August 2007 Archive
Thursday, August 30, 2007 
Sssshh Its supposed to be a secret
Financial Times: Bank warns emergency borrowers
Naughty, naughty, the Bank of England reminds financial institutions authorised to use its emergency lending facility that they are not supposed to discuss it publicly.
Everyone was Right It Was Barclays
Times: Barclays forced to arrange £1.6bn BoE emergency loan
Apparently 'Barclays said that a technical glitch with the market settlement system forced it to turn to the central bank for funds'.
Mortgage revelations continue
FT.com: Freddie Mac profits plunge
Freddie Mac, the US home mortgage lender, on Thursday reported a 45 per cent plunge in second-quarter profits as it was hit by a $320m loss on new mortgages.
But the article talks mostly of stability
FT.com: Outlook uncertain for housing
The British housing market has not yet shown any of the fragility of the US market. In a report on Thursday, David Miles of Morgan Stanley argued that the risk of falling prices in the UK was “material” but the market knock-on effects would be much lower as European lenders have not engaged in subprime loans on anything like the US scale.
Will interest rates be cut by FED?
BBC: US economy receives growth boost
Can FED cut interest rates on much anticipated 18 Sep meeting. I don't think so if economy is growing above normal drop in interest rate will lead to fall in dollar and also stagflation.
Why bother when you're in it for capital growth
Firstrung: Buy to let landlords fail to register with tenancy deposit scheme
The National Landlords Association reports that the majority of landlords have yet to register with a government-approved tenancy deposit scheme...Whist it is estimated that around 150,000 landlords have made the move to register with a scheme, it is clear that a large majority have yet to do so. Given the new legislation has been in place for almost five months, the number of landlords who have yet to register with a scheme could be a cause for concern. While landlords with tenancies that started before the scheme was launched on 6 April do not need to protect deposits until a new tenancy is created, there may be other, more worrying, reasons for the relatively slow take-up.
The party is over
Firstrung: High Street Home Loans has increased its fixed rates by one per cent
Committed to the sub-prime market, the specialist lender held its rates for as long as possible, but with credit markets tightening, it has ultimately had to revise its product range. High Street Home Loans has, however, promised to honour the £250 million of existing pipeline business with its intermediary partners...
It won't be pretty folks
The Kingsland Report: Home Price Decline to Accelerate - Count On It
It won't be pretty folks. If Goldman and Shilling are right, and historically housing bubbles have always deflated back to about where they started, consumer spending will die out and we'll see a recession by early next year.
Rose-tinted glasses of an ex-MPC member.
Telegraph Online: Business profile: MPC 'institutionally on the side of higher rates'
Stephen Nickell isn't a noshbag and, since departing the MPC, has been running the National Housing and Planning Advice Unit for Groondon Broone. Basing his theory on supply and demand, houses prices will eventually reach 10x average salary and there won't be a recession. Rather scary for a bloke who used to sit on the MPC. Provided as the alternative view.
Balance sheets are not in good shape
FT.com: Balance sheets are not in good shape
Just like the glib comments people make about the actual UK economy itself. On the surface all looks good. However, off-balance sheet .....
No easy credit no houseprice boom
Bloomberg.com: Britain's Housing Lenders Tighten Subprime Credit
U.K. lenders responsible for 12 percent of the nation's mortgages are tightening standards for loans on house purchases.
Bankers have been playing an elaborate game of pass-the-parcel and the music has finally stopped
TimesOnline: Disasters, not Masters, of the Universe
This is an extremely insightful "tell it how it looks" which suggests sub-prime and associated credit crunch has been caused by a kind of blinkered pass-the-parcel game where debts have been sold, repacked, sold .... Those holding the parcel at its different stages in life all thought they were smart enough to predict when the music would stop. Worth a read this one and appears to be very much inline with what many outside of the finance industry view as farce.
House Prices Fall By £65 Per Day
The Birmingham Post: Average house price falls
More than £2,000 was knocked off the price of an average house in the Midlands last month amid growing signs of a property slowdown. The value of the average property fell from £153,036 in June to £150,915 in July according to figures released by the Land Registry yesterday. The region was one of only three areas which experienced a downturn last month and contributed to the lowest national increase for more than a year.
No more cheap money to sustain the housing boom
MoneyWeek: Is UK housing set to follow the US into a slump?
House price rises in the UK appear to be finally slowing down. And with the cheap credit fountain that has sustained the housing boom shut down for the foreseeable future, the market looks set to weaken further.
Continuing cracks in the system?
FT.com: Sterling falls on BoE emergency lending
Sterling lost ground on Thursday after the Bank of England revealed it had lent £1.6bn through its standing facility to an unnamed borrower, sparking renewed fears over liquidity in the wake of the recent turmoil on credit markets.
Winter of discontent on the horizon?
BBC News: Brown's prisons pay deal warning
Gordon Brown has warned prison officers that delaying part of this year's public sector pay rise was "an essential part" of tackling inflation.
BBC reports some bearish news.
BBC News: 'Clear signs' of housing slowdown
There are now "clearer signs" that demand in the housing market has slowed, according to the latest property survey from the Nationwide. Average UK house prices rose 0.6% in August from July, just above market expectations of a 0.5% gain, it found. But taken on an annual basis, the Nationwide said house price inflation fell to 9.6% from 9.9% in July, the slowest annual rate since March. The Nationwide added that it still expected house price growth for 2007 as a whole to slow to between 5% and 8%. Earlier this month, the Halifax also said that the housing market appeared to be slowing, as did the Land Registry on Wednesday.
Loads A Money Lifts Market!
New York Times: Stocks Rally as Investors Chase Deals
Well it has worked so far......... and the soothing words that he will do all necessary to limit damage. Yet then the other post that seems to tell a different story. It seems that stocks will now rise again as markets are soothed by the kind words and money of the Fed.
