July 2007 Archive
Monday, July 30, 2007 
Big Drops To Come
AUSTRALIAN: Other funds face losses: Absolute
THE general manager of Absolute Capital's suspended investment funds yesterday warned that there were managers of other funds who were not admitting their losses from the US sub-prime mortgage crisis to investors.
Cliff D'Arcy calls top on property market.
Motley Fool: Five Dangerous Homebuying mistakes
I'm the Fool's property bear. I've been fretting about rising property prices since 2003, and I sold my house to move into rented accommodation two years ago.As you'd expect, I've taken a lot of stick from people who have seen their wealth rise thanks to UK property's long winning streak. For the record, I strongly believe that now is a truly terrible time to buy property. My view is backed by two leading economic forecasters. The Ernst & Young ITEM (Independent Treasury Economic Model) Club calculates that UK house prices are presently overvalued by up to a sixth. Today, credit-rating agency Fitch warned that UK house prices are overvalued by at least a fifth (20%). So brace yourselves, because I'm calling crash.
Add Channel 4 to the list
Channel 4 News: House prices are 'overvalued'
We all know it, they all know it and at last it seems to be seeping out to the plebs.
Comical Ali was an amateur
Independent: Buy To Let: Landlords are now making tenants play the lottery of sealed bids
Like the Americans committing suicide in their tanks headed for Bagdad, the Independent published two stories last week that are complete fiction. I tell you, i live in central London and property (both sales and rental) is totally stale on the shelves. More fictional stories in the comments
BBC have picke up the Fitch Report
BBC News: UK housing market is 'overvalued'
Yes - we on this site know this already (for years) - but the important point is that this has now got beyond the broadsheets. Let us hope the tabloids and popular papers/sites now inform the public
The smart money is heading for the exit
bloomberg.com: Corporate Bond Risk Soars as Subprime Mortgage Losses Spread
Investors are fleeing corporate credit at the fastest pace in seven years, Barclays Capital said in a report. More than 40 companies have abandoned or reworked loan and bond sales as yield premiums on corporate bonds rose to the highest relative to U.S. Treasuries since 2003. ``It's pure fear,'' said Gary Jenkins, a partner at London- based hedge fund Synapse Investment Management, which manages $650 million of debt assets. ``It's fear of the unknown, fear of hedge funds unwinding, fear of knock-on effects of the subprime meltdown.'' BTL landlords you were warned, worldwide credit crunch = financial armageddon
cheap compact accommodation with a difference
AOL travel: Weird Hotels
Bored with humdrum hotels? Why not bed down in one of these peculiar properties... Low cost social housing..mmm, What do you think?
First the good news, then the bad news.
Guardian: UK housing market 'overvalued by 20%'
House prices in the UK are more than 20% higher than they should be, making the country's housing market the third most overvalued among the world's major economies. But this doesn't mean a crash is inevitable.
Nice people at Fitch, a bit late with their warning
Guardian: UK housing market 'overvalued by 20%'
The question is not "if" the UK housing market is overvalued, everybody knows it, even the BTLers every time they buy are confident to find a greater fool to sell to. The question is "when" a correction will happen, and what type of correction that will be: sudden burst, inflation catching up?
Fitch's 'overall vulnerability index' uses a mix of how overvalued house prices and the exposure of households to rising interest rates.
TELEGRAPH UK: UK's house prices are second most overvalued
UK house prices are now the second most overvalued among the world's developed economies, trailing only France, according to a new survey by ratings agency Fitch. The survey shows that in all but two of the countries surveyed the ratio of house price growth to increases in incomes is above the long-term historical average
Like we told you officially, it won't spread. Trust us.
FT.com: HSBC hurt by exposure to US subprime market
Half-year profits at HSBC were hit by the bank’s exposure to the US subprime mortgage market and a $236m (£116.5m) charge for fee refunds in its UK retail banking operations.
Frog; boiled, skin off, floating on surface?
Firstrung: Rising cost of living the number one concern
The findings reveals the top five financial concerns to be:the rising cost of living, insufficient funds for reasonable standard of living, lack of preparation for retirement, level of debt and keeping on top of financial repayments.
In the euro zone, the ECB is forecast to keep interest rates on hold on Thursday at 4.0%. There will be no press conference. Data on unemployment, inflation and the PMI surveys may influence the timing of the next ECB rate increase to 4.25%, widely expect
www.lloydstsbcorporatemarkets.com: Economics Weekly BoE and ECB to keep interest rates on hold
The Bank of England MPC is forecast to keep interest rates on hold on Thursday at 5.75%. Resistance to higher rates from three MPC members at the July meeting and the publication of the August Inflation Report suggest the MPC is likely to take stock of recent data and inflation prospects in the months ahead before deciding whether more rate increases are justified. UK data this week includes manufacturing and services PMI's which may indicate that the economy is already responding to previous rate rises and that a further hike may not be necessary.
Is it inefficiency or jitters?
Firstrung: Housing market transactions still lack efficiency
During 2005 and 2006, the average of number of days between notification of sale and exchange was 47 which is already 17% lower than for 2007 to date. The same data also reveals cancellations to be on the rise with well over one in ten instructions being cancelled. This represents a 4% increase since January 2007 and, if this trend continues, the market will be witnessing a 20% cancellation rate by the end of the year.
KfW, the state owned development bank that owns 38 per cent of IKB, said it would step in and cover all potential losses in order to avoid a full-blown crisis
ft: Subprime woes claim first German victim
IKB Deutsche Industriebank, the German bank for industry, on Monday became one of the biggest European casualties of the fallout in the subprime mortgage market as it ousted its chief executive and issued a profit warning.
B(ear)BC
BBC News: UK housing market is 'overvalued'
UK house prices are at least 20% overvalued compared with their long term average, according to credit rating agency Fitch. Fitch, which judges how risky debt is, looked at how house prices have raced away from incomes over the past decade.
BoE shouldn't listen to VI spin!
