September 2007 Archive
More heads coming out of the sand?
Hedge funds are gambling on a fall in Britain's housing market with aggressive short selling of shares in housebuilders, developers and landlords. Big bets have been placed on shares in Persimmon, Britain's biggest housebuilder, taking a dive. Speculators are also predicting that Grainger, the country's biggest quoted investor in residential property, will see its share price drop.
Mayor Bloombergs comments
This is all very well.. but
It does not recognise a couple of key issues..
The Future's Not Bright For Northen Rock
The stricken mortgage lender could be force to close to new business as profits face being wiped out by interest payments to the Bank of England...
You thought the housing crisis was bad in the US? Wait ‘til you see what happens in Britain.
An American take on the UK house price bubble. Nice bearish article to pleasantly round off the weekend.
Gordon Browns Economic Mirage
One of the Best Comments I have seen for a while on a newspaper site, the first one nicely sums up our Economic Mirage.
"The world economy has managed, with some indigestion (apparently, haven't prices yet to fully feed through?), to swallow the rise of oil prices past $80 a barrel. How well could it survive $100 a barrel? The answer is quite well -- so long as several conditions still hold true."
Can Southwark & Lambeth explain the rising London prices, or somebody is cheating here
Everybody seem to be in the business of painting a rosier picture of this moribund housing market. The press and the Land Registry itself have tried to redress an appalling 0.2% monthly price increase in August (after the 0.1% of July!!) by saying "but London prices rise like rockets". But is it actually true or is it a cheat? See the report for yourself. How is in the world possible that Greater London grows at 1.5% monthly when all but 2 boroughs (Southwark and Lambeth... not the poshest, eh!) are either declining or growing well below the average????
"I would like to take this opportunity to thank you for your loyal custom and continued support".
The Oil Drum: Europe, Analysis and Discussion of the European Energy Gap and Peak Oi.: A Note From our Milkman
Doortstep Price Increase as of 30th September 2007 Pint Glass - will increase by 4 pence per pint 500 ml carton - will increase by 4 pence per 500 mls
Foregone Conclusion, No change in base rate.
"Looks like house prices heading for soft landing". S&P predict average mortgage repayment to rise by 26% as fixed price deals expire into 2008. Squaring the circle with a ruler and compass seems elementary now.
Are there still doubts we are heading for a HPC?
"Manchester is the most extreme example of a decade of massive residential city-centre development. Others include Leeds, Newcastle, Nottingham, Swindon, Basingstoke, Southampton and Bristol. Now it is feared that some of the more grandiose schemes - fuelled by borrowers whose access to cheap money has vanished in the wake of the credit crisis - could stand for years as empty symbols of property obsession and greed." But I thougth... immigration, divorces, students, single households... where is David Smith? Where is Fionnuaualaa Nationwide?
Phil Spencer: "Don't expect that to continue"
Phil: "There’s blood on the streets of Britain’s housing market. Five successive interest-rate rises have gouged deep wounds, but the coup de grâce could be yet to come – an estimated 2m people on fixed-rate mortgages will have to take out new loans at higher rates within the next 12 months, sending their monthly payments soaring and reducing their ability to trade up" ehmm... how about repossessions?
US bank with $2.5billion of assets shut down
Hedge funds short UK housing
"Hedge funds are gambling on a fall in Britain's housing market with aggressive short selling of shares in housebuilders, developers and landlords"... Never mind these funds have already made a mint on price drops of all of the above since the beginning of 2007
Another major US bank bites the dust...
House prices are actually lower than the prices declared!
Samantha Stoely bought her house in Canton for al lot less than the seller had originally hoped to get, but the good deal didn't end with the $243,000 price. They covered most of her closing costs too - a $10,000 incentive. In effect, the sellers recieved $233,000. But that's not what got recorded in the home sales statistics.
Hollowed out Britain, strip out equity and what's left?
Data published by Halifax financial services shows that household wealth has more than doubled during the past 10 years on the back of soaring house prices...Britons collectively had assets worth £6.336 trillion at the end of last year, after outstanding debt was taken into account, up from £2.795 trillion at the end of 1996, according to Halifax Financial Services. The group said the total value of people's assets rose by £4.343 billion during the past decade, massively outstripping the £802 billion rise in debt during the same period. A large part of the gain in household wealth was driven by booming house prices, with rises in the value of property accounting for more than half of the gain.
Lagging data not withstanding, anyone else expect this?
For the fifth month in a row, the rate of increase for London house prices remains over six per cent per annum greater than that of England and Wales as a whole. The August data shows the current rate of increase for London house prices has increased to over seven per cent per annum greater than that of England and Wales. With an annual price change of 16.7 per cent, London therefore leads the rest of the country in terms of house price growth by a significant margin. London's average house price for August 2007 stands at £349,838 whereas the average price for England and Wales is £182,914.
While the base rate is flat, the REAL interests rise!
lenders have struggled to securitise mortgage assets into the capital markets, will lead to borrowers paying more each month. This could trigger growing numbers of home repossessions as borrowers struggle to repay loans. S&P estimates that those who are able to refinance to another deal will face an average increase of 26 per cent, or £167, in their monthly payments. It estimates that those borrowers who cannot get another deal and so have to move to standard variable rate could face a monthly increase in payments of £415. “one of the largest payment shocks witnessed since the 1990s”... say no more!
When the speculators give up
Northern Ireland's property market is predicted to stagnate over the coming months as house prices begin to level out.
Prudent couple fox the "expert FAs"
This couple have paid off their mortgage and earn £80K pa between them.
The Indie's expert panel seem completely at a loss as to giving them any advice.
Maybe financial "experts" have forgotten how to serve prudent customers ?
Re: property, "Sofat says that if they sink all they have into buying another property, they are exposed to that one asset. "
Underestimated No More
Maximum financial gearing for 600% ROI guaranteed!!!
Housing Market Teetering On Chaos
Steep mortgage increases and falling house prices point to a market teetering on chaos. Edmund Conway plots a course to safety When I predicted at the end of 2006 that the housing market would take a turn for the worse in the second half of 2007, I didn't even begin to anticipate the extent of the twists and turns the property world - and the rest of the economy - would take in the following months.
Mortgage re-sets, coming soon to a town near you!
An oldish blog entry, shows an interesting graph of mortgage resets due in the US, it would be great to see similar stats for the UK in this format, but I would think that we are somewhere close to this in anycase and about 1yr behind. But its the trend rather than the precision that matter. Remember that each wave of re-sets and defaults further harms the balance sheets of investors who bought toxic mortgage backed securities.
A dumb, dumb article
These days just any dog can write for the Times. I am still missing the point(s) of this article, if any in the twisted minds of the writers. Maybe best summarized by the statement “In theory, where the loan is under £1.5 billion you can borrow around 90 per cent of the value of the property”
Some financial advisers are really dumb
He actually says they should should trade down to secure their finances. How dumb can you be??? Tee Hee!!! :)
Banks don't want to pay out
With only £4.4 million set aside by the Financial Services Compensation Scheme to pay back bank customers and banks not contributing to that scheme, banks are concerned about the cost to them of a new scheme.
I'd never thought that non-U.K. markets were also bubbly...
"The price of second homes in the Mediterranean and eastern Europe could fall as a result of the credit crisis, a leading property expert has warned. Michael Ball, a professor of property at Reading University, England, and an adviser to the UK government, said holiday homes in many parts of Europe were exposed to a correction."
Struggling to find a home for your family? Waiting ages for accommodation? Well here's some news to cheer you up!
Immigrants were given the keys to 10,000 council houses last year. The Government figures reveal the pressures which immigration is putting on housing and public services. Foreign nationals are legally entitled to social housing. Last year only 25,596 new social housing homes were built. Just a minute isn't 10,000 divided by 25,000 roughly 40%.!!!!!!!!!
According to the BBC, we're all up to our eyes in wealth, not debt!
If you ever wanted an article that exposes just how much of a Labour Party Lapdog the BBC has become since the Hutton Enquiry, then here's your proof. They even have the gall to defend the government's bumper IHT tax-grab which was the whole point of accelerating house prices in the first place. And where have those hardworking, honest and impartial BBC editors obtained this gem? None other than one of the UK's biggest private mortgage lenders who ... heaven forbid ... would never be interested in painting over the emerging cracks in the housing market!
Surveys don't prove anything!
Trends: There are so many local fluctuation and inconsistancies that you can now pick the index that will 'prove' your argument.
Liquidity crisis hits the housing market
"Banks which specialise in providing home loans to those with a poor credit history, the self- employed and first time buyers who want to self-certify their income have made dramatic changes recently. While some have dropped these mortgages altogether, others have raised their standard variable rate by as much as 2.5%." Even a dramatic drop in the BoE base rate cannot help the market at this point!
What? You mean the dominoes haven't stopped falling? I'm SHOCKED, I tell you
ING Direct, a subsidiary of the Dutch financial group, is to take over the customers and insured deposits of NetBank, an online lender with $2.5bn (£1.2bn) in assets that was shut down on Friday by the US government following losses on subprime mortgages and other loans. The closure marks the largest US bank failure since the end of the savings and loan crisis in the early 1990s.
Britons are rich! But read the small print - if house prices crash we are in negative equity!
Halifax point out that due to the increase in house prices people are now richer than they have ever been. Yep, but what happens when the prices go down? Oh negative equity! If we want to be rich we need to learn to diversify i.e. some gold, cash, shares, property etc.
This is becoming a pattern. $90 sooner than you'd think.
Prices rose as high as $83.76 early in the day.
There's no escaping inflation.
Oil and coal, on the up. "Coal fuels about 40 pct of global power generation. Physical coal prices for delivery into Europe have risen by over 50 percent this year."
"The monthly snapshot of consumer confidence from the research group Gfk found that consumer confidence weakened in September and grew markedly worse after the Northern Rock crisis"
But the Times says "A special Populus survey for The Times gives Labour a double-digit lead".
So the public feels bad about the mess Crash Gordon has made but will still clamor to vote him back in.
There's nowt so queer as folk as they say.
Controversy from The Landlord Association - suprise suprise
The title says it all so will simply leave you all to make up your own mind!
Buy to let bitten by credit crunch
According to mortgage advisors at Moneyfacts.co.uk, the credit crunch is now starting to take its toll on the buy-to-let market. “While the prime residential sector has so far been largely unaffected by the sub-prime crisis, the buy-to-let sector is beginning to show signs reminiscent of the sub-prime market over the last few weeks with tightening credit criteria, the withdrawal of products and rising fees.” In one extreme case a lender has withdrawn all mortgage products, while several others have made all tracker rate mortgages off limits. Rental cover requirement has increased by between five and ten per cent, and arrangement fees have increased substantially.
6X Salary or 125% its Business as Usual for Sub-Prime UK
The desperate rock continues to offer sub-prime loans in a desperate bid to keep mortgage business coming in yet is struggling to win new mortgage business.
Standard & Poor's report on mortgage resets
Don't you just love that name - Standard & Poor's?
Summary of the File on 4 programme
Looking at every investment mania, from the South Sea bubble of the 18th Century to the stock market boom of the 1920s or the dotcom madness of more recent years, you find dubious deals and misleading numbers which helped persuade borrowers and investors to invest more than they should
Property sentiment is on the vane!