Mmm... Now Looking For Credibility
New York Times: Fed Not Rushing to Bail Out Investors With Rate Cut: Report
So we have poured money in the system - which is now bouncing the market back at an alarming rate and he wants to show that he will not save asset prices???? Is this for real.
New builds not as brilliant as the sales pitch makes out
Guardian: Call to protect new homebuyers
People have more rights when they buy a kettle than a new home. Many homebuyers receive poor after-sales care and the average new home has 100 problems which need fixing. No surprise then that around 29% of new-build property developments are now deemed to be of poor quality and only a quarter of buyers would recommend their house builder to a friend.
Housing Supply
MSN.com: Do we need more houses?
Certainly a lot of astute sense set out in this article, both anti-myths and pro-facts.
Australian, N.Z. Dollars Fall; Bankrupt Fund Deters Carry Trade
bloomberg.com: Despite its small population, Australia is regarded as the hedge fund capital of Asia. ... high-risk investment,
The two favorites for the so-called carry trade have suffered the biggest loss of the 16 most-active currencies in the past month as the U.S. housing crisis sent equity markets lower and eroded demand for riskier investments. Basis Capital Fund Management Ltd. reignited credit concerns after it sought to liquidate the assets of its Basis Yield Alpha Fund. `Another hedge fund causes a sell-off in Aussie and kiwi,'' said Charles Wiggins, senior dealer at Custom House Global Foreign Exchange in Sydney, referring to the currencies by their nicknames. ``These funds are coming out of the woodwork and you have so many of them, no one is really sure how much exposure to the subprime market is out there.''
Out-of-pocket living costs for Australia's 4.5 million working households rose by 3.1 per cent over the past year, well above the broader consumer price index which rose just 2.1 per cent.
smh.com.au: Rate rise eats into family budgets
"This data is yet more evidence that Mr Howard has fallen deeply out of touch with the realities of many household budgets," he said. The series of "Analytical Living Cost Indexes" released yesterday by the bureau show payments by working households to financial institutions - through interest on mortgage payments and insurance premiums - rose by 11.4 per cent last financial year. "This is attributable to the combined impact of increases in debt and higher interest rates," the bureau said.
The Fraud Element of HPI?
Times online: Police launch inquiry into suspected mortgage fraud gangs
Or as Jimmy2times so succinctly puts it 'the tip of the sh1tberg'!? I think the article speaks for itself really: From The TimesAugust 30, 2007 Police launch inquiry into suspected mortgage fraud gangsElizabeth Colman and Gr�inne Gilmore Detectives are investigating mortgage fraud rackets after lenders alerted City of London Police to an “unusually high” number of defaults on commercial and residential property loans over the past six months. The reports have led the police to believe that criminal gangs, working with corrupt valuers and solicitors, are obtaining several mortgages at a time to build commercial property portfolios worth millions of pounds.
Wednesday, August 29, 2007
In New Zealand subrrime is run by finance companies - and they are dropping like flies
stuff.co.nz: Five star finance collapse
The NZ housing bubble has been helped along by lending from so-called finance companies (effectively subprime lenders). They are starting to fall like flies (3 in 10 days) - when they pop they also take debenture holders money with them too (Mum and Dad investors). Financing for spec. builders, flippers, BTLs is alll evaporating here in NZ.........
Brown's been spouting the brown again
FT: Setback to Brown's housing targets
Remember this bold initiative a few months ago in response to the protests at the Labour Party Conference? Well actually there won't be that all-smiles Brown ribbon-snipping ceremony in the nasty towerblock-of-the-future Thamesmeade development the year after next because it's being successfully bamboozled by vaguely-cited "independent inspectors".
Meltdown: Mattel's China syndrome
smh: THE alarm bell sounded just as Mattel was preparing to announce it would recall 1.5 million Chinese-made toys tainted with lead paint.
THE alarm bell sounded just as Mattel was preparing to announce it would recall 1.5 million Chinese-made toys tainted with lead paint. Surrounded by boxes of Barbies, Hot Wheels cars and other sample toys, Tom Debrowski, Mattel's executive vice-president for worldwide operations, was leading a tense, early-morning telephone conference with his team in Hong Kong, where it was 9pm. At the time, Mr Debrowski recalls, Mattel thought it was dealing with, at most, "a single failure, from a single vendor who made a big mistake".
Liquidity strapped banks and asset managers ditching 'investments'
Financial Times: SIVs set for $43bn asset ‘firesales’
Mounting liquidity crisis could force “firesales” of as much as $43bn in assets, according to an analysis by the Royal Bank of Scotland.
0.1%rise, any last takers for the the rollercoaster of doom!
Financial Times: House prices falter after rate rises
House prices barely rose in July across England and Wales, the Land Registry said on Wednesday, completing the picture of a slowing housing market after a resilient start to the year.
More inflation?
NY Times: Wages Up in China as Young Workers Grow Scarce
Higher wages in China are likely to lead to higher prices in the United States — at the mall, at the grocery, even at the gas pump
Could the US open a third war?
The Raw Story: US preparing 'massive' military attack against Iran
The paper, "Considering a war with Iran: A discussion paper on WMD in the Middle East" – written by well-respected British scholar and arms expert Dr. Dan Plesch, Director of the Centre for International Studies and Diplomacy of the School of Oriental and African Studies (SOAS) at the University of London, and Martin Butcher, a former Director of the British American Security Information Council (BASIC) and former adviser to the Foreign Affairs Committee of the European Parliament – was exclusively provided to RAW STORY late Friday under embargo.