Money Week: Why the Bank should hike interest rates this week
Amid the panic last week, traders are clinging to one silver lining. At least, they think, the BoE won't raise the base interest rate to 6% this month. Not now. That doesn't mean that it shouldn't though...
At current levels the iTraxx indices - Europe, Crossover, LevX - price in default rates so high that it`s difficult to find a justification for them in the historical data provided by the rating agencies…
/ftalphaville.: The benchmark iTraxx Crossover index, which consists of 50 mostly junk-rated credits and is an important indicator of sentiment, jumped 35bp to 435bp in early trade.
European credit derivatives markets sold off sharply on Friday morning, after steep falls overnight in US stocks and credit.
A decision to hold rates this week would be a mistake...
MoneyWeek: Why the Bank should hike interest rates this week
The Bank of England may be feeling extremely reluctant to pile on the pressure while the City is feeling so wobbly. But that doesn't mean it shouldn't hike the base rate to 6%, says John Stepek.
If a hedge fund's performance deteriorates sufficiently, its prime broker's bank can demand that it sells assets to repay loans
YAHOO BIZ: Tougher terms for hedge funds
Prime brokerage departments at several investment banks have raised their margin requirements for certain hedge fund clients as they seek to insure themselves against the possibility of new hedge fund collapses as a result of the recent market turmoil
Upbeat data for the MPC
Guardian: Mortgage lending grows at fastest pace for three months
With the MPC now very focus in limiting the spiralling up of debt, we can safely assume that they will care more about this type of data than a reduction in the house price inflation
Honestly Guv'nor this won't spread!
FT: Signs of US subprime crisis spreading
American Home Mortgage Investment said it is delaying paying dividends on its common stock and may delay payments on its preferred shares because banks demanded it put up more cash after the Melville, New York-based mortgage lender wrote down the value of its loan and security portfolios significantly. The move represents one of the first indications that the crisis facing sub-prime mortgage lenders in the US is expanding to affect lenders like American Home Mortgage whose borrowers tend to have higher ‘prime’ ore ‘near prime’ credit ratings.
many investors are turning away from the Costas to countries like France and Turkey.
efip.co: Spain's Little Britain
The influx of British tourists and holiday homeowners in Spain is now putting investors off Spanish property according to research conductred by GE Money Home Lending. The survey found that more than eight out of ten investors were discouraged from buying a Spanish property by the volume of Brits living there. The number of retirement homes and holiday properties along the Spanish coast has spurred nicknames like Costa Geriatrica and Little Britian.
Hometrack survey shows HPI grinding to a halt
Metro: Home prices stall as rate rises bite
The Hometrack survey released today agrees with last week's Nationwide survey, showing prices rose by just 0.1% in July. The annual rate of house price inflation dropped to 5.9 per cent from 6.4 per cent in June – the third consecutive month it has fallen. Richard Donnell from Hometrack said: 'It was inevitable that the steady increase in interest rates which began last year would ultimately impact on levels of housing demand right across the market. The slowdown has been accelerated by a rise in the supply of housing for sale over recent months. 'We expect demand to remain weak over the second half of the year as the impact of higher interest rates continues to feed into the market.'
Investment banks are responding to rising credit concerns by imposing tougher lending terms on hedge funds, in a move that threatens to exacerbate investor unease in the financial markets.
ft: Tougher lending terms for hedge funds
Prime brokerage departments at several investment banks have raised their margin requirements for certain hedge fund clients as they seek to insure themselves against the possibility of new hedge fund collapses as a result of the recent market turmoil.
The credit rating agency says the combination of overvalued property and highly indebted consumers makes these economies especially vulnerable as central banks tighten interest rates around the world.
ft: Denmark, UK vulnerable to house prices fall
Denmark, Britain and New Zealand are the economies most vulnerable to a fall in house prices, says a report released on Monday by Fitch Ratings.
Sunday, July 29, 2007
Mondays outcome... Place your bets please....
BBC: Fears of fresh stock market falls
Sell Sell Sell!!!!!!!!
NZ - Property will double in price in decade?
Stuff: Property will double in price in decade: marketers
Could property prices continue to double every 10 years? Investment property marketers believe so, but economists doubt it.
More house price falls
Times: Flood homes: prices could fall 80%
In no other country (I mean civilized country) the attention of the media could be turned so quickly from the human cost of the flooding to the repercussions on property market. Brick and mortar is a national obsession, people need mental help! On another note, this story shows the inherent fragility of the "brick and mortar", there is basically no inherent value in housing... you cant get an insurance policy? no value left! Keep investing all your pension in property, yes keep going, solid as "brick and mortar"! Just hope it does not rain!
Spending the inheritance may become a necessity
Firstrung: Cost of living when retired is rising faster than national average
Prudential warns that the cost of living for people aged 65 and over is rising faster than the national average. Analysis of household expenditure between 2002 and 2006 reveals that on average, annual expenditure in households where the main occupant is aged 65-74 has increased by around 9 per cent as opposed to a national average of 4 per cent. The corresponding figure for households where the main occupant is aged 75 and over is 10 per cent...
Spotlight on first time buyers
Firstrung: First time buyers the week in focus - Firstrung
The most disappointing news in relation to first time buyers this past week was the data from Scottish Widows suggesting that up to 56% of graduates still havn't managed to buy their first property up to ten years after graduating. First year Graduate salaries have barely moved in ten years, (circa 20-24K), house prices as we're all to aware have increased by 300%.
Creeping regulations will cool the BTL craze
CityWire: Landlords should be regulated, Law Commission proposes
"The Law Commission’s proposal requiring all buy-to-let landlords to be regulated could be the final nail in the coffin for some small landlords, already squeezed by higher interest rates and an oversupply of properties in some areas." I am not friend of red tapes and excessive regulations, but things like entrusting my landlord with a couple of grands in rent deposit, then what happens if the punter goes bankrupt? who is assumed to do credit checks? what happens if the loser gets my flat repossessed by the bank? then I lose the deposit? or not? regulating this sector is crucial. "an oversupply of properties in some areas."?? that s interesting, but I though the immigrants, the divorce rates, and all that cheap macroeconomic cr@p a la omni-loquent journalist was true! Not!