When the trade press starts singing this tune, then u know the end is nigh! “The government needs to bring in measures immediately to prevent banks from passing the increased cost of borrowing onto the already overstretched customer. This is irresponsible lending and customers should not be penalised for mistakes that banks make. We believe that that the property industry has been deliberately hiding the truth from homeowners about the state of the market to protect their own interests. The property crash has already begun."
Greenspan: "It's going to turn, it's got to turn"
Commentators believe prices began to slow at the end of last month and probably halted after the Northern Rock crisis. Greenspan: "A lot of the two-year fixes are beginning to unwind, and the teaser rates are going. It's going to turn, it's got to turn," He also warned that Britain was more vulnerable to the effects of the credit crunch than the US because it had a higher level of adjustable-rate mortgages.
Only the crazies want to buy into this bank now...
Spanish entrepreneur Jose Maria Ruiz-Mateos is reported to be keen to buy a 10% stake in ailing NR. A 10% stake would give him decision-making clout as an investor. He clearly thinks NR is a good investment. Did I mention that he has a criminal record, likes to dress up as Superman, is a member of Opus Dei and has 13 children?? Apparently he's viewed as somewhat of a 'comic figure' in Spain. Yes, that's right only the real lunatics want to buy into this bank now.
Blanchflower doesn't think its good for people to own their own home!!
No wonder matey boy Blanchflower is doing everything he can to prop up the house prices afterall what a terrible thing it would be if the masses instead of a few BTLers owned property!!!
The boom is over: Chelsea just +0.1% m/m!!
Housing boom is definitely over, despite the vomiting positive spin in the press. Kensington & Chelsea did not see any price gain in August (+0.1%) followed by 3 London boroughs with NEGATIVE gains. Very low gains in the over-btl-developed Tower Hamlets. Growth comes from the boroughs where the BTLs are flocking (Camden, Lambeth, etc). But sales volumes are a wopping 15% down (-17% in London!) vs last year. And sales in the over £2m range are dropping!! YEAH!!
Who knew trading sugar could be so difficult
.. or is it that raw material or commodity inflation is first hammering the profit margins and will then have to be passed onwards (unless companies like to do these things as a charitable service.. some shareholders must be thinking it is at the moment).
The great depression is approaching ...
I just hope that the election is called in March next year, when all these seeds will "bear " fruit. Any form of snap election will to this government's advantage. You can't hide GBH, your chickens are now comming home to roost. More Tax is about the last thing we need, and Petrol (alcohol, etc) Tax is just adding more Tax to be Taxed again by VAT, etc. I vote for a completely new tax system, and abolish Income Tax completely, just use VAT at 150% on everything.
Is strong employment enough to prop up a housing bubble?
The US arm of estate agents Foxtons is on the verge of Chapter 11 bankruptcy. And things are looking little better over here, despite claims that 'strong fundamentals' will avert a house price crash.
UK set for a severe mortgage-related squeeze of its own
An economist confesses
In years to come, economists will claim that during the boom years, the economic, social and political consequences of unsustainably low interest rates could never have been foreseen, and the subsequent credit crunch (after all every single credit expansion-led boom in history has ended in financial catastrophe) could never have been predicted. This of course, will be a lie ...
Good money after bad
New revelations that Northern Rock has been dipping in the cookie jar again to the tune of £5bn, and what it means for the beleaguered lender. As it becomes clear that they are now borrowing the equivalent of more than a third of their own retail deposits, questions are being raised everywhere (apart from at the Bank of England it seems) about the viability of their business model.
Al tells all
Crop prices to gain for next 10 Years
Don't seize upon the surprise rise in September house prices as proof that the consumer has shrugged off the credit crisis. The 0.7% jump from August reported by Nationwide may have confounded forecasts for a 0.4% fall, but few are in doubt that a slowdown is coming.
NSW housing heading for wall
smh.com.au: NSW is about to enter its most prolonged housing construction downturn since the Great Depression.
The slump does not augur well for other building materials companies, particularly Boral, which generates most of its Australian revenues in NSW. Boral also faces the problem of enduring the sharp housing slump in the US, where it is the largest brickmaker. Boral reported an 18 per cent slump in full-year profits last month."This downturn hasn't been the deepest or steepest downturn but it certainly is the longest downturn in the history of Australia since the end of World War II,"
Overseas Property Specialist Continues To Grow Destination Offers
Overseas property specialist, David Stanley Redfern Ltd. continues a year of fantastic growth with the addition of several exciting new destinations to its property offerings. The must-visit resource for anyone contemplating making a property purchase broad, the Nottingham-based company now offers property in hot spots as far afield as Barbados, the Czech Republic, Finland and Montenegro
Foxtons US Branches to Close
Several calls to company headquarters and branch offices were not returned today, and the recording this morning said to call back during business hours. Foxtons, which had great success in London, opened in the U.S. in March of 2000. It tried to differentiate itself from competitors by undercutting the industry’s 6% commission standard by paying its agents salaries and charging customers only a 2% commission.
Iran and $100?
Bring on the recession!!!
I was at a conference with people from various business sectors the other week, and the talk somehow got round to graduate trainees and work experience staff. Most of those around the table had horror stories about how demanding the new generation was. One person spoke of how law firms were so desperate to recruit the top graduates that they were taking them out on all-expenses paid nights out - and even then, the little ingrates demanded to know where the free champagne was.
Signs emerged yesterday that the housing market was starting to feel the effects of five interest rate rises in a year and a global credit crunch. Figures showing tighter conditions for buy-to-let investors, lower mortgage approvals and an underlying slowdown in house price growth for August all pointed to an easing in the market
We are right behind them
Original article for new NR lifeline tap
Here you go guys, should have posted this one first as it has better analysis with it, enjoy.
NR taps lifeline again
It would appear still that no-one but the BOE is dumb enough to lend NR money. Further proof they are likely to be sold off to a carpet bagger. In my opinion, they are effectively in government adminstration but for obvious reasons that's not what they are calling it.
Goldman Sachs warns of spreading economic turmoil
telegraph.co.uk: the US investment bank said it was no longer sure that Asia and Europe would be able to pick up the growth baton as America stumbled. It fears that turmoil is spreading beyond the debt markets to the factory floor
“We have good reasons to ask these funds to declare what kind of assets they want to invest in, what criteria they apply to decide their investments, and what the distribution of their investments is,” Joaquín Almunia, the EU’s commissioner for economic and monetary affairs, said in an interview. “If they don’t agree to these criteria, we can find good reasons to react in some cases, where these funds try to invest in some strategic sector or try to move towards some specific industries,” Mr Almunia said.
THE founders of hedge fund Basis Capital yesterday admitted that their sole remaining active hedge fund, the Aust-Rim fund, had lost half its value.
In August, Basis Capital sought bankruptcy protection in the US for its Basis Yield Fund after massive losses caused by the flow-on effects of the US sub-prime mortgage meltdown.
Your Pension or Your Mortgage - You Choose
So you thought paying 15% of your salary would buy you a decent pension when your retire - think again as you currently need to put away 25% to get a 50% of salary pension after 40 years or so. Amazingly most workers total contributions currently average a measly 10.4% and defined contribution schemes, in 2006, had contribution rates of just 8.9% of salaries. So where are you going to put your money, a mortgage or a pension. Hmmmm this country is broke.
Keep the boom going at all costs! Slash rates! Quick!
Dollar continues long slide against Euro
Gold is trading close to the highest in 27 years, heading for a seventh straight annual gain, after the dollar slumped against Euro and major currencies ... crude oil surged to a record....
Today's house price figures from Nationwide Building Society are surprisingly positive. House prices rose 0.7% in September compared to a 0.6% gain in August. Economists surveyed by Bloomberg had only expected a 0.3% rise for this month.
Ever onwards and upwards
House prices are rising at the fastest pace in three months as the market shrugs off the global credit crunch and higher interest rates. Thank goodness...all's good in the world...phew...let the good times roll !!!
Florida Real Estate "we're in deep doodoo"
Real Estate Agen's in Florida not quite rosy outlook "And it really doesn’t matter what the Fed does at this point, because we are waist deep in doodoo. The only way out is through the doodoo, and it is going to get deeper and stinkier." "If you believe anyone telling you prices are stabilizing, or even showing signs of stabilizing, you are either on drugs or you have the IQ of a green mango. Prices are now in total free fall, with buyers and competing builders in complete control. "
Christmas time for the buy to letters
“The outlook may not be all doom and gloom for the buy-to-let landlord, although borrowing costs are rising, yields are beginning to fall and the potential to gain from capital appreciation is declining. If the residential mortgage market sees increasing arrears, repossessions and first-time buyers continuing to be priced out of the market, the demand for rented properties will undoubtedly increase.” ... sorry, why it is not ALL doom and gloom?
...it probably is a duck
Foxtons NJ blamed the slowing U.S. housing market and laid off 350 of 380 employees.
If it walks like a duck...
The phrase night follows day springs to mind
Rates go up ahead of the next wave of Sub-Prime
Savers are continuing to reap the rewards of the squeeze that has sent the cost of money shooting up without the Bank of England (BoE) lifting a finger, as institutions turn to savers to boost their cash-flow.
Record lending from the ECB to distressed bank(s) yesterday
Sept. 27 (Bloomberg) -- The European Central Bank lent the most money at its penalty rate in almost three years, suggesting at least one bank is still being shut out of credit markets. The ECB loaned 3.9 billion euros ($5.5 billion) at its marginal rate of 5 percent yesterday, the most since October 2004, the Frankfurt-based central bank said in a daily borrowing-requirement statement today. It didn't provide details of which bank or banks asked for the money.
What the market predicts for housing
Cracking 3-paragrahs and graphs showing what the market thinks of housing: The Chicago Mercantile Exchange offers futures contracts on the US housing market which track the S&P/Case-Shiller Home Price Indices that provide median home sale price data for 20 cities across the country. CME offers futures contracts [...] that expire over various months from November 2007 through November 2011.
Goodbye Iceland, I hope you enjoyed your last hurrah...
There is too much debt, too much lending. He says: "The maturing debt in two years is 130-per cent of GDP. For Britain it can't go above 40-per cent of GDP. Those debt levels are remarkable, you won't find them anywhere else. The effect is that borrowing is running down net savings and running a very large current account deficit, which is running at 10-per cent of GDP. In the UK it's 6-per cent." Through all the predictions of doom and gloom, the Icelandic Financial News's Arnason says that there is no panic on the streets. "There are not massive queues outside the banks with people looking to get their cash out, " he says. "The banks are bumping up the interest rates which means that now people are not remortgaging the
A kindred spirit already vindicated in te US
If you get into difficult conversations at dinner parties, are the target of nervous housing bulls' frustrations or have come to expect people rolling their condescending eyes in your direction at the merest mention of the housing market, here's an article on the founder of Patrick.net, a US partner-in-spirit to this blog. It makes good reading - it's nice to hear that someone else with their head crewed on got the same "doom-monger" ridiculing treatment as has been heaped on HPCers this side of the pond. The important difference? He's now quietly put up the "I told you so" flag. Well worth a read when VIs here are still stubbornly refusing to admit the obvious truth.
Four asylum seekers hitch a ride to Britain in Blair's new bullet-proof BMW
Police are investigating how four asylum seekers smuggled their way into Britain by hiding in the back of a lorry carrying Tony Blair's new bullet-proof car
200,000 immigrants to enter Britain EVERY year as numbers soar by 30%
dailymail.co.uk: The number of people migrating to the UK will increase by 45,000 a year, according to new official figures published today.