The figures paint a bleak picture of low-income renters, confirming they are worst hit by the housing affordability problem.
age: Parents in mortgage stress soar
The number of families with children struggling with higher mortgage repayments has almost doubled in five years, census figures show. Almost half of all households below the median household income of about $53,000 are in rental stress. The Australian Bureau of Statistics has released a breakdown of the latest census figures showing a million households to be in housing stress — where more than 30 per cent of gross income is spent on rent or mortgage repayments
"It's massive. It's basically a daily thing that we are hearing about," the service's Patrick Ewin said
age: Tenants given 30 minutes to move out
Tenants are increasingly falling victim to their landlord's mortgage problems, and some are being given as little as 30 minutes to vacate properties repossessed by home loan providers. The Western Sydney Tenants' Service says it has seen a fivefold increase in renters receiving possession notices over the past three months.
Relentless denial persists at the Times
Times Online: Could contagion from the US finally kill off the boom?
The Times analyst Gabrial Rozenberg tries to convince himself and everyone else too that the UK market isn't headed for a crash like the USA because "Britain’s market will be cushioned by supply conditions" which are tighter than in the US, apparently. Ireland's definitely going to crash he notes at the end of the article - but the UK's doing just fine!!! Yep, no HPC in Britain! Nothing to see here, move along now... Funny the way everyone is trying to find some reason why the housing boom in their country is going to be the exception to the worldwide credit crunch.
Well, who'd a-thunk-it?
Bloomberg Opinion: Global Credit Crunch Will Dent London's Economy:
Some good points but a real misunderstanding of the real issues here. While Mr Lynn,s cursory analysis does well to show how London's prosperity in the last 5 years (arguably 10 years) has been tied to the whims of esoteric financial tides , I fear that his analysis is childlike in its shallowness. He fails to link the very motor of the UK economy to availability of cheap money. This spigot just got turned on and off a few times in a week and revealed the true weakness in our illusory edifice.
Only extreme optimists should buy to let
MoneyWeek: Only extreme optimists should buy to let
One optimistic interpretation of the recent stockmarket turmoil is that it’s good news for the property market. Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, told The Independent that people “who were thinking of dipping their toe into the equity market may now be tempted to forget about stocks and buy to let instead”. But anyone who does has clearly forgotten that is was property that got us into this mess in the first place.
The 'Waterbed' effect - The banks want their money back!
Telegraph: Credit card firms turn fee losses into charges
Credit card companies are imposing new charges to protect profits after a consumer watchdog forced them to reduce other fees. Last year, the Office of Fair Trading (OFT) ordered credit card providers to halve penalty fees, by setting a maximum charge of £12. Since then, the consumer group Which? has found that the range of other fees and charges levied on credit cards has "notably increased".
Food prices will rise !
The Times Online: Meat prices rise as East turns West for food
Consumers are likely to be hit by price rises for meat and dairy products as the Far East competes with the West for stocks, market analysts claim. Farmers are facing increasing costs for livestock feed and the supermarkets will, sooner or later, pass the increases on to the consumer, according to Deloitte & Touche LLP. Yeh, let's put interest rates down. Noone eats anymore - that's so last year, daaaling.
Murder on the dancefloor
Firstrung: Pink Home Loans witness unprecedented mortgage product withdrawal over past 12 weeks
Pink Home Loans recently emailed brokers to warn them that 'turnaround times' have been hit by the frequent pricing and criteria changes made over the last couple of weeks by lenders...The packager says it has seen an unprecedented 67 product withdrawals in just a 12 week period across its sub-prime lender panel. It also says lenders are giving "unrealistic deadlines" for intermediaries to submit cases when they make changes to their offerings.
We were right - Smith was wrong
The Telegraph: US housing crash reminds us we're due a correction
Over the next year or two, we will hear in the following order the C word, the R word, the D word, and the G word.
The warning follows recalls of Chinese-made toys and blankets in New Zealand and the announcement of an investigation by the consumer affairs ministry into allegations children's clothes made in China have been tainted with the chemical formaldehyde
bloomberg.com: New Zealand Issues Warning Against Poison in Chinese Toothpaste
New Zealand's health ministry warned consumers against using 11 brands of Chinese-made toothpaste after they were found to contain the poison diethylene glycol, an ingredient used in antifreeze.
Well maybe time to paralyze the Oil
BBC: Bush warns Iran over insurgents
As everyone knows, Oil is bought in Dollars. So if Iran supply is catastropihically disabled. Then prices will shoot, as for inflation.. Who cares.. It's all about self preservation as Iraq is turning out to be the US's Afghanistan. Relationship to the housing market, well with everything going up, meat, wheat, etc. Nikkei down, cofidence lost in the markets, misinformation. You would think Goebbels was still alive. This follow something I read regarding a catastropy, no catastrophy, like everything with this regime in the US, planned and premiditated.
Tuesday, August 28, 2007
Climate of distrust claims more wall street victims
BBC News Online: Stock markets suffer fresh falls
Merrill Lynch tells clients not to buy shares in Bear Stearns, Lehman Brothers and Citigroup and shares in US bank State Street fell on newspaper reports that the money manager is exposed to bad debt.
US property slump now beyond denial
Times Online: US house prices fall worst for 20 years
Those who have been following US house price blogs will not be surprised by this. How long will we have to wait before we are reading similar headline about the UK? I give it about 2 years yet.
subprime woes wont go away
times online: credit crisis claims wall street casualties
Subprime "OLD NEWS" I dont think so
China cannot save us this time!!
Reuters: Meat prices set to rise as feed costs soar
Deloitte said many livestock producers were facing almost 100 percent price rises in feed costs
Possibilities of what lies ahead
kitco: Serious Credit Collapse Could Strengthen Dollar and Hit Gold
How this crisis might play out
Mystery trader bets on huge downturn
prisonplanet: Market Crash Forecast Suggests New 9/11
A mystery trader risks losing around $1 billion dollars after placing 245,000 put options on the Dow Jones Eurostoxx 50 index, leading many analysts to speculate that a stock market crash preceded by a new 9/11 style catastrophe could take place within the next month.