Essex btl start to feel the pain
essex county standard: homes is this crisis point?
Here we go its started.I loved the comments from the estate agent "not to put them on the market at the moment because the value is not what it was" I expect to see many more articles like this over the next few years. Colchester could be about to hit a repossessions crisis,it has been claimed.Warning bells began to sound as six repossessed flats in a prestigious town centre developement were sold at auction for up to £70,000 less than buyers originally paid.
Food prices rise & property prices likely to fall in flooded areas
Guardian: After the deluge, Britian will be swamped by a 6bn pounds tidal wave of costs
Dearer food and negative equity for owners of homes at risk is on the way, writes Zoe Wood. Recent floods have not only added to the likelihood of food price increases, but are also likely to lower the value of houses in the flood-risk areas. Before things get worse, perhaps son-of-the-manse Gordon might like to get on his knees to seek help from a higher source!
BoE to keep rates on hold ?
The Independent: Cost of Borrowing Starts to Hit Home
HPI down to a miserly 10.9% so "Sputtering house price growth could be the deciding factor if, as looks likely, the Bank of England votes this week to keep interest rates on hold at 5.75 per cent."
Almost there!
Times: At last, good news for buyers
We’ve entered a buyer’s market,” says Lucian Cook, director of residential research at Savills, the nationwide estate agency. “It is a turnaround since the beginning of the year: three months ago, it was definitely a seller’s market. The average homeowner is going to have to take a more realistic look at the market this summer.” “For the first time in ages, buyers, especially if they are cash- and chain-free, are in a strong position.” I wonder the BTLers who bought in the past few months, how they feel now?!?
Saturday, July 28, 2007
Is this the ultimate answer to stopping the London boom?
BBC News: London flooded in disaster film
Look at the picture folks. This is what will happen when the Thames barrier bursts. I think Birmingham will become the new capital in the next 50-100 years.
We out to campaign agaist this sh*t!
Gordian: Desperate to get on that ladder? Believe it or not, you could now
Interesting the government is "downplaying" the issue. Maybe they have finally come back to their senses and decided to stop funding these idiotic equity schemes. with taxpayers money. The press should stop inflating this bubble. But they are too stupid to understand.
Doh!!
Firstrung: Interest rate rises fail to dent buy to let confidence in the lobotomy club
At what point to buy to let players finally 'get it'? Property is no longer rising in value (other than small pockets of opportunity throughout the UK), rents are static - if not falling ironically due to the increased competition provided by buy to let investors, and buy to let interest only mortgages currently have an average 'tag' of 8.5-9% meaning for every 100K borrowed they need to achieve £850-£900 per month rent simply to stand still...Madness...
Punters!!
Mortgage Introducer: What the papers say
This is a very low quality article - collection of information from mortgage trade press, but a very truthful account of how the mortgage industry is screwing Britain. "5 years ago interest only mortgages accounted for 5 per cent of new mortgages, today they account for 26%. Heron asks whether borrowers, lenders and advisers are storing up problems for the future by selecting interest only payments. He says that if there were evidence of significant numbers of consumers taking interest only loans solely because they are cheaper and without considering how to repay it, there would be grounds for concern. Griffiths says: “No disrespect to John Heron...but why else would borrowers take out interest only deals? They make a larger property affordable..." PUNTERS!!
"It takes guts"
Scotsman: Plenty of life left in the buy-to-let market for those who have 'guts'
"some investors are now starting to feel a bit jittery about the possibility of the buy-to-let bubble bursting and there is a parallel worry that those thinking of getting involved in the sector may have missed the boat. Yields are not at the level they once were and some markets have been saturated"... the rest of the article is a desperate appeal to investors to keep buying BTL, like if you must do it. Some readers' comments are interesting
Well they are in it for profit
thisismoney.co.uk: Beware sale-and-rent back firms
A growing number of sale-and-rent back companies are targeting those struggling to the meet the cost of living in their homes. Firms offer to purchase homes at below market value and rent them back to the former owners. But the majority of companies offer no residence guarantee beyond six or 12-tenancies, leaving former homeowners at risk of eviction.
BTL and you'll make your fortune!
Scotsman: Plenty of life left in the buy-to-let market for those who have 'guts'
Many landlords are concerned about the effect of rising interest rates as they may increase ahead of relative income, But the managing director of Landlord Mortgages said, "Don't worry.. you should be able to increase the tenant's rent..." Checking the recommended New Town area of Edin, there seems to be a dearth of 1 bedroom flats for rent, but plenty of 2 beds ranging from 600-900. To buy one of the cheaper flats on the market would cost over 900 over 25 years at 6%. I don't understand how they can claim rent covers the mortgage!
Friday, July 27, 2007
Blair Era Graduates Struggle to Buy
Guardian: Graduates 'struggling to buy a home'
In a job market flooded with graduates 56% who graduated from university during the past 10 years have yet to get on to the property ladder according to Scottish Widows with 58% claiming they did not earn enough and 27% saying they could not even afford to save for a deposit.
As Graduates Struggle to Buy Houses as Degree Quality Falls and Quantity of Competition Rises
BBC News: Graduates 'face housing struggle'
A little something for the Better Weekend Papers to mull over on Sunday as a leading UK insurer reveals that 60% of people who have graduated in the past 10 years have been unable to buy their own home.
I get the feeling this is part of something bigger. It doesn't mean that we'll be down again on Monday necessarily but I think we're seeing a liquidity squeeze.
smh: The wipeout cost investors about $41 billion and the effects will be felt immediately, as Australia has the highest percentage of private share ownership in the world
STOCK watchers fear the Australian market could be on the brink of sustained correction after concerns about the health of the US economy sent shares into one of their biggest one-day dives since the September 11 terror attacks.
the shoe hasnt dropped yet
smh: US mortgage debris has not fully hit Australia
Last week, Australian hedge fund operator Basis Capital hit troubles as a result of the US sub-prime mortgage meltdown and Absolute Capital temporarily suspended trading of its funds. Fears are already emerging about the sub-prime market in Australia, with the principal solicitor for the ACT Consumer Law Centre, Amy Kilpatrick, saying "I am now more of a house repossession service than I am a general credit legal service." Ms Kilpatrick said that about 70 per cent of the cases the centre sees involve non-banks, which are not regulated by the Reserve Bank of Australia or the Australian Prudential Regulation Authority.