The number of people migrating to the UK will increase by 45,000 a year, according to new official figures published today. Experts at the Office for National Statistics (ONS) said their estimates had increased to 190,000 a year compared with 145,000 in calculations issued two years ago
Argentina NOT New Zealand
Sweden raises overnight rates to 500% - A little bit of history repeated
- Bad banking
- Inadequate market discipline
- Weak regulatory and supervisory frameworks
- Inadequate macro policies and adverse macroeconomic developments
Risk of lower economic growth and a housing slowdown
The Bank of England should be poised to cut interest rates because of the risk of lower economic growth and a housing slowdown in the wake of recent financial market turmoil, the Organisation for Economic Co-Operation and Development said in a report on Thursday. It said lower growth and reduced profitability in London’s financial district due to the credit squeeze, were likely to lower the government’s tax take and lead to a rise in the budget deficit, which it said was “still high by international comparison.”
FT commentators are quite unsure about what they say
In the past month the picture WAS less gloomy that we have recently seen in the press, true... but going forward... overstretched borrowers will not be able to borrow, all the forward looking surveys are negative, and 10000 people in the city may lose their jobs... the journalist had a gloomy look as well. But she said "if you have 25% for your deposit, the lending conditions are still good". Yes but who wants to throw good money after bad business and buy a "falling knife"?
The European Central Bank’s emergency lending fund, which attracts a penal interest rate, was tapped on Wednesday for €3.9bn – the largest sum since October 2004, the Frankfurt-institution has revealed.
ECB emergency fund tapped for €3.9bn The European Central Bank’s emergency lending fund, which attracts a penal interest rate, was tapped on Wednesday for €3.9bn – the largest sum since October 2004, the Frankfurt-institution has revealed. http://www.ft.com/cms/s/0/100cb3e4-6cdd-11dc-ab19-0000779fd2ac.html
Land reg figures
Credit crunch is not over
Seems unfair that troubles at Northern Rock and with US sub-prime mortgages should end up hammering small businesses in Britain. But then, that’s the joy of spreading risk through derivatives – everyone gets to share the pain.
We are not alone in the Universe !
Mortgage lending drops sharply v August 2006
Mortgage Lending: When compared to August 2006, house purchase approvals were down 14% by number and 7% by value; remortgaging approvals were up 4% by number and up 11% by value; while approvals for equity withdrawal were down 16% by number and down 9% by value.
The press positive spin on the Nationwide figures
"UK house prices are still continuing to rise, increasing by 0.7 per cent during September, despite turmoil in the global financial markets and the resulting crisis at mortgage lender, Northern Rock"... maybe the Times (and other papers) did not understand that the Nationwide statistics reflect buying intentions (and mortgage promises) of before the Northern Rock crisis (and probably even before the August credit crunch). Let us wait for October and November data to assess the real impact of the "financial turmoil"!
There will be no effect on the real economy
Orders for U.S.-made durable goods fell in August by the most in seven months, raising concern business investment will soften. Demand for products meant to last several years fell a greater-than-forecast 4.9 percent after a revised 6.1 percent gain the prior month, the Commerce Department said today in Washington. Excluding transportation equipment such as airplanes, orders declined 1.8 percent after a 3.4 percent gain.
No more money to be made in housing!
Despite the bullish press releases, and the rosy commentary, Nationwide's figures show a simple truth: house price inflation has more than halved over six months, and growth in the average price from June to September (4 months) is negligible. Read for yourselves.
How the economy has been ruined by cheap credit.
The US and UK economies have been ruined by over-reliance on cheap credit and an a housing-led boom. Economic performance has, by virtually every standard indicator - output, investment, employment and wages - deteriorated, decade by decade, business cycle by business cycle, since the early 70s. In the US a reduction of real short-term interest rates since 2001 has led to an explosion of household borrowing, contibributing to and feeding on rocketing house prices. Inflated household wealth enabled increased consumer spending that, in turn, drove the expansion. Personal consumption plus residential investment accounted for 90-100% of the growth of GDP! The UK is in a similar position.
Still some momentum in prices yet ?
Interesting graph on page 3 of the actual report here . It shows that house price with trend growth would be £130K, but is actually £180K. Anyone know how this survey is put together ? Is it asking prices ? In which case, I wouldn't expect to see any hit from the crunch yet.
Welcome to the Republic
It's official - we are a Banana Republic. This is the best bit of analysis I have seen anywhere for a while. Lambert telling it how it is. Britain’s system of financial oversight has failed its first big test and left the country looking like a “banana republic” in the aftermath of the Northern Rock crisis, the head of the CBI employers’ organisation said last night. However, Richard Lambert, director-general, warned the government against the knee-jerk remedy of “heavy-handed regulation”, which he said risked stifling competition.
The men, who claimed to be from Iraq, were perched over a rear axle of the 36-ton truck. They had been hoping to get on to a ferry bound for Poole, Dorset.
RIOT police launched a crackdown last night on migrants in Cherbourg – which has become the front line in Britain’s war on illegal immigration. Stowaways were pulled from under a lorry in the Normandy port as part of the operation to cut off this new route to the UK.
Remember this !!! well the rest is due NOW
Remember this !!! well the rest is due NOW Hedge Funds MUST have the funds that their investors requested to withdraw in August (remember the 45 day request limit). Next time a withdrawal can be made will be the end of the coming quarter (Dec), with appropriate consternation 45 days prior when requests are due
Even the big housebuilders are worried.
The credit crunch and woes of Northern Rock will push down demand for new homes and could result in price falls, Britain's biggest housebuilder warned today.
Norway's central bank raises interest rate to 5%
Wednesday’s decision to raise the main interest rate was bad news for nervous home owners, already feeling the financial pressure after 12 hikes in the main interest rate since 2005. But governor of Norway's central bank, Svein Gjedrem, pointed to a "stronger than expected" economic growth and an inflation on the rise, and raised the interest rate once again by a quarter point.
HPC gets an airing on daytime radio
Our very own spokesman for housepricecrash on Radio 4. I've been trying to find a good link for this. This will take you to the web page, but I will try to post the direct links in the comments so that it can still be found in a week's time.
Mr Fillon showed no intention of rowing back from the political furore he triggered last week when he suggested France was
French public finances 'critical' France's public finances have reached a "critical" state and are unsustainable, François Fillon, the prime minister, said on Monday as the government took measures to plug a yawning gap in its welfare budget.
commercial banks to raise mortgage deposits to at least 40 percent for homebuyers who intend to buy a second apartment
Homebuyers at a real estate exhibition in Dalian, Liaoning Province. The government may raise the interest rate of mortgage lending to curb the fast rise in house prices and speculation in the real estate market.The central bank is likely to stipulate commercial banks to raise mortgage deposits to at least 40 percent for homebuyers who intend to buy a second apartment, according to the source.
Economists warned of the heightened risks for corporate borrowers on Wednesday following the first release of the Bank of England’s new quarterly survey of UK credit conditions.
Commercial banks expect the turbulence in financial markets to affect the availability of corporate credit far more than their lending to households, the survey showed. The Bank said lenders had raised fees and reduced the amount of credit available to the corporate sector over the past three months, partly due to recent market developments, which they expected “to reduce significantly their capacity to extend corporate credit over the next three months”.
We expect the German economy to lose further steam in the coming quarters
Germany Could Be At Peak Of Economic Cycle LONDON - Earlier this month Michael Glos, Germany's economy minister warned his peers at the Bundestag that "clouds [were] gathering in the economic sky." On Tuesday it looked like Europe's biggest economy was starting to feel the first drops of rain. The trend lower suggested "a permanent change of course" for the German economy, Commerzbank analyst Ralph Solveen said. "We expect the German economy to lose further steam in the coming quarters," he added.
How the smell of fresh paint will cost investors thousands
Few BTL investors seem to realise they’re actually paying a hefty price for those shiny new build flats. Fresh paint, unblemished kitchens and the perk of having the keys handed to you by that charming sales rep can come at a 20% premium to buying a second hand home. Some people may feel this is a price worth paying, just as there’s a huge market willing to sacrifice 30% of the cost of a new car the second they drive it away from the showroom. But why would anyone pay tens of thousands of pounds to give their tenants this brand new buzz for free?
U.S. housebuilder posts record loss
FTBs to pay £1m for a house in Northern Ireland by 2018 - is this house price comedy?
It seems that some people just can't help themselves - I can plot points on a graph and use a ruler (or even a spreadsheet!) to draw a line into the future - does that mean I can earn a crust as a financial expert? A large pinch of salt is needed with this press release from Stroud & Swindon. Given that house prices (historically) always return to a trend of 3-4 times average income we can presumably all look forward to earning a minimum of £250,000 by the year 2024. Those of us who commute will 'jet-pack' to work, money will be credits on an implant under the skin and the words "sub" and "prime" will be a distant memory...
The Truth About Property
"The Truth About Property" is a three part prime time BBC Television Current Affairs series which will be broadcast in the autumn. We are looking for contributors to film for a few days in August who have personal experience in buying a New Build property. Have you bought a New Build home in the last five years? Have there been problems with your house? How easy has it been to rectify the faults and have you sought help from any regulatory bodies? Do you think the housebuilding industry is monitored and regulated effectively? If you are interested in taking part please Melanie Hill at the BBC, email@example.com or 0161 244 3658
Barratt blaming Northern Rock ...
Is it not the case that Northern Rock is in trouble because there is an underlying problem? A 10% drop in sales and a 20% drop in share price - chief executive Mark Clare needs to find someone to blame - now!
Sterling slumps to lowest level against the Euro since early 2005. Where is Sterling heading now??
LONDON, Sept 26 (Reuters) - The euro rose to its highest level versus sterling since early 2005 on Wednesday, with the UK currency staying under pressure on concerns about the health of the British banking sector and possible interest rate cuts.
Take with one hand pay chicken feed with other
Firstrung: Two out of five current accounts pay just 0.1 per cent interest to customers in the black
Nearly two out of five current accounts on the market pay just 0.1 per cent to customers in the black, new research from MoneyExpert.com shows. And another nine per cent pay one per cent or less, analysis from the independent personal finance comparison service shows...
Ken Livingstone fails to deliver on promises
Mayor Ken Livingstone has said that half of all new London homes must be affordable, with the majority of these being social rented homes, but only a handful of the 33 London councils are meeting their targets. Figures highlighted by Shelter show that in the last three years just five London councils have ensured 50% or more of new housing in their area has been affordable, with some councils providing as little as 12%.
The tide is turning!
RICS remarked on a 32% rise in repossessions in the second quarter of 2007. It predicted repossessions could rise by a further 50% to 45,000 in 2008. A significant number of these are buy-to-let properties where landlords are throwing in the towel as a result of rising mortgage interest rates. It’s likely that house prices will see their first monthly fall in the next few months, and at some time in 2008, for the first time since 2000, we’ll see a year-on-year decline in average prices. For long-term homeowners, this is of no great importance, but it will be surprising if we don’t soon see a lot more highly geared BTL investors heading for the exit.
N.Rock crisis causes dip in Barratt's UK house sales
British housebuilder Barratt Developments (BDEV.L: Quote, Profile , Research) saw sales of its homes plunge as much as 10 percent last week as the crisis at mortgage lender Northern Rock (NRK.L: Quote, Profile , Research) led buyers to pull out of the market.