Such a cataclysmic jolt could only happen as a result of two factors, China dumping its vast dollar reserves in reaction to the sub-prime mortgage collapse, which it has threatened to do, or a massive terror attack on the same scale or larger than 9/11.
Stuff the stock markets, rescue the bees instead
CNN: As bees go missing, a $9.3B crisis lurks
Could this spark high inflation then high interest resulting in property prices crashing all because of a little bee
Record Drop:this only ever going one way
The Street: Record Drop in Home Prices
Either like the Chess Grandmaster you knock over the king now, or like the beginner do you need to follow through every single pre-ordained move until the end? The UK is next. It may even overtake the US on the way down.
isnt this the bank that nearly when down?
yahoo: Deutsche Bank Americas chief says crisis starting to end
read this article, then you will know what BS this guy is talking, trying to get markets back up?? so they can bail out maybe?? read this link too (Subprime fallout heightens global rate doubts) http://uk.biz.yahoo.com/28082007/325/subprime-fallout-heightens-global-rate-doubts.html
Mortgage lending Falls
The Daily Mail: Property market cools as mortgage lending falls to lowest level for three months
The number of people taking out a mortgage to buy a house fallen to its lowest level in three months in a further sign the property market may be cooling.
Households, the credit crunch and interest rates.
www.thisismoney.co.uk: Households hurt by crunch
Great article by Deutsch Bank Chief UK economist George Buckley. Reasons the view that banks will want to be paid more when they lend money to their counterparts to compensate for the 'riskier' environment.. The article states that if banks can only get money at a premium then they will likely pass on the extra cost to us!
Builder resorts to eBay
Idaho Business Review: You have been outbid on the item New Home in Meridian, Idaho
What does it say about the housing market in Idaho when Corey Barton puts its houses on eBay? Courtesy of PrudentBear.com, just the press release, plus a few neat comments.
Hopes of sustained rally subside as Wall Street and ECB balk
The Times: Business News Article
David? I thought the only way was up now? And this is before the reporting season?
Burn your way through red tape in Greece!
Evening Standard: Has Greece been set alight by property developers
Rogue property developers have been accused of starting the forest fires that continue to destroy large swathes of Greece. Police have arrested 33 suspects amid claims that some were paid by developers to get round planning laws.
Commercial property owners are starting to sell up
MoneyWeek: Why City banks might need less office space than they think
Commercial property looks like its glory days are behind it. Returns are already at multi-year lows and, with things in the City looking precarious, there could be worse to come.
Free homes for criminals
Times: Crime suspects swap cells for city flats to ease prison crowding
Some new customers for BTL I think . . . Thousands of crime suspects are to be housed in flats and houses in cities around England and Wales while awaiting trial, in an emergency measure to ease prison overcrowding. Hundreds of low-risk criminals with no fixed address are also expected to benefit by becoming eligible for early release on a tag. The £18 million-a-year deal, in which a private company will provide accommodation for suspects and ex-prisoners, is the latest measure aimed at freeing up cells in jails.
Most overpriced markets worldwide
Forbes: Worlds most overpriced real estate markets
Good article looking at prices worldwide, seems to have a reasonable methodology: The rankings were compiled by calculating an effective annualized rate of return on a property based on annual cash flows derived from renting and adjusted for capital gains tax, transaction fees, operating costs and maintenance, appreciation and inflation. For each market, it assumed no debt financing; a constant cost of capital as the buyer wouldn't shift funds based on where they buy; a 10-year hold of the property and that the property would be a nonprimary residence. Interestingly: Many of the world's most expensive markets, such as London and New York, didn't make the top 10, and were beaten out by less expensive markets that had lower yields and smaller rates of appreciation.
Why our prisons are full ... 9 months for sleeping it off in an un-used car park !!!
Times Online: Is it time to rethink the ASBO?
Sorry a bit off track, but is this where aIl our hard earned Tax is being wasted ??? "The town drunk used to be given a day in the cells sobering up. Now he can be thrown in jail for nine months" B&B with bacon & eggs in jail = £20, and good public relations. 9 months in jail = something like £5,000 per month, and bad public relations. http://www.prisonreformtrust.org.uk/subsection.asp?id=411
Slow to a standstill ?
Financial Times Online: House prices expected to slow to near standstill
The house price boom of recent years could be set to slow to a near standstill next year even assuming the credit market storm blows over. Fionnuala Earley, chief economist at Nationwide Building Society, said she expected property values to rise just 2 to 4 per cent in 2008 – “earnings growth or less” – as affordability constraints take hold and expectations for further price rises reduce. Does anyone know - have house prices ever "stood still" ? From the graphs I have seen they tend to go up and down - but stand still ?????
Rewards for Failure?
Guardian: City bonuses hit record high with £14bn payout
Uhm ... aren't the city bonuses supposed to be going down what with CDOs being devalued and a liquidity/insolvency crisis? It appears that we will have two house markets: one for city yuppies (booming) and another for the rest of us (topping out).
Convergence of their Theories based upon the Long Wave Hypothesis
southerndomains: Smith, Marx, Kondratieff and Keynes
Written in 1998, this paper looks at the works of 4 economists (Smith, Marx, Kondratieff and Keynes) with respect to long-wave theories.
The article is clearly dated by viewing the internet as "a new business paradigm" which the bursting of the dot-com bubble proved incorrect.
The author clearly thought that another debt-level expansion was not possible as debt levels were at saturation limits back then. He did not foresee US IR going to 1% allowing another surge of debt levels to 360pc of GDP.
The worrying aspect is that even if we do have a depression, there is no labour-based innovation that will lead us to the next upswing in the long-wave cycle
The coming depression will last until this labour-based innovation can be discovered and implemented.