The funds had gambled heavily on debt securities linked to sub-prime home loans -- high-risk loans made to people on low wages and incomplete credit histories
smh: Sub-prime crisis may trigger global meltdown
A LEADING Wall Street economist has warned of a possible global financial meltdown if the problems in the US sub-prime mortgage market claim more institutional scalps. Moody's Economy.com chief economist Mark Zandi said the pre-conditions for global shock were in place and "one or two more Bear Stearns events" could have a profound psychological impact on investor confidence. Bear Stearns, the fifth-largest securities firm in the US, shocked global markets during the week when it announced that two of its mortgage investment funds previously worth about $US1.5 billion had little or no value left in them.
Land Registry confirms the slow down
LandRegistry: House Price Index - June2007
"House price change in England and Wales remained positive for residential property transactions that completed in June 2007. The 0.4 per cent rate of monthly increase is slightly less than the previous month." slightly less!?... yes, it is 0.3% less than last month's growth, small difference? 0.3% less means HALF the growth of last month, dear land registry!!
Growth data still supportive
BBC: US economy sees stronger growth
Not all doom and gloom. I don't understand why some of you are wishing for a crash. That helps no-one. A slowdown would be rational and helpful, but a crash would lead to pain for everyone - even some of you. How would you ever afford a house if you lost your job?
Traders no longer believe "subprime" problems can be contained
FT: Subprime coming home to roost
The US housing market is looking increasing weak with the number of unsold properties reaching its highest level since the end of the nations last housing recession in 1992. Losses in high-risk lending known as subprime could reach $100bn according to estimates by the Federal Reserve. After a subprime market wobble earlier this year traders has satisfied themselves that the "subprime" problem was contained and a sense that risk could be contained by spreading the risk ensued, boosting markets. However, as with cyclic behaviour, optimism has faded and fears of a credit crunch due to subprime problems is forcing investors to sell healthy investments to cover their losses.
How can this cr@# be published
LSE: Buy-to-let 'helps out millions'
Dwindling supplies of social housing have helped boost the buy-to-let sector, according to a property expert. "buy-to-let helps fill the housing gap," Mr Terrington remarked. However, the article is right in pointing out the increasing 'non-profit' nature of the BTL. Thanks landlords :))
Volatility in UK and European equity markets remain after Asia and US stocks tumble
FT: Equity turbulence follows credit market sell-off
The FTSE 100 rapidly fell 0.9 soon after opening this moring but at the time of posting this blog has rallyed, up 0.18. David Buik at Cantor said, "With uncertainty prevailing on credit, markets are likely to see levels of volatility like this for many sessions to come, until the strength of losses from sub-prime level are known and whether they are containable”. Fears about an end to the levereged buy-out boom which had boosted share prices has created turmoil due to increasing difficulty in raising funding for takeovers and buy-outs. During Thursday trading London's blue chips experienced their largest sell-off in more than four years. "Bad news has been building for months and these worries have now come to a head”, said Ronan Carr, equity strategist at Morgan Stanley.
worlds beginning to collide
Firstrung: The credit crunch starts to bite
John Stepek - Moneyweek. Up until last week, global stock markets had been ignoring the carnage in the credit markets. Not anymore. Yesterday the FTSE 100 had its biggest single day points fall in five years. It dived more than 200 points - wiping out all the progress made since March. The FTSE 250 had the worst points fall in its history, slumping 382. And in the US, the Dow Jones Industrial Average lost more than 300 points - plunging by up to 440 points during the session.
France to become more Homeowner friendly
Homes worldside: french relocation helped by Sarkozy effect
New French president, Nicolas Sarkozy is making headway in supporting small businesses in France and helping people onto the property ladder...Nicolas has a raft of reforms that he is already putting in place to imrove the French economy and boost the 'pouvoir d'achat' (buying power). Nicolas would also like to see the number of home owners increase to match the rates in the UK. But how realistic is this French dream? The article is definitely VI, but hey, you can't blame the EAs for trying!
The credit crunch starts to bite
MoneyWeek: When 'buy and hold' simply doesn't work
Recent entrants into the BTL market say they don’t mind subsidising their tenant’s rental payments, because they’re “in it for the long-term.” But buy and hold is a flawed strategy if the asset you’re holding isn’t worth the price you paid for it. And it’s worse still if you are holding it using borrowed money. If you just sit on an overvalued asset, it’s only a matter of time before the market realises that it’s actually not worth what you paid for it, and marks it down accordingly. Then all you’re left with is a huge debt to service...
Scottish Widows have just returned from Mars
BBC: Graduates 'face housing struggle'
A groundbreaking survey by Scottish Widows suggests that graduates are finding it increasingly difficult to get onto the property ladder. Perhaps Scottish Widows should have extended their survey to anybody possessing a pulse that was trying to get onto the property ladder. Those Scottish Widows folks are sharp I tell you sharp.
Mr Brown's big brownies are about to hit the books
FT.com: Capital projects face funding cuts
Indirectly related to houseprices, but it looks like all that PFI "hidden debt" is about to resurface, hitting capital investment.. such as a plan to build all over the green belt? The move could see the government breaking one of Mr Brown’s two cherished rules for running the economy. But the sustainable investment rule is seen as increasingly discredited and both economists and the Conservatives have been urging a rewrite – something Mr Darling could use the accounting change to achieve with minimal political damage.