"Perfect Storm of Events"
This has to be the best piece the BBC has FINALLY produced so far on the housing misery that is hitting our shores. A great listen for 38 mins. Starts off slow with some dumb Brummies, but gets much better, with some great tongue in cheek line like "property prices always rise, right ?" Shame the BBC haven't decided to allow this to go out on a more main stream channel.
part with your advice on yahoo
get posting on this one guys
Dramatic fall in the housebuilder’s sales
"He also warned the turmoil in the credit markets and this year’s interest rate rises would dampen volumes and prices and that it was unclear how quickly the housing market would recover." Recover ? From what - nothing significant's happened. Do these people actually think that 20% per year price increases are healthy and sustainable ?
Who else is up the creek without a paddle?!
At this rate, 0.5% above LIBOR, only companies with terrible credit ratings will go for the loans. The roumour mill will indeed be going around about who has been forced to borrow at this rate. Wouldn't it be a scream if we found out that another mortgage supplier had to dig deep?!
When the fat Lady sings?!
"But Barratt said the long-term picture for house prices was still positive". What, in that house prices should be 3.5x wages on average and in that the long term sustainable price continues to rise?! What exactly is a slowdown? What a non-commital term, how long until the slowdown becomes crash, becomes slump, becomes meltdown?!
Job losses in the City..?
Experts are now predicting that up to 10,000 City jobs may be at risk as a result of the credit turmoil in the financial markets. Lehman Brothers have already got rid of 800 employees and some investment banks are believed to be thinking of cutting up to 15% of their workforce.
Americans are spending less
Consumer confidence fell more than forecast in September to the lowest level in almost two years, as declining home values, a deteriorating labor market and tougher borrowing standards took a toll on Americans' spirits.
self cert borrowing and btl scam
already refered to yesterday, but actual programme refers to 2 scams. 1. about self cert borrowers lying - mentioned in blog yesterday 2, about BTL new units being sold at 85% of claimed price so that BTL mortgage actually covers whole price and banks carry whole risk. Encourages reckless buying and figures for claim price make it to Land Registry which means their statistics are cast in doubt. (the link is for the file on 4 programme - can be listened to for 1 week after broadcast on 25 Sept)
upswing in Europe’s biggest economy is over,
The slowdown begins. An unexpectedly steep fall in the German Ifo business-climate index on Tuesday – to its lowest level since February 2006 – shows that the best part of the upswing in Europe’s biggest economy is over, with consequences all over the 13-nation eurozone. With the euro last week reaching record levels against the dollar and, more crucially, on a trade-weighted index, the latest news seems unsurprising. But it is not clear whether the currency’s recent appreciation – the result of the global credit squeeze and fears about the US economy – is yet to blame http://www.ft.com/cms/s/0/d1322e24-6bc9-11dc-863b-
Could the US trade deficit be about to disappear?
The latest monthly data showed the US trade deficit was about $59bn. On an annualised basis, this is just over 5 per cent of gross domestic product, an improvement from the 7 per cent level of not so long ago. Within the details, there are also some impressive signs.
Gordon Brown came under mounting pressure yesterday to call a snap election this autumn as a new opinion poll put Labour 11 points ahead of the Tories.
Labour prepares its activists for a snap election Gordon Brown came under mounting pressure yesterday to call a snap election this autumn as a new opinion poll put Labour 11 points ahead of the Tories. Another bout of election fever gripped the Labour conference in Bournemouth, where delegates were put on full alert for an early poll and issued with a 96-page "campaign toolkit". Peter Watt, Labour's general secretary, said in his introduction: "The preparations for the next general election are now well under way."
The euro is now hugely overvalued for France, though not for Germany. It is hammering French luxury exports and forcing Airbus to mull yet another €1bn of cuts
The news reaching the desk of Christine Lagarde at the French ministry of economy, finance, and employment is dreadful, and getting worse by the month. The budget deficit is ballooning to €42bn (£29bn). The trade deficit is smashing records. Business confidence has fallen to the lowest in five years.Her own prime minister blurted out on Friday that France was now "bankrupt", with no chance of halting its relentless slide down the global growth league unless there is a drastic change of course.
As the dollar flirts with all-time lows on a trade-weighted basis, the smell of approaching capitulation is in the air
US dollar Can sentiment get any worse? As the dollar flirts with all-time lows on a trade-weighted basis, the smell of approaching capitulation is in the air. The bears have plenty of fodder. A need to rebalance the huge current account deficit has provided a solid long-term case for dollar weakness. The prop of higher-yielding dollars has been eroded by rising interest rates abroad and now pummelled by the Federal Reserve’s half-point cut. Meanwhile, the US slowdown is piling on the pain. Tuesday’s horrible housing data again raise the spectre of real estate acting as a significant drag on the US economy and forcing deeper interest rate cuts.
I think some is having a laugh now-What the FLIP!!!!
The Bank of England creates it for the purpose of lending it out to the banks and electronically transfers it to their accounts. However, the banks will have to pay it back within three months, when it may simply disappear again.
means that UK financial institutions now must pay more interest to borrow money
The sub-prime mortgage crises has claimed several scalps in the US but has so far failed to heavily affect the rest of the world. It is safe to say, however, that mortgage industry analysts are waiting with bated breath to see whether the UK financial markets will be adversely affected.
The Northern Rock debacle has increased worries about the banking sector, particularly those institutions that rely in part on wholesale funding.
Questions have been raised about how UK banks, particularly small mortgage banks without the comfort blanket of large balance sheets, will access wholesale funding – given that capital markets are in effect closed for business.
US house sales at 5-year low
Housing markets continued to slump across the nation in August. The number of homes sold dropped for the sixth straight month to their lowest level in five years, according to the latest report from the National Association of Realtors. Sales were down 4.3% from last month and 12.6% from last year. The slump pushed the glut of existing inventory to an all time high However NAR said median prices were stable. "Sellers are not being realistic about selling prices. Owners are still holding out for their asking prices.That explains the contradictory trend of fairly stable prices but sharply lower sales numbers. Prices will have to drop to clear the 10-month backlog of unsold inventory."
The rich propped up by the taxpayer.
The nations Number 1 housebuilder posts massive losses
The nation's No. 1 homebuilder in terms of revenue, Lennar posted a net loss of $513.9 million, or $3.25 per diluted share, down from the net earnings of $206.7 million, or $1.30 per diluted share, in the year-earlier period. this is massive, could this be the start of a USA recession, if so UK brace yourselves,
50% fall in mortgage volume on the cards
Advantage, a mortgage lender owned by US investment bank Morgan Stanley, has warned mortgage packagers that the credit crunch could see their business volumes reduce by 50% unless they re-evaluate their business models...
THE states that can least afford it, NSW and Victoria, will be hardest hit by the US sub-prime crisis.
This emerges from a report released to The Australian by the leading receivables and credit company Dun & Bradstreet. The report concludes that the greatest concern is for NSW and Victoria, both of which send about 33 per cent of their total exports to the Asia-Pacific region, and are dominated by manufacturers and wholesalers, most of which are small to medium-sized businesses.
Heavyweights get out of Real Estate - London & UK next!
``You're seeing a retrenchment in the private-equity, hedge-fund and brokerage businesses, and there could be a lot of layoffs,'' Heebner, 66, said. ``That could have a devastating impact on high-end residential real estate in New York. Appetite for office space will also decline.''
House prices fall in every region
The average house price in August was £221,708, according to the latest figures from team Association, the UK's largest branded network of independent owner operated agents. Overall, prices slipped in every single region, as the traditional summer slowdown was compounded by the credit crunch, interest rates squeezing affordability and the rollout of HIPs (Home Information Packs)
Browns desperate Tax Grab set to accelerate as the economy turns to poo!
The Revenue is already pursing some 40,000 UK citizens who have offshore accounts with High Street banks. Following a legal ruling, Barclays, HSBC, HBOS, Royal Bank of Scotland and Lloyds TSB have already been ordered to hand over the names and details of their UK customers who had accounts with branches based offshore..
More Record Price Falls in US
The Case Shiller Index, the best index of house prices in the US, shows another record fall in prices. "Increased lending restrictions and reduced demand are prolonging the housing slump, now entering its third year. Price declines may continue, and possibly deepen, because homes are staying on the market longer, economists said."
Pennies on offer for the ultimate sacrifice
Armed Forces personnel deployed to Iraq and Afghanistan will benefit from a tax-free rebate on the cost of council tax in new measures announced by Defence Secretary Des Browne today. All troops who pay council tax for a property in the UK will receive financial support through a flat-rate rebate payment over a six month tour of £140 - worth 25 per cent of the average Council tax bill.
UK Subprime market "higher than official estimates"
Great article from The Economist about the knife-edge state of the global economy. It makes the point that the UK economy has been growing on the same faultlines as the US economy: an overvalued housing market, high consumer debt and a massive trade deficit. And the sub-prime market - estimated at 10% - is likely to be more like 25% when one takes liar loans into consideration.
CDO investment analysis by fund
Crash "likely", BTL particularly vulnerable
This won't make any regulars to this site fall off their seat with surprise - it tells us what we all knew all along - but it's yet another example of mainstream media talking about a crash. We've seen lots of this since NR. And the more of it we see, the more nervous the BTL brigade get. And the more likely they are to sell. And the more supply outstrips demand. Etc, etc, etc.
IMF says UK market is comparable to US
The International Monetary Fund has predicted that the subprime problem in the US will continue to unfold 'at least through 2008'. What's more, the IMF says that the UK has a similar subprime problem...
My buy-to-let dream cost me everything
"Anne, not her real name, has been a taxi driver for most of her life. 'Driving day after day is long, hard work,' she says. So in January 2002, in a brave attempt to escape the daily grind, she parted with £6,000 of her precious savings to attend a three-day property investment seminar in London."
On the Brink of a Crash
BTL jump ship... The UK Housing market is teetering on the brink of a crash led by the buy to let sector investors jumping ship. But the messages coming from the major banks and UK central bank are still benign. In many ways the situation is reminiscent of the initial stages of the the early 1990's property bust, which was also accompanied by soothing statements that ignored the facts on the ground as this article will illustrate
And they say there is no sub prime problem in the UK?
Industry insiders have described how people have been advised to lie about their incomes to take out loans far bigger than they can afford. It is impossible to tell how many cases there are because few borrowers or mortgage brokers will admit to the practice, but campaigners fear it is widespread and have urged the Financial Services Authority to take action against the lenders and brokers involved.
8pm tonight on Radio 4 : File on 4
"As American house prices are hit by a flood of defaults on home loans, Michael Robinson investigates growing concerns about unchecked borrowing and the potential danger for the UK housing market." Looks like it will "open the lid" on the millions of self cert "lie to buy" mortgages and the dodgy EAs and brokers who have encouraged it. Another BBC investigation 5 years too late, but maybe worth a listen just to confirm what's been said on here for far too long.
Spot the VIs (a Where's Wally? game)
It is the name given to the act of making a quick profit by buying a property, then selling it straight away for more, often between exchange and completion, avoiding stumping up any more than a five per cent deposit.
Is this the start ... when the Property Agents even get themselves into trouble ???