Monday, August 27, 2007
Houseprices caught in pincer movement on two economic fronts
Finance Markets: Inflation set to surge on food prices
Two good quotes in this article sum up the downward pressure's mounting on UK house prices this autumn. “The combination of falling supply with rising demand means the inevitable increase in food prices. As these form a core basis of the CPI in the UK for measuring inflation, we can be assured that this will encourage inflationary pressures." “With Britain already experiencing record levels of debt, and a collapsing lending market worldwide, there is no more redundancy left in the economy to help bolster consumer spending."
Some "honesty" from the EAs.
Firstrung: House prices have suffered negative impact of recent interest rate rises
It was also revealed that 61% agents had experienced a sharp drop in the number of house hunters on their books following the latest rise.
Credit where credit's due ?????
Financial Times: Credit-card defaults on rise in US
US consumers are defaulting on credit-card payments at a significantly higher rate than last year, raising the prospect of problems in the stricken US subprime mortgage market spreading to other types of consumer debt. Oh dearie, dearie me. Where is this all gonna end ????
Anybody want to buy a bank? No thought not!
Yahoo: Troubled German bank sold in wake of subprime crisis
To avoid bankruptcy a German state run bank has been sold after suffering losses in the U.S. subprime crisis
The supply of unsold single-family homes reaches the highest level since 1991.
Reuters: U.S. stocks fall, bonds up on housing gloom
The problems just won't go away, looks like we can expect further bad data and market falls throughout the week.
Sensible but Depressing Article
This is North Scotland: Falling in to Serious Debt can Happen to Anyone
Middle class can also fall in to serious dept
So much for the end of US sub-prime
BBC News: US home sales decline yet further
Concern that US house prices could fall sharply has returned after a key survey showed that sales fell to a near five-year low in the year to July.
Alternative to BBC bias
Bloomberg: Home Resales in U.S. Probably Dropped in July for Fifth Month
Aug. 27 (Bloomberg) -- U.S. sales of previously owned homes probably fell in July for a fifth consecutive month, showing the housing slump that triggered a collapse in credit markets will drag on, economists said before a report today.
This is for you David!
CNN NEWS: Mortgage applications slip
Mortgage Bankers Association index falls 5.5 percent on lower demand for home-purchase and refinancing loans. Is this a recovery????
Hometracks says house prices have stalled
SKY News: Market Gloom As House Prices Stay Flat
House prices stalled during August as the market was hit by higher interest rates and more cautious consumers, new figures have shown. Property information group Hometrack said it was the first time for 20 months that prices in England and Wales had failed to move ahead.
We're not the only ones!
Telegraph: Overheating sees house price downturn in Europe
Ireland & Baltic states have seen house prices fall. Romania, Bulgaria, Croatia & Russia look like they might be joining them soon. Debt levels are above 100% in Ireland, Britain, Spain, Netherlands & Denmark. Even France is starting to see some falls.
Hometrack recognises house prices are falling.
Channel 4 News: Rate rises hit house prices
Richard Donnell, Hometrack's director or research, reckons only 9% of England and Wales saw price rises during August with 7% of the country seeing a fall. Even London, where most of the price rises were, only rose 0.1%.
Central banks are trying to save the system.... will they succeed?
International Herald Tribune: Central banks try to prevent the global system from unraveling
By Michael R. Sesit Bloomberg News Published: August 26, 2007 PARIS: 'This financial crisis is far from over," says Rob Carnell, London-based chief international economist at ING Wholesale Banking. "U.S. house prices have further to fall; delinquency rates have further to rise; and subprime mortgage-backed assets will likely fall further." The world's major central banks face four challenges as they strive to prevent the global financial system from unraveling and growth from stagnating: Acting in a concerted manner; improving transparency; deciding who gets bailed out and who doesn't; and making sure whatever monetary medicine is administered doesn't come with destabilizing side effects.
Sunday, August 26, 2007
Santa Claus is coming earlier this year for UK Investors.
www.Landlord.co.uk: Santa Claus is coming earlier this year for UK Investors.
Landlords are look to diverse areas of the world to realise there investments.
Will the "Bernanke put" happen?
Telegraph: Should the Fed cut Rates? Should it Heck!
Global stock markets appeared eerily calm last week. In London, New York and elsewhere, share prices ended most trading sessions flat, if anything posting small gains. But don't be fooled. Under the surface, the markets remain extremely volatile. Reassuring closing prices mask alarming daily swings. Across the world, the fear of another big drop remains palpable as more and more evidence emerges that banks beyond the US are nursing serious sub-prime losses.
US foresees first national drop in house prices.
The New York Times: Drop Foreseen in Median Price of US Homes
The median price of American homes is expected to fall this year for the first time since federal housing agencies began keeping statistics in 1950.
No subprime crisis in the UK ..... NOT!
thisismoney.co.uk: Brokers 'urge buyers to lie for home loans'
Mortgage brokers are encouraging prospective homeowners to lie about their income in a bid to secure massive loans, it is claimed. Sandra Ashcroft, 59, said she was advised by brokers to lie about her salary to secure a £102,000 loan in 2003. Two years later she increased that loan to £122,000 after claiming she was a £35,000-a-year senior midwife. In fact, she received an annual wage of between £3,000 and £5,500.
The big banks are struggling ...
Telegraph: Loans block up London banking
Although an air of calm has descended on equity markets, the short-term money markets remain chaotic say senior bankers, who warn that the market for asset backed commercial paper (ABCP) - loans that typically last between 60 and 90 days - has ground to a halt. Problems in the ABCP markets have forced the restructuring of a number of credit vehicles linked to Barclays Capital. HBOS last week refinanced its ABCP vehicle, owing to the liquidity issues in the market. One analyst said: "With banks still struggling with liquidity, and short-term lines nearing capacity, I expect to see five-year or 10-year bonds issued in sterling or euros by big, cash-starved banks in the coming days or weeks."
What goes around,,,.
