank of England will freeze borrowing costs this week, the British Retail Consortium said the high street suffered its worst month since last November as stretched consumers shunned new spring fashions." Perhaps The Independent will follow the line of The Times? I reckon the spinelessness of the MPC means we're still on for 5.75% by end of 2007 with cuts in 2008.
Rumblings from NI
BBC Northern Ireland: NI house price boom hits brakes
Questions are starting to be asked about the Northern Ireland market now. This report was also on BBC NI tv news last night, while on UTV there was a half hour programme raising similar points. Demand seems to be disappearing in the Northern Ireland market very quickly.
What we have been saying for a long time...
Times: Buy-to-let brigade could be the joker in the homes pack
In polite circles there is one C-word that remains taboo. Crash. We can whisper it or think it, but anyone saying it aloud faces ostracism from our property-obsessed culture. Yolande Barnes, head of residential research at Savills, said: “We are in uncharted territory. A lot of the market is based on the willingness to sink large amounts of wealth into housing. It is confidence-based. That tends to make it more volatile. There is even a problem if interest rates get to 6.5 per cent. That is the absolute biting point. That would probably trigger a household debt crisis similar to the late 1980s" and that is from an EA... not from a doom-monger!!
Monday, June 4, 2007
Mind that bull
Fin Data: SSEC Shanghai Composite [INDEX]
Not really a big suprise, but where will the sell off end.
Tax worries knock Chinese shares
BBC News: Tax worries knock Chinese shares
Will global markets go into freefall this week ?... BofE is due to post its next rate rise. I got cash but am thinking about getting raw materials
Another reason why there's so much debt
BBC News: The champagne overdraft
"Everyday folk are trying to buy into the celebrity lifestyle of swanky nightclubs and £5,000 bar bills and plunging themselves into penury as a result. Why?" I wonder why too! I really do.
The "Haves" sneer and Jeer! Trying to convince the have nots all is lost!
The Economist: Fighting over their castles
A political head of steam is building behind the idea of fixing things by building more homes. Gordon Brown, the prime-minister-to-be, has argued for this recently. It will be hard to sell to the 70% of households who already own their homes, however, and especially hard for the Conservative Party, which is strong in the south-east where people think their neighbours are too close now. Yet Michael Gove, the shadow housing minister, believes his party will accept a bonfire of planning restrictions when it is convinced that there is a good, economically liberal case for it. “The longer it goes on unchanged, the worse it gets,” says Mr Gove. Which seems a melancholy verdict on what has looked for a decade like the closest thing yet seen to a mass lottery win.
Yet more signs of an ongoing Global inflation problem and rising interest rates
Bloomberg: Fed Faces Pressure to Raise Rates
Options on Federal Fund futures at the Chicago Board of Trade indicate a 41 percent chance the central bank will lift its target rate for overnight loans between banks to 5.5 percent from the current 5.25 percent, according to data compiled by Bloomberg. A month ago, they showed no expectations for an increase.