It pretty much speaks for itself ... "Erinaceous shares tumbled 47pc after the property services group revealed it had breached banking covenants and was in emergency talks with lenders." "Nearly £55m was wiped off the company's value after the shares closed down 51 at 57¾p. The news came as Erinaceous withdrew its interim results, which were due to be published today. Talks were continuing last night."
11.5 % Interest rate????
Some firms specialising in mortgages for those with a patchy credit history have pushed up loan rates to an astonishing 11.5% - double the Bank of England base rate.
A New Inflation Measure: The Grateful Dead Inflation Index
This is about CPI manipulation in the states. There's a bit about how an over-supply of rental-units is artificially keeping CPI down, as CPI only tracks rents and not the cost of buying a home. Sound familiar ?
Mayfair replaced by the cathedral city of St Albans as the nation's top real estate
Cities and towns across Britain take the place of London street names on the world's most popular board game after a vote by more than one million people. Leeds and Liverpool replace the cheap streets, Whitechapel and Old Kent Road, while posh Park Lane becomes Exeter. A city's position on the board was set by the number of votes it received. Thus, London, where the average price of a house is £313,000, comes before Stoke-on-Trent, Derby and Birmingham where buying a home can set you back half that amount. However, average house prices in commuter-belt St Albans are in fact the highest among the 22 towns and cities featured.
Not Enough Money to Go Around - Bank deposits fund seen worth 4.4 mln pounds
The fund that Britain taps into in order to protect bank deposits is worth only 4.4 million pounds, a newspaper reported on Tuesday. The report by the Independent comes as the government has signalled it may provide consumers with full protection on deposits of up to 100,000 pounds as the nation's lenders face a credit crisis that triggered the worst run on a British bank in recent memory.
Subprime Panic Freezes $40 Billion of Canadian Commercial Paper
bloomberg.com: Baffinland ran short of funds to pay for food, fuel and drilling equipment after investing in commercial paper that borrowers couldn't repa
On Baffin Island in the Arctic Circle, Baffinland Iron Mines Corp. almost missed its window to ship provisions to workers before winter arrives. The delay came not from the weather, but from a sudden freeze in the market for short-term debt 2,000 miles south in Toronto.
Northern Wreck to shell out using your money : Insanity
Northern Rock's growing troubles have led to resentment that shareholders will profit from the taxpayers' guarantee. The bank plans to pay a £59m dividend next month to everyone on the share register this week, despite having drawn £2.9bn from the Bank of England's emergency facility just to keep the business running.
We knew it already
More gloomy news about the British house market
The International Monetary Fund has warned that Britain's sub-prime mortgage system is comparable to the United States, sparking fears about the stability of the housing market.
History doesn't repeat itself, but it does rhyme
The UK Housing market is teetering on the brink of a crash led by the buy to let sector investors jumping ship. But the messages coming from the major banks and UK central bank are still benign. In many ways the situation is reminiscent of the initial stages of the the early 1990's property bust, which was also accompanied by soothing statements that ignored the facts on the ground as this article will illustrate.
Braced for prices to fall back by up to 5% between the end of this month and the new year, the report says.
Prices of multimillion-pound homes in Central London may fall over the coming months as weaker financial markets and fears over patchy City bonuses and job security take their toll, reports The Times in London Tuesday. Savills PLC (SVS.LN), the property agency, expects minimal price growth - at best - over the coming six months and is braced for prices to fall back by up to 5% between the end of this month and the new year, the report says. he agency is the first to adjust its growth expectations for prime parts of Central London, it Times reported.
IMF states the obvious
"The International Monetary Fund has warned that Britain's sub-prime mortgage system is comparable to the United States, sparking fears about the stability of the housing market."
Meanwhile, bond rating agency Moody’s has reported that credit card companies wrote off 4.6% of payments as uncollectable between January and May,
Meanwhile, bond rating agency Moody’s has reported that credit card companies wrote off 4.6% of payments as uncollectable between January and May, a 30% year-on-year increase. It’s likely to get worse; according to Merrill Lynch’s David Rosenberg, overall balances on credit cards jumped by an annual rate of 11% in May and June, showing that distressed homeowners are turning to their credit cards. “The lender of last resort as banks pull in their horns is the credit card.” All this presages a jump in credit-card delinquencies over the next year. “The next shoe to drop” in this subprime mortgage fiasco “is probably going to be the credit-card business”.
Borrowers told to lie to get the mortagage application through ... surely not!
In a letter to 100 MPs, including the members of the committee, he denied that Northern Rock had been a reckless lender.
The dividend is due to be paid on October 26 to everyone on the shareholder register on September 28, leaving Northern Rock just a few days to alert potential investors if it changes its mind and pulls the payout.
The International Monetary Fund has warned that Britain's sub-prime mortgage system is comparable to the United States, sparking fears about the stability of the housing market.
The Washington-based institution singled out the UK's low-income mortgage market as a key area of risk for the financial system.
Britain's deposit protection scheme currently holds funds of just £4.4m, it emerged yesterday as banks warned that consumers face sharp price rises to pay for the Chancellor's plans to offer a £100,000 guarantee
The Financial Services Compensation Scheme took control of a £9m fund from its predecessor scheme but that has been gradually whittled down through payouts to depositers with collapsed credit unions. The scheme's meagre resources are in stark contrast to America's Federal Deposit Insurance Corporation which has a $49bn (£24bn) fund and the power to take control of the deposits of failing banks.
Revenue renews offshore sweep
The Revenue wants to widen its net to catch more Britons who have hidden money offshore, in the wake of its recent success in prising open secret accounts held with five high street banks – Barclays, HSBC, HBOS, Royal Bank of Scotland and Lloyds TSB. Plans for a renewed assault on tax evaders with undeclared offshore accounts are being drawn up by Revenue & Customs, which has called an exploratory meeting with 170 banks, brokers and wealth managers for Tuesday. .
Not quite funeral time for the greenback
the current account deficit is falling sharply. In purchasing power terms, the dollar is now absurdly out of whack with all other currencies, as anyone who has bought a five-dollar ice-cream in London can attest. In any case, the financial turmoil in the UK in recent weeks and question marks over the Bank of England’s credibility may start to produce a fall in sterling – at least one of the important cross-rates. Even if the dollar does fall further, if the US economy avoids a recession in the next few months – still a probability – expect the greenback’s long slide to begin to reverse.
London's Business Sector Growth Predicted to Fall
London's Business Sector growth could be curtailed as Property services firm CB Richard Ellis (CBRE) warns that half of the new buildings planned for the City over the next five years could be shelved or postponed.
We always knew HPC could do better forecasts
"The world's three biggest currency traders advised investors at the start of the year to bet against the British pound when it traded at $1.9588".....Doh!
Northern Rock gained market share in part by taking risks
The immediate danger for depositors of British mortgage lender Northern Rock may have passed, but the company's troubles highlight a greater threat ahead: the broader impact of the global credit crunch on the United Kingdom's housing market and the world's fifth-largest economy.
Sept. 24 (Bloomberg) -- The U.K. had a larger budget deficit than economists forecast in August as spending jumped and revenue from profits fell, piling pressure on the government to save money as income from financial services dwindles
The cold economic wind blowing from the US
Northern Wreck was the first casualty - but it won't be the last
Northern Rock is hardly a distant memory - but with the immediate crisis past, most investors are no doubt hoping that we’ll get back to business as usual pretty sharply. But Northern Rock’s woes were just symptoms of a deeper problem in the markets.
Another blow - and rumblings
Savings back in fashion in debt riddled Britain
UK families savings rise by £10bn to £47bn whilst borrowings excluding mortgages fell from £8bn to £4bn in the second quarter of 2007. This is a very large swing in percentage terms and may well account for falling corporation tax receipts as consumers slow their spending.
It is now time to "bid and chip" !!
The property-cheerleader-in-chief, our friend Anne, has found an lengthy and exotic way to tell us a simple thing: the market has turned a buyer's market in London. She revealed a secret bidding strategy to save money on your next purchase in Belgravia. What a finding! But be aware!!!! There are Middle Easterns and Indians who will steal your deal as soon as you "chip"!!
Finger in air when it comes to debt
Over two million British consumers (6%) cannot quantify how much debt they're in, according to research carried out by Unbiased.co.uk, the website promoting the benefits of independent financial advice. This trend seems worse amongst young people, with 41% of 18-24 year olds unaware of their current debt burden to within £500.
BTL market unravelling fast!
Budding property investors are in for a rude awakening. Paragonhas increased its rates, while the Mortgage Trust has launched a buy-to-let fixed mortgage that charges a huge 5 per cent fee and levies early redemption penalties for four years after the fixed-rate period ends. One broker called it a "truly appalling produc". House prices dipped in August for the first time in two years, and confidence in the price outlook dropped to its lowest level since June 2005.
VI talking rubbish
" Goldman Sachs, the world's biggest and most profitable securities firm, has good news for its competitors: The worst credit-market shakeout since 1998 is abating"
Credit crunch 'hits world growth'
The International Monetary Fund (IMF), which supervises the world financial system, says an economic slowdown is likely due to the global credit crunch. The IMF warned in its global stability report that the "downside risks [to growth] have increased significantly".
Is this really a surprise
Is it not strange that everybody apart from the people running Northern Rock are being blamed for this shambles
What a shambles - this is supposed to be our golden era of growth too, imagine what a downturn would bring.
Both key measures of the UK's public finances were further in deficit than expected in August, latest Office for National Statistics (ONS) figures show. The public sector net cash requirement was in deficit by £5bn, compared with £3.7bn in August 2006. And the government's prefered measure, of public sector net borrowing, was £9.1bn, from £6.7bn a year earlier.
Not sure which planet they're referring to
Not sure about our readers but all we see is vast swathes of empty new build flats in most city centres, perhaps ARLA forget to include this in their research. What next; buy to let players increasing rentals to match their mortgage payments?
the financial system especially vulnerable to shocks, it reveals in its quarterly bulletin published on Monday.
The Bank of England had feared a "gathering snowball" would be created by financial institutions' need for short-term funding, leaving the financial system especially vulnerable to shocks, it reveals in its quarterly bulletin published on Monday.
UK governments finances swung into deficit in August, registering the worst readings for that month since records began
ft.com: The public sector borrowed £9.1bn in August, £2.3bn more than in the same month the previous year and above forecasts for borrowing of £6bn.
The figures follow a record public sector surplus in July but could nevertheless raise questions over the government’s ability to hit its borrowing target of £34bn in this financial year.
Dummies blowing smoke up each others arses
With relatively low loans on their investment properties, more than half of all Buy to Let investors expect to increase their portfolios over the coming twelve months and 90% of investment landlords said they would not sell should house prices fall, according to the latest ARLA quarterly Review and Index published today, Monday 24 September. This is based on the largest independent survey of the Private Rented Sector...
It's crunch time, folks
High street banks are slashing credit card limits and turning away droves of borrowers in a consumer credit crackdown. Banks hope that by tightening up lending standards they will cut the cost of servicing problem borrowers. Half a million Barclaycard customers have seen their credit limits reduced in a continuing review by Barclays of its customers’ spending behaviour. Here we go, here we go here we go...
Brown justifies 1.4Trillion in debt
All common sense stuff !!
The UK, which has also seen extreme house price increases over the past decade, building societies used to hand out mortgages of up to 130 per cent of the property’s value, at up to five times an applicant’s income. The mathematics behind these mortgages is based on what economists call a Ponzi game – a gambit that will eventually collapse.