Guardian: City stars humbled as meltdown hits Mr Sub-prime
"One hedge fund of funds manager said: “We’ve never seen such heavy losses in such a short space of time. It has been brutal and caught many managers out.” Well, if you do inflate a balloon, don't be upset if it goes POP!
Interest Rates? 6% before Christmas, 6.25% before Valentines.
Guardian: GDP up for sixth consecutive quarter
Phew, I missed this at the time, GDP up to 3.2%. And people have been calling for a cut in rates!!
Changing sentiment from the VIs
Timesonline: Turmoil to dent house price growth
Analysts are warning that the continued uncertainty on global financial markets could pose a threat to the value of British homes Even if it blows over, homeowners are warned that the highest interest rates for six years and affordability constraints could spell the end of the housing-market boom.
Herd mentality and sentiment
The New York Times: A Psychology Lesson From the Markets
IT is no surprise that the Federal Reserve’s discount rate cut has not entirely reassured investors. The Fed can stop a run on the banks, but it cannot control the speculative cycle — a cycle built on psychology and misperceptions that has been sweeping much of the world for the last 10 or 12 years.
MEW advice gone MAD or interesting sales ploy ?
Guardian: 'Release cash in your home while you've still got time'
An equity release specialist is so worried about a property crash that it is urging clients to act now rather than wait for retirement, writes Jill Insley
Saturday, August 25, 2007
Average rural house price in Scotland is £177,007
Scotsman: Appeal of life in the country puts a rural home beyond locals' reach
HOUSE prices in rural Scotland are soaring above the cost of city dwellings, with first-time buyers and locals priced out of the market by wealthy incomers.
Central Banks Continue to Printe Billions, but this will not stop the crash
Gold-Prices.biz: Central Banks Print Another $167 bln: This Will Not Solve The Problem
In an attempt to prevent a financial crisis, the European Central Bank pumped an emergency €94.8bn ($131bn) into the banking system. This cash injection is larger than that the one that happened the day after 9/11 (€69bn) which shows what a big problem the ECB is facing. This “cash injection” is really just the ECB printing loads of worthless fiat currency and throwing it at the problem, but this will not prevent the coming financial crisis that will hit the credit systems, including mortgages and home loans, particularly hard. Along with printing this vast amount of money, the ECB also made a one day pledge to fulfil any and all funding requests from financial institutions.
Flat prices go into reverse - BTL lambs to the slaughter
BBC News: UK House Prices
Might have already been done here. At first the BBC pulled these figures from its News website as they thought there was a problem with the Land Registry statistics. On checking again many of the UK's flat prices are floundering and many areas have seen reverse fortunes including many high profile locations plumeting. Scaremongering, no. Slowly but surely Semi Detached and Detached properties look to go the same way with minimal gains and again in some area actually dropping. Just like the US took 18 months to convince people prices were actually dropping, I can see these figures being dismissed as market jitters rather than an actual HPC, for now anyway.
Buy To Let Fever Continues as more Punters Plough Funds In
FT dot com: Rate rises fail to halt UK buy-to-let rush
So called Investors are continuing to plough money into the buy-to-let market, despite fears that rising interest rates have made the sector completely unsustainable to new entrants.
Subprime woes: Foreclosures at 8-yr high in UK
business standard: Subprime woes: Foreclosures at 8-yr high in UK
"Foreclosures are at an eight-year high, lenders have repossessed a record 14,000 properties in 2007, 30% more than at the same time last year, according to the Council of Mortgage Lenders. An additional 1,25,100 households are behind in their mortgage payments,"
7% of adults express grave concern over their exposure to debt
SKY: Millions Worried By Rising Debts
7% may not seem like a lot but according to this report 7% is around 2 million adults. When questioned people tend to not confess to debt problems or may not realise their level of exposure because they have just MEW'ed. What hits me as frightening is that despite interest rate rises over the last year a quarter of consumers have increased their borrowing. For balance the article also states that just under a quarter of those surveyed were debt free with another 40% were not worried about their ability to repay their debts.
surveyors stop and look at houses instead of doing drive buy valuations
telegraph: Surveyors clamp down in the wake of US housing crisis
Surveyors are starting to clamp down on mortgage valuations, as lenders prepare to protect themselves against the risk that house prices may falter and even fall.
The most worrying news yet.......
CNN: Fed bends rules
Seems the Fed has admitted yesterday bending its own rules to get two massive banks out of the morass (2 of the very same banks that used the discount window for 'symbolic purposes' earlier). wow this goes deep.........
Pressure on prices
reuters: Rates on the rise for subprime mortgage borrowers
UK subprime mortgage borrowers are facing a sharp rise in rates as credit market turbulence adds to pressure on funding costs, lenders and brokers said on Friday, reviving fears of increased arrears and repossessions. Combine this with reported central london property decline - (lead article on ft.com today: http://www.ft.com/cms/s/0/54dc1886-5282-11dc-a7ab-0000779fd2ac.html) and what do we get...
Cracks or major fault lines benig revealed?
Firstrung: Sub prime mortgage lending beginning to crack
"It's a sign of the times that the Bank of England has been forced to use its position of lender of last resort and offer a helping hand, granting a £314m loan at 6.75% to an unidentified lender". "While its a little too early, for the prime mortgage market to be affected by the stock market turmoil, the sub prime sector is beginning to show cracks. Victoria Mortgages has withdrawn its sub prime range, GMAC-RFC increased rates by 0.75%, Mortgages Plc increased rates by up to 1% and Northern Rock by up to 0.55%. SALT will no longer considering applications from borrowers with any arrears in the last three months.
Ratings agencies suddenly go bearish
Firstrung: Ratings agency expects arrears and repossession levels in UK to rocket
Fitch Ratings has announced that they expect arrears and possession levels in the UK sub-prime mortgage sector to continue to increase over the next few months... The agency recently published their latest quarterly performance report for the sub prime mortgage lending sector revealing a deterioration in arrears in Q2 2007 compared to Q1 2007.