The Irish Titanic
BLOOMBERG: Investors flee Bank of Ireland, Allied Irish on Housing Slump
Investors are abandoning Irish stocks as rising interest rates hurt western Europe's fasting-growing economy of the pst decade.
Dixon Motor Holdings Limited calls in administrator
Yorkshire Post: Breaking: Dixon calls in administrator
The company was one of the UK's biggest and most successful motor retailers, with an £800m turnover, when it was bought in 2002 by the Lombard subsidiary of Royal Bank of Scotland.
IR rises to be put on hold for now
The Telegraph: World markets plunge as fears rise
"The dramatic falls also make it all but certain that the Bank of England's Monetary Policy Committee will opt to leave interest rates unchanged at its meeting next week, economists said."
More importantly is Japan's IR decision in August - will they hold off.
My guess is that stocks are heavily oversold in the short-term at least. Once stocks rally a bit then Japan may raise its IRs then. The carnage to start proper in the Autumn.
It s spreading fast
Times: AA-Saga merger under threat as banks fail to find additional underwriters
The writing was on the wall, the various Blackstone flotations, but I am surprised how quickly this is unwinding. There is a lot of hubris in private equity that tons of value can be created through financial engineering. Well, true also that there is a lot of dumb money around. All in all, I am glad some of these plugs will be pulled before irreversible damage is done. Some funds will have to return money to the investors. That's life. Better than having lost the investors' money.
Thursday, July 26, 2007
Stall!
BBC: UK house prices 'stall' in July
Greeting all; When my old Vauxhall Chevette used to "stall" it generally stopped and when it "stalled" going up a hill - such as UK houseprices -, it then used to roll backwards at alarming, uncontrollable rate!! Currently taking a sabbatical in South America but pop in regularly to keep up to date and read the amusing rants and opinions. Suggest the City could do with referencing this site for future economic predictions as they are slowly being uncovered as the muppets they really are... this is getting enjoyable!
Increased money supply is cause of house price rises
BBC News: World stocks fall on rate concern
"Over the past few years there has been a boom in company profits, house price increases, and mergers and acquisitions. Driving this have been low interest rates that have made it cheap for companies and consumers to borrow cash and finance purchases."
Ooops-a-daisy - but the experts told us sub-prime was contained
Telegraph: Stock markets' global sell-off
The FTSE 100 had its worst day since 2002 and US stocks suffered one of their worst openings this year as concerns about sub-prime lending and an impending credit crunch hit investors' appetite for risk. The Dow Jones Industrial Average opened down 121 points at 13,684 - its second worst performance out of the gate this year. By lunchtime in New York, the index had weakened further and was down 221.20 at 13569.70
This is how the Poles see the UK
Guardian: Why would you leave a place like Wroclaw?
This is interesting reading, especially the testimonies after the article. The views and ambitions of immigrant Poles and how they see our country.
Plenty of bleating going on - Nice of them to 'tell' the MPC too!
FT: MPC told to give rises time to bite
The Bank of England is in danger of raising rates too far because it is not allowing enough time for the full effect of previous rises to come though, says a respected economic think-tank. Arguing that this month’s quarter-point rate rise to 5.75 per cent “looks pretty unnecessary to us”, the National Institute of Economic and Social Research said on Thursday that some members of the Bank’s rate-setting monetary policy committee might be “overreacting”, especially if they were to vote for another rate rise this year.
The report also argued that the region was in much better shape than it was ahead of the financial crisis that hit Asia a decade ago and stressed that there is no reason at this stage to expect a sudden liquidity collapse
FT.com: ADB warns on unwinding of carry trade
East Asia’s financial markets are vulnerable to a sudden unwinding of yen-carry trades and withdrawal of the capital that has lifted many of the region’s currencies, according to the Asian Development Bank. In its latest semi-annual report, the bank warned Thursday that political and monetary authorities in the region, which last year witnessed a record $269bn in capital inflows, needed to forge ahead with measures to prepare for a sudden reversal. The bank’s recommendations ranged from greater currency flexibility to a further liberalisation of capital outflows and tighter financial market supervision.
If only....
Prime Location: House for sale
Ah, if only.... does this mean the housing crash is now well and truly here at long last? (You would need to register to see the full details of this house unfortunately, but to put it in a nutshell, primelocation has a house in Exeter listed for sale for £675. Sadly I think they've put it under the wrong part of the site, ie for sale rather than to rent, but never mind, I can dream!
Market reaction to housing news
Reuters: Sterling slips on signs UK housing mkt slowing
Sterling fell against the dollar and the euro on Thursday after a series of soft UK housing figures.
Would you like milk on your Credit Crunch sir?
BBC: Debt crisis hits Chrysler buyout
The recent volatility in global debt markets has thrown the funding for the buyout of Chrysler into disarray. Banks have failed to find buyers of loans worth $12bn (£5.8bn) to help Cerberus Capital Management buy DaimlerChrysler's loss-making US arm.
Let's uncork the Dom Perignon, the market has spoken
YahooFinance: B&B shares
B&B down 3.6% after claiming that BTL is in rude health. Northern Rock down a staggering 4.8% and HBOS down 2.51%
She canna take any more, Captain!
Bloomberg: Yen Advances After Equity Declines Prompt Carry Trade Unwinding
The yen rose against all 16 of the most actively traded currencies as global equities fell and traders bought back yen used to finance investments in other countries.
She's holed below the waterline, Sir! The ship's going down.
Bloomberg: U.S. Stocks Decline on Credit Concerns; Exxon, Builders Fall
U.S. stocks tumbled as concern about loan defaults increased, investors balked at funding takeovers and companies including Exxon Mobil Corp. reported earnings that missed analysts' estimates.
Do they know something we don't?
Yahoo: Land Securities £253m shopping centre sale
Now it may be a purely good business reason to sell, but could they know something we don't and want to offload this? Before the SH** hits the fan?
July: the tipping point
FT.com: House price rises slow to 15-month low
"House price growth stalled in July, bringing annual price growth down to single digits and resuming an underlying downward trend..." So, if prices rose only 0.1% this month, and the growth rate is resuming it's downward trend, that means that next month we will get what? Correct, 'negative price growth'...