Buy to lose is a big scam! Even Dean had to admit it
The biggest scam after the Dutch Tulips. BTL investors will lose big this time! "Mortgage lenders have been reviewing their portfolios as rumours of fraudulent borrowing unsettle the buy-to-let sector. The scale of the problem is not yet known but following the difficulties of Northern Rock, lenders are scrutinising their books to see where any potentially disastrous risks could lie."
Oh me God.....
Britain's financial services industry could be hit with a £7bn bill to fund the Government's proposed new scheme to protect savers' deposits. Now I think things are going a little bit crazzzzzyyyyyyy. But ladies - check out the picture of Michael Owen - he could rock me any day !
Now you know why trust went out of the credit market
Deutsche Bank's profit could be hit by up to 1.7 billion euros (1.2 billion pounds) thanks to loans that have dwindled in value as a result of the credit market crisis...
Reposting the right link, sorry
The fear is that buy-to-let landlords are starting to sell their properties, in an attempt to avoid an imminent downturn. Tim Warrington, of landlord.co.uk, which has 14,000 registered landlord users, said: "Too many landlords selling in the UK could send the property market into freefall."
Buy-To-Lose - GAME OVER MAN! (As the grunt from Aliens once said)
"Too many landlords selling in the UK could send the property market into freefall."
For someone trying to get onto the buy-to-let ladder, the maths no longer stacks up.
Anybody fancy a spot of down hill ski-ing on the volatile economy of life?!
Growth could halve, transactions on homes could fall 20% from a clampdown in sub-prime, interest rates could fall. Remember the domino effect of a 20% fall in transactions, this could cause Northern Rock style panick as BTL investors rush for the door.
Levelling the land.
"Savills, the property agency, expects minimal price growth – at best – over the coming six months and it is braced for prices to fall back by up to 5 per cent between the end of this month and the new year." Excuse me? 5% fall in less than six months!! That is more than 10% fall in a year, which is the definition of crash, inflation adjusted, 10% fall is about 14% fall!! This will be the first prediction of a crash then, maybe time to open the first champaign bottle!! What idiot bought a house in London for a few million will have their wealth evaporating in a very short time, a crash can be a great leveller.
As Northern Rock's share price continued its collapse last week The Share Centre reported a 591% increase on the previous week's account openings as investors have swooped to take advantage of a weaker Northern Rock share price. Northern Rock also accounted for 34% of all deals on 20th September. The speed with which the accounts were opened illustrates the advances in online share dealing technology; investors can now react to changes in the stock market, without having to wait days for their applications to be processed. Even with greater measures for consumer protection, the share dealing industry can now move as swiftly as the prices of shares themselves.
The blind leading the blind
The Telegraph: We don't understand the markets, Bank of England admits following crisis at Northern Rock
The Bank of England is looking at improving the way it monitors UK credit conditions after admitting that the growing sophistication of the financial markets has made it more difficult to manage monetary policy.
The proposed deal would see the funds divide up Northern Rock's mortgage book, worth more than £100bn. But shareholders would be left penniless.
The hedge funds believe they could acquire Northern Rock's mortgages at below face value and make huge profits by holding them until they mature. The funds have yet to approach the Northern Rock board, which has spent the week scrabbling to find a new source of financing.
Do not miss this week's Davinomics
"On the other hand, money-market interest rates remain high in spite of last week’s swerve, and represent a tightening of monetary policy, particularly for the 60% of business borrowing directly linked to Libor" "PS: My reference last week to the fact that UK house prices are not 11 times average earnings, not much more than half that, brought a flood of responses, some quite rude. A disturbing number of people believe it. Let me set the record straight."
Down to £81/barrel? That's not much of a fall!
But check out what's going on in the Atlantic: http://www.nhc.noaa.gov/gtwo_atl.shtml
Rates on their way down? Or are they?
"Why does it matter? Because if the US falls into recession then only China can stop the world from going down with it. And whether China can hold up the world economy depends on how Wen responds to the most serious outbreak of consumer and asset price inflation in more than a decade." Also: Rate rise in Australia still a possibility, and arguments there seem relevant to here: http://www.smh.com.au/news/business/rates-rise-still-a-possibility/2007/09/23/1190486137172.html
The Repo Man cometh
Demise of Northern Rock means BIG Profits for Hedge Funds
Interesting article that shows how big profits have been made from the Northern Rocks fall from grace as certain hedge funds shorted the banks shares. "This may be a new story for many people, but it's not new for some sophisticated investors," observed Julian Pittam, the overall profit from shorting Northern Rock could be as much £1bn.
Tales of a deluded landlady
BTL landlords shaking in their boots
Buy-to-let landlords could trigger a house price crash as increasing numbers sell their properties because of higher interest rates and fears of price falls.
Regular review of global HPs
Choice quotes: 'America's housing boom was almost modest by global standards—which is worrying', 'the average “excess” increase in real house prices is 47%. ', 'dangerously loose lending standards fuelled America's housing boom and now the fallout from increasing defaults is exacerbating the bust.', 'If America's slump deepens, it might trigger a reassessment in Europe's property hotspots' etc etc. Enjoy!
Potentially disastrous, and possibly fraudulent, buy-to-let borrowing exists on an unknown scale in the books of mortgage banks, according to surveyors and lenders. Most of this 'toxic' buy-to-let lending is on new-build flats in regional cities where values are tumbling and tenants scarce. Lenders' main fears concern cases where property prices, against which loans were advanced, were inflated by the developer.
Brilliant because he bowed to Government pressure?
LONDON -(Dow Jones)- U.K. Prime Minister Gordon Brown Sunday reaffirmed his confidence in Bank of England Governor Mervyn King, despite the failure of a rescue package announced by the central bank to halt a run on Northern Rock PLC (NRK.LN).
How fast things change.
This makes Northern Rock virtually worthless. What is amazing is that this bank went from being worth billions to possibly not being worth anything at all, all in the space of a few weeks. I never realised that the foundations of our banking system were so shaky. With even HSBC putting forward a profit warning, things must be far worse than they seem.
That'll be us then!!
"IN the first hours of the Northern Rock crisis, a few gloom-mongers predicted a dire outcome for the housing market: there is a certain kind of person who takes a perverse pleasure in the prospect of a catastrophic slump in prices, with all the misery this would bring." Yes and there's a certain kind of person who has boasted about and engineered high property prices in the media and will get what they deserve.
Soon the press will be filled with tragedies from the credit binge! "Mortgage Express told Financial Mail it had not yet launched bankruptcy proceedings to take possession of Anne's own home, but would not rule out doing so. 'We always maintain that buy-to-let is not without risk,' a spokesman said."
will Carol give her fees back?( To help the liquidity crisis)
Barclays tries to sell "First Plus" at a loss.....It's the second loan outfit advertised by Carol Vorderman which Barclays preferred not to put their own name to.
Apparently you could tell the crash last time because estate agent offices suddently went silent.
Can houseprices survive 18months+ of credit crunch?!
Leading City figures have warned the credit crunch, which last week prompted Britain's first bank-run for 140 years, could continue for another 18 months.
Here we go!
“We are witnessing a ‘rabbit in the headlights’ reaction,” says Max Ziff, chief executive of the estate agency Humberts. “It will be a month or two before we can accurately measure the impact of this week’s developments on the property market. “We will see an early correction in prices, but not a crash. While prices will inevitably fall, the impact will be heavily skewed towards the lower end of the market and the big conurbations, where properties tend to be purchased with higher proportions of debt.” What the heck does it mean? To me it means that mainstream press is talking about CRASH
Confidence returns to the US Markets
Bailout Bank Carries On Regardless
Well I never, who'd have thought, the Northern Rock with Bank of England underpinnings carries on regardless with 117% Negative Equity Mortgages and 6x salary lending figures way ahead of other leading banks.
If your looking for a Sub-Prime mortgage go no further than the rock.
Is there any silver lining to this whole fiasco?
No comment 1
Alternative perspective of the Northern Rock crisis
The British have been feeling pleased with themselves lately. The economy has been growing strongly, the City of London has outshone Wall Street in attracting business from overseas, sterling has risen above $2 and home owners have become a lot richer, at least on paper. So when it emerged that the Bank of England (BoE) had agreed to bail out Northern Rock, the mortgage bank, the first instinct of many was to blame foreigners - particularly US banks that made subprime mortgage loans.
Correction should be no surprise!
In one dramatic convulsion Britain’s housing industry – from house buyers through mortgage providers to house builders – has moved from boom to the prospect of sharp correction. It is one thing for the housing market to anticipate a slowdown in growth. It is quite another to adjust to the prospect of a sharp and immediate downturn. Whether you are an individual planning to sell a property, a house builder looking for new sales or the government stuck with a target of building 3m homes, prospects have suddenly become much bleaker.
Getting tough out there
It is quite likely that liquidity support will be required by other UK Banks
Good analysis by BusinessWeek. Simon Adamson, London-based senior analyst at Credit Sights comments that "the liquidity freeze we are seeing is getting worse." Also Bradford & Bingley a lender heavily involved with buy to let (BTL) is seen as facing pressure. The article is a week old and a lot has changed in a week but the content of the article is highly relevent.
The last paragraph says: 'The United Kingdom was ranked at the bottom of the list at 29 countries, largely due to its high real estate prices and overall high cost of living.' I think they should add bad weather, crime & bland food.
The only ever production plateau/decline that has co-incided with high growth, is this a geological problem? Has the economy been more shaky than previously thought? Or both?
www.theoildrum.com: Peak Oil Update - September 2007: Production Forecasts and EIA Oil Production Numbers
- All Liquids: the peak is still July 2006 at 85.54 mbpd ( 0.11 mbpd), the year to date average production in 2007 (6 months) is 84.28 mbpd ( 0.02 mbpd), down 0.07 mbpd from 2006 for the same period. - Average forecast: the average forecast for crude oil + NGL based on 13 different projections is showing a kind of production plateau around 81 +/- 4 mbpd with a decline after 2010 +/- 1 year.
BTL is the UK subprime
"Unofficial numbers suggest BTL lending has become yet more relaxed than this suggests. It seems BTL largely replaced traditional first-time buyers in the market a long time ago and, more than simply not selling, BTL investors now need to keep buying to support the lower end of the UK’s residential property market. The party has gone on far longer than I could have predicted but the fallout from the US sub-prime market is leading to a severe readjustment in risk appetites and ‘the price of risk’. A BTL might be a sensible part of an overall pension plan but now does not look like the time to buy it and investors who did in recent years may have plenty of time to regret it ahead of them." Ah aha hahhah ahahah!
Warning! Prices may come down!
The recent turbulence in the credit markets is expected to put further pressure on the property market as banks become more cautious about who they are lending to and borrowing rates rise.
The bank's first profit warning in its 142-year history
The shock-and-awe of the ponzai scheme continues to spread its unrelenting toxicity. Last night, HSBC chief executive Mike Geoghegan said about the Decision One closure: "This is a small part of our US business. It's no longer sustainable and not the right place to allocate capital in the future."
Sheeple, read and weap
Sounding the death nell for NS&I
Alistair Darling is planning to guarantee people’s savings held in any bank or building society account up to £100,000 in an overhaul of the financial system designed to prevent a repeat of the Northern Rock fiasco.
the rain in the gulf falls mainly ....
analysis of future of house prices
"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 " Writer is not so pessimistic.