US credit turmoil hits London property
FT: US credit turmoil hits London property
Fears are growing that the fallout from the US subprime mortgage meltdown will hit house prices in central London, one of the world’s hottest high-end property markets.
Friday, August 24, 2007
Looks Like The Party Is Over (for a while)
FT dot com: House prices expected to slow to near standstill
Don't you just love Bank Holiday Weekends as you can get all sorts of 'bad news' (sic) stories out in the hope that they will all be forgotten about by Tuesday.
Buy now pay later is ingrained in UK consumer culture
The Daily Reckoning: UK Consumer Debt More Than GDP
Well and truly gone are those days when saving for goods or a rainy day was the norm. Consumer debt has risen 10% since this time last year and now stands at £1,345bn. Debt now exceeds the entire output of goods and services according to accountants Grant Thornton.
2nd Quarter Statistics for Scotland now available
BBC: IK House Prices
Just noticed the 2nd Quarter statistics for Scotland are out. This link is also available on HPC external links. House prices in your area with the BBC.
Does personal debt exceed GDP?
David Smith: Business Article
Well does it? I thought everybody had agreed it was 167% of GDP?
While interest rates go up, we are also being taxed into submission.
Property Week: Conservative group calls for abolition of Inheritance Tax
One of my old gripes against this government, but the Conservative Party is suggesting an abolition of the Inheritance Tax, and other reductions, definitiely a step in the right direction ... "A Conservative policy group has proposed abolishing Inheritance Tax and slashing corporate taxes to make the UK more economically competitive." "The report, which is not binding on the party, also called for reduced taxes on business profits to make the economy more competitive. It said Corporation Tax, which is payable on business profits, should be reduced from 30p in the pound to 25p. It recommended that the tax for small businesses should be 20p in the pound."
It's not a bed of roses, even for commercial property ...
Property Week: Credit crunch hits Macquarie HQ hunt
"Macquarie has put its search for London and New York office headquarters on ice because the turmoil in the credit markets." "City sources say that, given the recent credit crunch, the bank has decided against taking any decision at this point. It is understood to have put the search on hold last week and will renew its options again next year."
People really should read the things they sign
BBC News: Shrewd lenders spark US mortgage chaos
"In Milwaukee alone, 20 to 25 new homes with a combined market value of some $2m (£1m) are being foreclosed, or repossessed, every day. State-wide there was a 34% rise in the number of people who faced eviction in 2006 and Ms Derus believes that that number will double this year."
Where's my cheap credit gone?!?
BBC: Northern Rock ups sub-prime rates
Northern Rock is to lift the rates on its range of fixed-term mortgages for borrowers with patchy credit histories. From 29 August, sub-prime home loans at the lender will cost up to 1.25% more. Loans that track the Bank of England's base rate will no longer be available. ...I Liked this line! 'The bank said it was not at risk from sub-prime lending, as it passes those loans to an arm of Lehman Brothers.' ...pooof, the nasty debt magically disappears!
auctioneers bidding for vendor, whats next outright fraud?
Right move: Alpraham, CW6
what is interesting is this, how is this legal? Method of Sale he property will be sold at a reserve price and the Auctioneer reserves the right to bid on behalf of the vendor or to withdraw the property.
The Helicopter remains firmly grounded (US rates won't be cut)
The Economist: The Fed keeps its head
"Investors should think twice before assuming that Mr Bernanke will soon act to reduce the federal funds rate. While mortgage lenders and financial institutions heavily invested in American mortgage securities have struggled mightily, recent reports from the broader economy have been anything but uniformly negative. Employment numbers have held up even as home construction has collapsed. For the moment, conforming mortgages remain stable and large firms unconnected to the home-mortgage market have yet to experience serious trouble. Moreover, financial markets remain in positive territory for the year, despite the past week’s gyrations. Do not expect Mr Bernanke to bend to the demands of overextended investors suffering through short-run volatility." - Hmmm, so the "real economy" is ok?
benefits of a recession
The Economist: Does America need a recession?
Some economists believe that recessions are a necessary feature of economic growth. Joseph Schumpeter argued that recessions are a process of creative destruction in which inefficient firms are weeded out. Only by allowing the “winds of creative destruction” to blow freely could capital be released from dying firms to new industries
Too early to send in cavalry to save mortgage defaulters
TELEGRAPH UK: Retailers batten down the hatches
argues that two million mortgage defaults - that's the alarming projection doing the rounds - could lead to the worst property slump since the Great Depression, with prices sliding by maybe 10pc or more.
Global poison
Guardian: Bank of China admits sub-prime exposure
Countrywide, the largest US mortgage lender, warned yesterday that the US economy was teetering on the brink of recession after a severe downturn in the housing market and a sharp slowdown in consumer spending.
Barclays Capital's CDO chief quits
FT Online: Barclays Capital banker quits
Edward Cahill, a banker who ran the collateralised debt obligation division at Barclay Capital's quits after holiday. Rumours abound. There's a piece in the Daily Mail's City diary that Barcap may be exposed in a big way...
Markets regain liquidity but outlook unclear
The Times: Business News
Investors are unlikely to see the full damage that turmoil in credit markets has wrought on the banks until their third-quarter results are released. The market is watching for signs of discomfort. In the US, hopes that Countrywide was on a firmer footing after a $2 billion capital infusion by Bank of America were set back after the chief executive of the home-loan provider struck a negative tone on the housing market. Angelo Mozilo, Countrywide’s founder, said: “If this trend continues, it’s going to have an impact on the overall economy. I’ve seen this movie before, and the ending of the movie always ends up in some form of recession.” What Recession Mr. Mozilo? Don't you mean a depression?
Debt destruction (depression) here we come.