Interesting news from the Irish!!
Independent Ireland: House prices plummet by up to €10,000 every month
The value of average priced homes in some areas of the country is plummeting by €10,000 each month. Estate agents last night confirmed that - despite recent concessions for first time buyers - there has been an alarming drop in house and apartment prices across the country over the past three months.
London House Market - Risks & Rewards
Bloomberg: Home Craze Gazumps London With Record Prices, $500,000 Parking
The decade-long leap in prices has made London the most expensive city in the world for high-end homes -- costlier per square foot than Monaco, New York, Hong Kong or Tokyo.
Prof. Besley speaks out
Times: Hardliner is prepared to be unpopular
“I think we have done the right thing. We have been raising rates against a backdrop that repeatedly justifies what we have been doing.”
Buy to Let set to out perform broader mortgage market according to B&B
BBC: B&B upbeat on buy-to-let outlook
The UK's biggest lender to the BTL sector Bradford & Bingley believe the BTL sector will outperform the broader mortgage market in the second half of the year. The bank said, "continue to outperform the mainstream market in the second half and beyond, as the supporting demographics continue to drive demand over the medium-term".
Great news for savers!
Mail: Fixed rate savings nudging 7%
... and bad news for borrowers
Dramatic slowdown in mortgage approvals for house purchase
Firstrung: Mortgage approvals for house purchase down 11% compared to 2006
"Although the trend in net mortgage lending is being maintained, approval numbers for house purchase are well down on this time last year, suggesting that market demand may be reacting to higher mortgage costs. Spending on credit cards was lower than at the same time last year, reflecting weaker retail sales but the reducing appetite for unsecured borrowing continues the pattern seen over the last two years."
Almost there
The Telegraph: Bank risks 'overkill' after house prices stall
Prices edged up just 0.1pc this month, down from 1.1pc in June
creeping unstablisation
CNN: Prime borrowers catching subprime ills
second lien loans are bieng cut back. buyers who originally paid over the odds for the house are stuck with aproblem are are starting to default on second lien taken out to make up difference.
Cracking interview about the credut crunch
BBC: Today Programme
For anyone who missed it, at 6:15 this morning, (half way through this clip) there was an excellent interview on the Today programme where the speaker set out the developing credit crunch. The important point is that banks can't sett their loans to the markets. If they can't sell the loans uickly, it slows down the cycle of "rinse and repeat", where they keep loaning out the same money again and again. That makes it harder for people to get mortgages, which is likely to weigh on the market. Caveat on this link as I can't get in to work here and I know the BBC have been having issues with their listen again.
Even the building societies are starting to admit it
The Times: House prices show significant slowdown
House prices have grown just 0.1 per cent this month, their slowest growth rate for 15 months and the latest evidence the market has stalled, according to the number-one building society lender the Nationwide. Steep rises in utility prices have also stretched household finances. Nationwide has been predicting that over the full year house prices could rise by as little as 5 per cent.
Somewhere between bull and bear
Every Investor: Better to rent your home than to buy it?
OK, there is no sign of a housing crash in the UK at present, but the simple fact is that house prices cannot continue to rise faster than earnings indefinitely. buying a property should be an investment decision based on a careful assessment of both the rewards and the risks. In many areas and for many types of property, buying will still work out cheaper than renting, and this is especially true for family houses outside Greater London. But for flats aimed at first-time buyers, the numbers will often point to renting as the sounder financial decision.
BBC resorts to sentiments and anecdotes to cover up bad US housing stats
BBC "News": "US growth outweighs housing slump"
This is the metaphorical equivalent of putting icing on a dump and then polishing it to a high shin and calling it gold. The BBC gives it a cheery enough title but when you read the short article (which thankfully the journalism graduate editor didn't have the balls to try to post on the front page), it smells really really bad. "It reported that consumer prices had been growing at a moderate rate as oil and gasoline prices rose. The report said that businesses were having mixed success in passing on their higher costs to consumers." Ouch. That's bad.
Hopefully, the only direction now is down...
BBC News: UK house prices 'stall' in July
House price growth in the UK "stalled" during July, suggesting that higher interest rates are starting to bite, the Nationwide has said.
Wednesday, July 25, 2007
Sensible talk... housing is overvalued, it gotta be written down and then we can go on with our lives
FoxNews: Burtsting the housing bubble (webcast)
Is the housing boom like the dot.com bubble? Yes, just make it burst and go on with life (and get rid of BTLers)
The move follows estimates the fund would fall in value by up to 6 per cent in July, following widespread re-pricing of sub-investment grade debt.
smh: Sydney hedge fund freezes withdrawals to prevent run
SYDNEY hedge fund Absolute Capital has frozen investor redemptions from its $210 million Yield Strategies fund, blaming debt markets that have "ceased to operate normally".The move follows estimates the fund would fall in value by up to 6 per cent in July, following widespread re-pricing of sub-investment grade debt.The market value of these debts has been hit hard, following credit rating downgrades related to defaults from the US sub-prime home loan markets.
Interest rates in NZ up again to eye-watering 8.25%
Stuff.co.nz: NZ lifts rates again
The relentless rise in NZ rates continues, as the country is caught in an inflationary spiral. The Central Bank blames (rightly) the housing market and is making its mission the demise of HPI.
What is it all about?
Cold Hard Flash: Flash Animated Philosophy From South Park Creators
Click on "Life and music" (the rest is a little dubious)
Cheap labour drying up?
Financial Times: Germany looks east as skills shortage bites
"Germany’s ban on workers from new European Union member states, imposed at the time of EU enlargement in May 2004, may be eased next year, a labour ministry spokeswoman said on Wednesday." Landlord - looks like your Polish tenants are going home, Germanys only next door and it holds much better economic prospects than the UK. Oh the property is much, much cheaper than the UK, rent is kept low by law and house prices haven't risen in real terms since I was last there when the wall fell down. Want some more!! Well interest rates are lower, its got good hospitals and schools and the streets aren't full of chavs and naive property developer's.