The housing market is in great health!
'This is the silver lining to the credit crunch and the financial uncertainty. Our suspicion that interest rates have peaked has actually been strengthened.' The credit crunch provides a silver lining for borrowers? Ah ahaha ahahh ahhhah ahahhahhaaa... I cannot stop laughing... who is the i@iot who wrote that! Yes the BoE base rate can go down but that does not mean mortgage rates will go down. Ah ah ah.... just wait November and will see the impact of the cost of bad debt on lending.... ah aha hahhahha aaahh.
A "drains up" exercise?
Publicly and privately, bankers and politicians are asking what the FSA could have done in its role regulating individual banks to prevent the Northern Rock crisis.
The inevitable happens (2)
HSBC Holdings, Europe's biggest bank, said that it would close its U.S. subprime mortgage unit, cutting 750 jobs and taking $945 million (468 million pounds) in charges and write-downs, because the business is no longer sustainable
The inevitable happens
Gold has advanced 12 percent and the dollar dropped 3 percent to a record low against the euro since the start of July as a crisis in the U.S. subprime mortgage market spread.
Is there no limit to the miracle?
Those clever banks are at it again. The value of the money you owe is lower as your credit worthiness drops, hence, when marked to market you owe less, and if you owe less, you make a gain. Brilliant - so the UK BTL investor can take the same approach. They will make gains, even as their grotty flats fall in price. Three cheers for accountancy.
Recent Press Coverage pointing towards a snap election
Recent press articles from London, Daily Mail and others are all pointing towards a snap election in October. The Daily Mail even stated yesterday that Brown was widely reported as favouring an early election, before tax hikes early next year and before the fall force of people coming off fixed rate mortgage deals starts to hit home. I think the PM knows exactly whats coming and his only hope is an early election.
Back to the 70's
Sources said the move had effectively turned billions of pounds of Northern Rock's liabilities into gilts (or guilts). Check the cartoon in this article says it all.
Who's screwing who?
Saudi Arabia has refused to cut interest rates in lockstep with the US Federal Reserve for the first time, signalling that the oil-rich Gulf kingdom is preparing to break the dollar currency peg in a move that risks setting off a stampede out of the dollar across the Middle East. These guys own most of the US. Perhaps it's the FEDs job to get them to dis-invest at a know down rate (bit like Norther Crock). Not sure who screwing who here. See also 'China threatens 'nuclear option' of dollar sales' http://www.telegraph.co.uk/money/main.jhtml;jsessionid=N0AY3R4MOVEOLQFIQMFSFFOAVCBQ0IV0?xml=/money/2007/08/07/bcnchina107a.xml Again not sur who's crewing who here?
Low Inflation! My Ar*e
Fundamentals are strong! but really?
Lehman Brothers said it is now forecasting GDP growth to be 1.7 pct in 2008, down from its earlier forecast of 2.3 pct. Meanwhile it said it expects the Bank of England to cut interest rates in February and May next year. 'The softer outlook for next year justifies 50 basis points of Monetary Policy Committee rate cuts ... we would not rule out earlier moves if there is further negative news from financial markets or the banking sector,' said Alan Castle, UK economist at Lehman. On the inflation front, Lehman said it now sees 2008 CPI inflation at 2.2 pct, down from the earlier forecast of 2.4 pct." Is this the strong oulook that underpins house prices? And how about the currency?
British Bankers Association behave as a union to protect their industry
... and they do so at the expense of the wider economy. This is a great analysis from Martin Wolf in the FT who lays the blame for the recent credit crunch squarely at door of the banking industry itself. They have engaged in irresponsible lending and now essentially hold Mervyn and the whole UK economy to ransom for taxpayers' money to bail them out of a jam. "In a game of chicken, the loser is the player who swerves first out of the way of the other driver’s car. Since the Bank is concerned about the health of the economy, while the banks are concerned only about their survival, the former is at a huge disadvantage. Apparently, the banks told the authorities they would not lend to their weaker brethren until the Bank opened its wallet. The threat was credible and the Bank swerved."
LOL...this analysis was from 2002!!! - 5 years later we're still at it.
Britain suffered an economic slowdown last year - but house prices still went up by 16%. The typical house now costs over £100,000, a level that prices most first time buyers out of the market. If, however, you had managed to persuade your bank or building society to give you a 100% mortgage and bought a house for £100,000 last year, you would have cleaned up. You would have received a £16,000 gain free of any taxes. Even after accounting for interest payments, you would still be £10,000 or more better off. Small wonder that people feel confident enough to spend so much money in the high street.
Bernanke tells Congress subprime will get much worse
Financial markets might be breathing easier, but US Federal Reserve chairman Ben Bernanke is warning there is worse to come, with subprime defaults expected to surge in the coming months.
Houses - "business as usual" ???
Rate cut potential diminished
Even markets are starting to question whether the economy will benefit from rate cuts. Rates could charge towards 0.5% again, but expect hyper-inflation and more bubbles if the fed go that way.
Higher prices are beginning to stick, are not only propped by the storm and winter peak-demand is on its way.
A look into the debt mire
No big suprise but nice to read it. Mortgage brokers said around a quarter of borrowers were in the "seriously adverse" catagory with more than six months' arrears on their mortgage, unpaid utility bills and credit cards.
RICS 1 in 10 chance of a crash
LONDON - A candid prediction that there was now a one in 10 chance the British housing market would crash, thrust the chief economist of the real estate trade group Royal Institute of Chartered Surveyors into the spotlight this week. Forbes.com caught up with Simon Rubinsohn on Thursday to ask him how the subprime mortgage crisis in America was affecting Britain, and whether the bank run at mortgage lender Northern Rock (other-otc: NHRKF - news - people ), was a sign things could get worse.
The unravelling continues...
US interest rate cut=weakening dollar=inflation=recession?
Thai carmakers are planning to increase prices of vehicles exported to the us in the belief that the US dollar may continues to weaken against other currencies for another 2 years.
About 5 million adjustable-rate mortgages are slated to reset to higher rates in the next 18 months, according to Lehman Brothers. Economists warn the housing slump could deepen if those homeowners are unable to refinance loans under tighter underwriting
-Subprime borrowers had trouble refinancing mortgages because loan programs were no longer available, according to a poll of 1,744 brokers in the last week of August by Campbell Communications, a Washington-based research firm. Prime borrowers were impeded by appraisals and high loan-to-value ratios, it said.Lenders cut off credit to customers at an especially fast rate in August as many investors stopped buying the debt banks use to finance home loans. Commenting on business in the weeks ahead, 14 percent of brokers said they had no available lender for subprime loans at all, said Thomas Popik, the author of the survey and principal of Nashua, New Hampshire-based research firm Geosegment Systems.
“The new capitalist gods must love the poor – they are making so many more of them.”
The hope of every central bank is that the real problem can be kept from public view. The truth is that the public---even professionals on Wall Street---have no clue what the real problem is. They know it has something to do with derivatives, but none of them realize that it’s more than a $20 trillion mountain of unfunded, unregulated paper that has just been discovered to not have a market and, therefore, no real value… When the dollar realizes the seriousness of the situation---be that now or sometime soon---the bottom will drop out.” Jim Sinclair, Investment analyst
new consumer motto of financial institutions in Australia can be summed up as
abc.net.au: Remember when financial institutions encouraged us to save money and develop a savings history? Not anymore!
No government agency has been tasked with the monitoring sub-prime lenders in Australia so no one knows how deep our problems run. According to ABS data, at least $9.5 billion of sub-prime loans were approved in the first five months of 2007 alone. This is certainly not a small market. The twisted and complex ways in which sub-prime lenders get their funding certainly exposes more of the banks than they seem willing to acknowledge. We are yet to see the full effects of the sub-prime fallout here, but I am certain that my service could use another lawyer to assist those people who will be hard hit and face losing their home.
It Aint Over Till The Fat Lady You Know What
The housing market is in its worst downturn since the Great Depression -- and it's taking the rest of the economy down with it. Most forecasters insist there won't be a recession, although the August job losses forced even optimists to acknowledge that the meltdown is causing serious economic problems. (When it comes to recessions, the professionals seem to be the last to find out: On the eve of the last downturn, in the fall of 2000, all the Blue Chip 50 forecasters predicted solid growth for the following year.)
GS might be behind HPC.co.uk
Or maybe it is Merv- trying to calm you down and make you resist the urge to splurge. Or maybe it is someone else, trying to find a steam-valve for your angst. Interesting times lie ahead. I do not understand the media reponse to the "run". Why would they be be so united in their promotion of it? Are the Bank trying to pull in a wild-card? Injecting liquidity by redistributing it from NR? Or are the media just being generally anti-social?
Jerusalem Post puts the Boot into Bank of England
The last two paragraphs are critical, the Jerusalem Post accuses the UK government of effectively nationalising by implication the entire mortgage banking sector and urges the rest of the world to withdraw their holdings of sterling and move to whatever they consider a safer home for their money.
All of this, and only a tropical storm threat, not even a hurricane.
"Energy companies have shut over 360,100 barrels of oil per day, some 27.7 percent, of Gulf crude oil production and 16.7 percent of natural gas production on the storm threat, the U.S. Minerals Management Service said on Thursday". Bernake's talk of a positive economy has also boosted oil prices, an imediate example of inflation from the fed cut.
Britain is different to the USA, we are more in debt!
Britain a country that used to pride itself on thrift is now awash in consumer debt: more than $2.5 trillion of it. That is roughly the same as the United States, which has five times the population.
In other words our average debt per person is 5x the USA's.
Big Fall Predicted for US House Price
Brown's Reputation on Economy Shaken
For Prime Minister Gordon Brown, getting past the immediate crisis over Northern Rock Plc may have been the easy part; the tough part is dealing with persistent doubts about the health of the British economy.
"Never give a sucker an even break" W. C. Fields
Bernanke is trying to temper congressional criticism of the Fed for lax enforcement and foot-dragging on rules to safeguard mortgage buying consumers.
The economic and financial doldrums ahead
The Bank of England was only ever going to be independent for as long as it was doing what the boss wanted. And for ten years, it did. Now the entire Anglo-Saxon economy - possibly the global economy, if you account for the fact that China’s economic miracle relies a great deal on selling Americans cheap goods - is a Ponzi scheme built on houses.
Press tries to prop up the BTL market
These are figures taken largely before the main event too!
Bear Stearns' profits took a big hit from its exposure to sub-prime mortgages and the disruption to debt trading over the summer. The US bank's profits between June and August fell 61% compared with the same period last year to $171.3m (£85.4m).
If you're "worried" that rate cuts will "solve" the HPC problem...
This was posted under a different link at about 11pm last night, but it's only just shown up so I think many may have missed it (there are no comments). This is a MUST READ. Written before the Fed actually cut rates but it all holds true, and for virtually every point made about the US you could just substitue "UK" and it would still be true - the parallels are frightening. HPC full steam ahead whether BoE cuts or not, but whither the economy...
Building Society mortgage approvals plummet
The Building Society Assocation press release this morning headlined with a positive message of savings growth. The real story is the 22% fall in gross mortgage advances in August 2007 compared to August 2006. This follows an 8.7% drop in July.
The MPC emerge as giants agains a backdrop of hypocrite politicians
Absolute Hedge Fund fights for its survival
So is Sir Mervyn King the "Fall Guy?"