Independent: For the first time, Britons' personal debt exceeds Britain's GDP
Image if all that liquidity had gone into securing - Elimination of the UK's carbon footprint. - Restoration of the nation's crumbling listed buildings - A high speed rail network covering Cornwall, Wales and Scotland - Crossrail and tube upgrades - Housing association new build and new council housing - Expansion and linking of our national parks and other natural treasure. Oh, shi%t, the government spent it on a war in Iraq and we spent it on houses we already had, betting on rising prosperity of homeowners without doing anything to raise our productivity, oops! Its the biggest waste and nonsense in history. Are humans smarter than yeast?
6% IR and we're doomed! say EAs
WhatInvestment: Interest rates start to bite
NAEA survey reveals interesting statistics about housing market. All is not rosy in EA land and they're desperately clinging to the hope that interest rates are not rising (at least temporarily.)
Repossession Tragedy
BBC: Shrewd lenders spark US mortgage chaos
Story of crippled divorcee losing her home, the article manages to cram in everything: Bills, debt, refinance, race (why is it mentioned?), small print, repossession, banks, brokers, borrowers, bonds, subprime, negative equity. I could quote from every paragraph, but what i want to know is what is the 5th B? bankrupt ?
Buy it, quick
BBC: Buyers 'pick home in 17 minutes'
"The pace of today's housing market puts a huge amount of stress on buyers and our research shows this can lead to snap decisions being made when choosing a new home,"
Rise, Drop, I always get those confused.
999Today: UK property prices to rise 40% by 2012
The average house price in the UK will rise by 40 per cent over the next five years to reach £302,400, a report finds. The National Housing Federation (NHF) report also shows that the average property price in London will increase to almost £500,000 by 2012.
A depressing observation from a UK political blog about debt.
Guido Fawkes Blog: Every Week 2,000 People Go Bust
Gordon likes to talk about stability and prudence, but rising indebtedness and rising interest rates have led to people going bust and losing everything at the rate of 2,000 a week.
Thursday, August 23, 2007
When being bullish is really just bull
BBC News: Wall Street shares decline, AGAIN.
US stocks ended lower on Thursday after the head of the country's largest mortgage lender warned that the housing market slump could spark a recession.
Inflation, inflation, inflation.
FT: Wheat prices jump to record high
Ooo aaar, I think I'll settle myself with a bottle of cider to calm mi farmer nerves, aaare.
Northern Rock initiates moves to retreat from UK sub-prime mortgages by escalating interest rates on fixed-rate loans
The Times: Northern Rock prices itself out of sub-prime
"It (Northern Rock) has now hiked interest rates on its fixed-rate loans for future borrowers by up to 1.25 per cent and scrapped its tracker range". Phew, that's an extra 2500/yr on a £200k mortgage, or 48-quid a week. I know that I'd be a bit pi*£ed, if my rent went up by that much, and I spend nothing close to what a homeowner (flat in Ldn) pays. If this is just the beginning then it must be the beginning of the end. There's no way that house prices can sustain this kind of carnage. What I couldn't find out is, what is their rate now, their website keeps that a bit quiet, can't find rates on it, what a surprise!
Be very careful. Interest rates in Europe and Asia are that much higher now, with delayed effects starting to bite hard. Japan’s economy has stalled to 0.1pc growth in Q2; the euro-zone has slowed to 0.3pc; and China’s refusal to import (by currency manip
TELEGRAPH UK: Brace yourself for the insolvency crunch
These CDOs were the only way to get rid of the riskiest tranches of subprime debt. Interestingly enough, these buyers (mainland Chinese banks, the Chinese Government, Taiwanese banks, Korean banks, German banks, French banks, U.K. banks) possess the 'excess' pools of liquidity around the globe. These pools are basically derived from two sources: 1) massive trade surpluses with the U.S. in U.S. dollars, 2) petrodollar recyclers. These two pools of excess capital are U.S. dollar-denominated and have had a virtually insatiable demand for U.S. dollar-denominated debt . . . until now.
Can't say I have any sympathy. It was a free money arbitrage situation which was used to create ridiculous amounts of leverage. When you gamble that way, you take your chances and if you aren't smart enough to get out before the scam ends, you deserve to
agonist.: The Yen Carry Trade Unwinds
unwinding now because large numbers of people are having to close out positions and thus repay their Yen denominated loans standard play was to borrow in Japan (which has had zero or near zero prime rates all decade) and then buy foreign denominated assets. When you unwind you have to convert your foreign currency back into Yen.That increased demand is driving up the price of the Yen. As the Yen goes up, you get into a classic vicious spiral - the higher the Yen is compared to when you borrowed, the worst the (non Yen) assets you bought with that loan are looking.A large enough rise in the value of the Yen can wipe out your gains entirely, or even convert them into losses.
Immigration divides England into two zones
Telegraph: Immigration divides England into two zones
The British are fleeing to the countryside while the cities are overwelmed with immigrants. Quite a bold article. New Labour, the far left in disguise, has sold our country.
UK Sub prime in Manchester
Manchester Evening News: Low paid 'urged to lie' for mortgage
UK sub prime? - On the front page the the Manchester Evening News of all places!
"Save us, Mr Bush"
Telegraph: Bush should bail out sub-prime industry
Mr Gross (managing director or Pimco urged Bush to "write some cheques" to "prevent destructive housing deflation". He warned that house prices in the US could drop by as much as 10% which would amount to throwing 2,000,000 homeowners to the wolves in 2007.
Bailing out the offenders is not without consequences
FT: The next financial crisis starts here
There was a great cartoon in the print edition of the FT this morning under this article.
who is next? redrow? barrett? bobby the builder?
BBC: US builder hit by mortgage woes
this is an interesting little article about some builders in the USA...
It's OK, the ECB & Fed are going to subsidise our gambling habits permanently.
BBC News: Credit markets get rates bounce
OK, if you hit yourself on the head with a cricket bat you quickly learn never to do it again.