Corprorate debt dries up, what next for BTL
ft.com: Debt problems may signal end of buy-out boom
Equity and debt markets in the US and Europe faced the clearest signs yet of a credit crunch on Wednesday when it emerged that financing for two of the largest current leveraged buy-outs had struck significant difficulties. In Europe, bankers leading the £9bn debt financing for Alliance Boots, the largest buy-out in UK history, threw in the towel on trying to place £5bn in senior loans and sold more junior debt at far bigger discounts than expected, leaving themselves with losses. Credit crunch! here comes the housing depression of 2010 and beyond.
Sorry david20040_0
Bllomberg: Oil Rises After Report Shows Third Straight Weekly Supply Drop
July 25 (Bloomberg) -- Crude oil rose the most in more than nine weeks in New York after the U.S. government reported a third straight weekly decline in oil inventories and increased refinery operations. The BBC should just report facts, and not try to speculate........
CBI asks Bank of England to hold off interest rate rise after sharp fall in factory orders
The Guardian: CBI asks Bank of England to hold off interest rate rise after sharp fall in factory orders
Britain's leading employers' organisation urged the Bank of England yesterday to put further interest rate increases on hold after its latest snapshot of manufacturing showed rising interest rates and higher energy costs putting the brakes on industry's expansion.
The alternate universe of London property
Bloomberg: Home Craze Gazumps London With Record Prices, $500,000 Parking
Good article from Bloomberg on the giddy London property market with some interesting insight into everyone's favourite estate agent, Foxtons. For me this has a real fin de siecle feel - just when the party seems like it will never end, dawn breaks and economic reality gatecrashes.
Min wage goes up in London drops for rest of UK
BBC: Minimum wage to be reduced
The minimum wage is set at £5.35 across the UK, however, if the plans go ahead it will be reduced in NI, Scotland, Wales and the north east of England. THIS WILL LEAD TO BIGGER PRICE DIFFERENCES BETWEEN LONDON AND THE REST OF THE UK
Oil soon to under $70 reducing inflation
BBC: Oil prices fall on stocks hope
Oil prices have fallen for the fourth day, ahead of US data that is tipped to show a rise in petrol stocks.
Humanitarian benefactors to rescue UK house market
Tgraph: The flash way to avoid repossession
"When financial difficulties strike, the last thing on anyone's mind would be selling the family home at a discount. For some, though, there is no option. Faced with repossession and the corresponding costly black mark on their credit rating, growing numbers of homeowners are turning to a new group of so-called "flash sale" property companies"
Couple claim victory in tax case
BBC: Couple claim victory in tax case
Maybe instead of HMRC wasting tax payers money chasing genuine small businesses through the courts, they will end this dogmatic and obsessive witch hunt and focus more on the buy-to-let tax dodgers who are easier to catch.
... and if a lender says that to the financial community, it is for real
Mail: House prices 'poised for sudden slowdown'
"Northern Rock said that house prices, which last month showed annual increases of just over 10%, could be rising at the same level as wages by the year-end, which would mean by as little as 4%."... the "just over 10%" shouws the level of madness and delusion in the market... "just 10%"... and risk-free, yes, money grows on trees and a pigs fly in the sky!
Countrywide slashes subprime lending - now accounts for just 4% of new loans
Firstrung: The subprime crisis hits the mainstream
John Stepek - Moneyweek. We weren't planning to return to the credit crunch so soon. But when the Dow Jones falls 226 points in a single session, and the FTSE 100 sheds 125 points on the same day, you can't let it pass without comment. We've been talking about the subprime crisis, and how the ill effects wouldn't be confined to the poor and desperate (as many had hoped), for a while now. And the latest slump in the markets has come about because one of the big US lenders has finally confirmed we're no longer looking at just a subprime crisis.
US subprime mortgage collapse is spreading to wider markets
MoneyWeek: The subprime crisis hits the mainstream
The latest market slump has come about because one of the big US lenders finally confirmed we’re no longer looking at just a subprime crisis. We‘re looking at a crisis, full-stop…
Following yesterday's 'It's Great Commuting' article - It's about to get 'Not So Great!'...and this will feed into inflation to boot!
Telegraph: Rail improvements will cost passengers billions
Passengers have been handed a multi-billion pound bill to help pay for what the Government hailed as "the most ambitious strategy for growth on the railways for 50 years". As Ruth Kelly, the new Transport Secretary, unveiled a series of improvements designed to improve reliability and ease overcrowding, it emerged that about half the additional cost is likely to come from fare increases.
Yadayadayadayadayadayada!
Telegraph: Buy-to-let repossessed
The emperor is naked! "Birmingham Midshires is the latest lender to trumpet the buy-to-let market. It claims the average return for a landlord was 13 per cent over the past year and argues that the fundamentals underpinning the buy-to-let market remain strong. But the survey disguises the harsh reality that properties are being repossessed less than two years after first-time landlords made their foray into the buy-to-let arena and that some new-build flats have plummeted in value by 30 per cent."
Could the floods trigger an earlier rate rise?
Telegraph: Price of milk and food set to soar
Whilst achnowledging the human suffering and not wishing to be insensitive, there are economic implications to the flood. Food prices already under pressure to soar from supply problems with damaged product and supply chain. Service industry prices, e.g. plumbing, along with construction also set to surge from flood demand. If the inflation issue was on a kife's edge, could this push us over the edge? Could this, combined with stretched households tip the housing market over the edge? If HIPS could be blamed for destabalising the housing market, then why not the biggest flood in modern history?
Deep in the "other news" section, BBC hides the elephant in the US living room
BBC "News": Housing woes hit US share markets
The news from the US is bad and getting worse as the subprime issue moves beyond subprime and begins to affect the rest of the economy. Coming soon to a UK shore near you.
Short, sharp and to the point... Sir Landlord, post this on your site!!
BusinessDay: A housing perspective
Quote a couple of uncontentious figures, connect two dots... the London housing market can only go in one direction: DOWN
Interesting reading in the Gordian
TheGordian: Everyone is entitled to a stake in the nation's soil and bricks
"Cooper will urge councils to use their 2006 powers to stop the buy-to-leave-empty market, where investors find the value grows more by leaving property pristine, so whole blocks are sometimes built, sold and left. She will urge councils to chase owners of any property empty for more than six months and not on the market. What of buy-to-let? There is nothing wrong with landlords renting out, since it still houses people. But the rush to use housing as investment has inflated prices. (A whole Doncaster street was bought with one City bonus.) Will Cooper stop the unfair tax incentive that lets landlords charge their mortgages against profits? That, says the government cryptically, is a matter for the budget, but it should be done in order to cool speculation."
Tuesday, July 24, 2007
713,000 NI numbers given to foreigners last year
BBC News: UK gets 2.5m new foreign workers
"The 713,000 figure for the latest year is more than double the 349,000 National Insurance numbers allocated to overseas nationals in the year to April 2003. " It's no wonder that buy to letters are cashing in on the rising demand for rented accommodation with so many arriving each year (over 2000 a day, plus dependants). Where will it all end? There are nowhere near this many houses being built each year.
Largest US mortgage lender rocks credit markets as high-risk "subprime" problems spread to its "prime" loan book
The Times: Countrywide warns on profits and 'prime' loans
Looks like the contagion is escaping.... "Countrywide Financial sent shockwaves across the credit industry today when America’s largest mortgage lender declared that the well-publicised problems with its high-risk "subprime" homeloans had spread to its "prime" loan book and issued a profits warning for the year. "
The skydiving hedge funds just pulled the CDO rip-chord and nothing came out but confetti.
Information Clearing House: Trouble in Hedgistan
Y’see, the hedge fund industry is based on the bizarre notion that one does not have to produce anything of value to make boatloads of money. You don’t even need assets any more---just a risky loan that can be transformed into an investment grade security through the magic of “securitization” a sprinkling of Wall Street snake oil. It’s like taking shards of bottle-glass and selling it as the Hope Diamond. Who’s gonna notice? The only catch is that--now that these toxic CDOs are going to auction--there are no bids. That’s a bad thing. “No bids” means that $1.4 trillion of shaky investments have no discernable market-value. The CDOs were graded “mark to model” which translates into “mark to fantasy”. It means that the investment bankers and hedge fund managers got together over Martinis
Houses 'account for 60pc of the UK's wealth'
Telegraph: Houses 'account for 60pc of the UK's wealth'
Houses now make up three fifths of Britain's wealth, the highest proportion recorded, according to the latest official figures, demonstrating our increasing reliance on the value of our properties. Who needs manufacturing anyway!
60% of UK wealth is tied up in homes
The Guardian: 60% of UK wealth is tied up in homes
The increasing dominance of the housing market in the British economy was revealed yesterday when the government released figures showing that 60% of the country's £6.5 trillion wealth was now tied up in property.
Would more dispersed industry lower house prices?
Telegraph: Commuting: the real cost
Exclusive research shows how every minute on the train cuts £1,000 off the average house price. That's why Londoners seeking quality of life are travelling further than ever, writes Caroline McGhie
Earn 6.75%!!!
Tesco Finance: Tesco high interest savings account
If you've got a spare 50K Kicking about earn 6.75% with tesco but hurry the offer closes on 14/8/07. The rate includes a 1% bonus for the first 6 months so you'll have to move some where else in six months but there'll be even better rates then and possible house price deflation resulting in even more yield when you pick up a bargain repo in 2010. Landlord - it beats BTL yield!
C&G insist they're still keeping their heads above water, as floods cause branches to close.
mortgagestrategy: Industry hit by floods
Cheltenham & Gloucester have had to close 12 of its branches after they were left under water, but, bless 'em they're still convinced "this disaster will not have an affect on house prices in the area."
Feeling the pain - watch the hospitality and tourism sectors
Bloomberg: Expedia scales back
Expedia Inc.'s decision to scale back a share repurchase by almost 80 percent underscores the threat that tighter credit poses for the U.S. stock market. The world's largest online travel agency, chaired by billionaire Barry Diller, abandoned a plan announced last month to borrow $3.5 billion and use the money to buy back 42 percent of its stock. Instead, the Bellevue, Washington-based company will spend no more than $750 million for a 9 percent stake.
How worried should we be about the rising cost of living
BBC: The cost of living
Radio 4 listener Adam Potter meets with the governor of the Bank of England Mervyn King in attempt to understand the role of the MPC in setting interest rates. In the interview King states that he would like housing costs to be included in the inflation measure. The podcast includes some input from Bootle and his view on the direction of interest rates. Excess money supply is discussed and comments are made that the BoE take little notice of money supply. WARNING. The program starts about 1 and half minutes into the podcast so be patient! For those on a slower link the program transcript (pdf) is here: http://news.bbc.co.uk/1/shared/spl/hi/programmes/inside_money/transcripts/07_07_21.pdf
Have the showers started - where are the sand bags?
Money Week: MPC hawk argues ‘a stitch in time...’
The UK money supply has now swollen by £1.03 trillion since June 2002. That's a greater expansion in cash and credit than the previous 15 years put together. You've only got yourself to blame, gentle reader. You shouldn't have borrowed and spent so much.
Brown uses taxpayers money to prop up property market
The Times: 8bn promise for low cost housing means its boom time for builders
Apparently Brown has decided to increase the use of tax payers money to support absurdly high house prices though the dreaded 'shared equity scheme'. Incompetent or cynical ?
No chance of flipping in those remote hills anymore
Firstrung: House prices in Scotland rose by just 0.6% in Q2 2007
Please excuse the weak pun matching the image =;¬) House prices in Scotland rose by just 0.6% in Q2 2007, one of the smallest quarterly price rises in the UK. This brings the average price of a house in Scotland is currently £140,262 - 29% less than the UK average of £196,525.