Mervyn King had every reason to protect the BoE's integrity, both the SFA & the Government are clearly putting a squeeze on the "Hawk". But what the Government and the Quango have to realise, that there is only so many layers of wallpaper you can put on a wall before all of the wallpaper peels away. If I didn't know better, I would say this market intervention of an unprecedented nature. And the word Communism or Fascism would be not short of what is actually occurring. NR, is down 20%, and was down as low as 42% this morning. So when are we going to return to straightforward traditional capitalism, instead of the bastardised tripe that the public are now being served up.
Trouble? What troule?
Abbey is offering 125% mortgages! "Abbey defended the deal, insisting it would be useful to those buyers who need extra cash to furnish a property. A spokesman said the bank carries out personal finance checks on customers to ensure they can afford the repayments." If someone can't even save a couple of grand to buy a bed, table and a few chairs, how can they possibly be considered credit-worthy? This is madness!
You can run but you can't hide!
NR losses will eventually be picked up by taxpayers, who have thus become "shareholders". Nice problem for Gordon. For how long can the man in n.10 hide the current crisis. See previous posting on Pound slide for hints.
A partial return to sanity... against Gordon's wishes?
The saver's shares slide as Alistair Darling, the Chancellor, refuses to guarantee any new customer accounts. Shares in Northern Rock slid almost a third as the Government threw an obstacle in the way of a Northern Rock recovery this morning by refusing to stand behind any new accounts opened from today. The move by the Treasury - which at the same time guaranteed the rights of existing borrowers - left the Tyneside lender isolated and was seen as making a rescue takeover significantly less likely
$ and £ slip away! Inflation ahead.
Rate expectations have been turned around by upheaval in financial markets, weak UK house price data, and news mortgage lender Northern Rock has become the latest casualty of the global credit crunch triggered by defaults on U.S. mortgages.
Brilliant round-up of the current situation by Simon Heffer.
This was blindingly clear from the antics on Monday, when a bank in no danger of failing was underwritten by the Government. It was underwritten because a thin-skinned Prime Minister who, as Chancellor, had not presided over the economy with the brilliance he claimed, was shamed by the spectacle of a run on a bank being beamed around the world and making an international laughing stock of our financial system.
Independent - until we think we need to intervene to keep a boom going. Pathetic!
The Government has forced the Bank of England to relax lending standards in a dramatic U-turn, effectively stripping the institution of its independence for the first time since the new monetary regime was created in 1997. In a bizarre move, the Bank shifted tack abruptly yesterday by agreeing to flood the capital markets with £10bn of three-month money and widen the asset classes it will accept as collateral against the loans.
The imaginative number!!
Inflation is so fiddled.... you'll know we were right when they suddenly add the cost of housing to inflation. That day can't be far off.
How long before this reaches UK?
typical labour, change of heart or move goal posts
if anyone can shed some actual light on this???
David Smith's Sub Prime Problem Arrives.
Countrywide finally on the ropes.
Is Merv toast ????
Bank of England Governor Mervyn King will come under intense pressure today from MPs to defend the Bank's role in the lending crisis at Northern Rock.
Buy to let in serious trouble...
Article designed to frighten those in financial difficulty into selling their property to "National Homebuyers". What I don't understand is how they reckon they will be able to turn sentiment round in a year or two once prices are generally seen to be falling. If they hold on to the houses they buy now 'at a discount' - their stock will soon be in negative equity itself.
The biggest slump came in detached home sales, falling 8.9% in August to their lowest level since December 2006, while sales of apartments fell 6.8%.
Australian new home sales fell 8.6% in August from July, hitting their lowest level since January, according to an industry survey.The Housing Industry Association said sales of new homes and units among Australia's largest builders and developers were 7,712 in August. The biggest slump came in detached home sales, falling 8.9% in August to their lowest level since December 2006, while sales of apartments fell 6.8%.
Let me begin with the most important actors of all – the millions of British homeowners, savers and consumers, whose economic future was briefly balanced on a knife-edge this weekend.
Every ten years or so, any capitalist democracy can expect to have its economic system and governing institutions severely tested. For Britain, the last such occasion was Black Wednesday, 15 years ago, and before then the Winter of Discontent in 1979 and the sterling devaluation of 1967.
House prices across much of Western Europe have stalled or begun to fall as spiralling borrowing costs and fears of over-supply take their toll on markets from Ireland to Spain, an industry survey has revealed.
The German housing market has been hit hardest. A glut of property for sale in former East Germany dragged down price inflation countrywide, leaving the national average down 6.9 per cent over the 12 months to the end of June.
Handelsblatt made a summary of Ackermann's text available to other media at the weekend.
Growth, especially of private consumption in the United States, will suffer because of the housing crisis and that can naturally not go without negatively affecting the world economy overall," Josef Ackermann said in a guest column to be published in the German business daily Handelsblatt on Monday
MADRID: The current global credit squeeze may exacerbate an economic slowdown in Spain, where borrowing by companies and consumers has fueled rapid growth, analysts said.
Spain's economy is already faltering as interest rate increases begin to bite and a nine-year property boom starts grinding to a halt. Many analysts forecast that house prices will fall nationwide as early as next year. Tighter credit conditions will limit lending to firms that have borrowed to finance an acquisition spree, pushing Spanish corporate debt to 105 percent of gross domestic product - the highest of any large European economy, economists said.
Gordon made me to do it
Driving the property market into even deeper crisis
"Saudi Arabia has refused to cut interest rates in lockstep with the US Federal Reserve for the first time, signalling that the oil-rich Gulf kingdom is preparing to break the dollar currency peg in a move that risks setting off a stampede out of the dollar across the Middle East. The Fed's dramatic half point cut to 4.75pc yesterday has already caused a plunge in the world dollar index to a fifteen year low, touching with weakest level ever against the mighty euro at just under $1.40. There is now a growing danger that global investors will start to shun the US bond markets. The risk is that flight from US bonds could push up the long-term yields that form the base price of credit for most mortgages, THUS DRIVING THE PROPERTY MARKET INTO EVEN DEEPER CRISIS!!"
Great Article Explaining Sub Prime Mortgages and their Global Spread
Even if your not new to the subject this is a cracking article illustrating how lending practices how changed since the Great Depression and illustrates just how bloated the sums have become from the USA all the way round the world to even Bangladesh!
US Banks Brace For Storm Surge
By now, you've probably seen the photos of the angry customers queued up outside of Northern Rock Bank waiting to withdraw their money. This is the first big run on a British bank in over a century. It's lost an eighth of its deposits in three days. The pictures are headline news in the U.K. but have been stuck on the back pages of U.S.newspapers. The reason for this is obvious. The same Force 5 economic-hurricane that just touched ground in Great Britain is headed for America and gaining strength on the way.
Spain may face a replay of Britain’s ERM crisis in 1992, but this time without the safety valve of easy exit.
The banks are highly exposed to the Spanish housing market. After rising 270pc since 1995, house prices have begun to fall in parts of northern Spain, slipping 2.1pc in Barcelona and Madrid so far this year. Over 98pc of all mortgages are priced off floating Libor rates, causing mortgage payments to almost double in under two years. Construction has reached 18pc of GDP, more than Germany (15pc) at the height of the reunification boom.
Inflation will now increase: ready to duck?
US Treasury 10-year notes fell the most in six weeks as investors speculated inflation will accelerate after the Federal Reserve cut interest rates.
U-turn erodes Bank’s credibility
...It is not clear what the latest intervention is meant to achieve. The Bank will offer three-month liquidity at a penalty of at least 1 per cent above its base rate, an offer that will only appeal to banks in difficulties...
Channel 4 gives Merv and Gordo both barrels
In stark contrast to the BBC, Channel 4 News' top story asks if Gordon has been sticking his nose where it's not wanted. A dramatic U-turn by the bank of England: But who's in charge, the governor? or the politicians? A week can be a long time in economics - last Wednesday the governor of the Bank of England said that injecting more cash into the money markets "encourages excessive risk-taking, and sows the seeds of a future financial crisis". But today, after a week of turmoil which has undermined public confidence in the banking system, he did just that - pumping an extra ten billion pounds into the markets for three months.
Mega News Look What Landlord Association Is Doing He Has Set Up A Rival Site!!!!!!!!!!!
What will happen to interest rates in the months ahead? Are house prices going to fall, rise or stagnate? What lies ahead and how much can we learn from historic house prices? Judge for yourself by visiting www.HousePriceDebate.co.uk. The 'Discuss and research' engine for house prices and the UK economy. The Lanlord Association, is that the guy who used to post here has set up a rival site to this one!
But for how long now rates are starting to come down, this happened in 2005 before rates were cut.
Rightmove has backed up last week's findings from the Royal Institution of Chartered Surveyors (Rics) and agreed that house prices have indeed now started to fall.
Makes no sense to me
The UK's buy-to-let sector will continue to thrive if house prices fall. That is according to the Association of Residential Lettings Agents (Arla), which says that a cooling market will lead to increased demand from tenants.
Lower energy prices ?
The European Union proposed breaking up Electricite de France SA and E.ON AG or ending their network-management role in a push for more competition that would also impose curbs on OAO Gazprom
oops more job losses
Overall, that brought the total layoff damage to 107,758 in the financial industry this year. Another month that even remotely resembles recent trends will send the layoff total soaring past the 116,515 mark set during the recession of 2001. And that could spread to other sectors too. "We'll now start to see how it impacts as the effects ripple into the other areas," said Challenger, Gray & Christmas CEO John Challenger. "The mortgage industry grew and grew because we created buyers who traditionally wouldn't have qualified," same in uk??
oh dear...what next...
Many of the worst hit cities are in Sun Belt areas that experienced outsized home-price growth during the real estate bubble, according to Arnold Slesers, an associate economist at Moody's. The home price correction in many of these cities will be severe as unsold new homes and leaps in foreclosures add to already big inventories. what is different in the UK? Yes thats right a BIGGER BUBBLE
Stable door is being shut now !
BTL Bubble Bursters
The army of small British property investors now taking on risk on a heroic scale will realize that an investment that costs more to own than it generates in income and stops rising in price is a bad idea. Almost unbelievably, many buy-to-let investors have bought property as an alternative to a pension plan. While surely property belongs in all pensions, the idea that a highly leveraged, totally undiversified asset should be relied upon for old age support is, well, aggressive.
Truth is coming up in the mainstream press
What we have been knowing for a while is slowly being aknowledged in the press: "The turmoil in the financial markets in the past month has already taken its toll on asking prices in London. The higher cost of borrowing and an expected tightening of lending criteria for new mortgages could deter some smaller buy-to-let lenders from buying and force more potential first-time buyers into rented accommodation." ... sorry, what should a "lender" buy? and "Andy Wiggins, head of Bradford & Bingley’s buy-to-let division, predicted that one of the big fallouts from Northern Rock would be “fewer lenders stretching their lending criteria”.
Oz mortgage payments at significant risk of default will surge from 70,000 to 113,000 by the end of the financial year say JP Morgan
THE number of households in severe mortgage stress will balloon by more than half by next June, because the depth of the problem is masked by desperate borrowers obtaining new credit cards to free up money to make home loan repayments.
The influx of Romanian migrants has led to an explosion in crime in this country, it emerged last night.
During the same period in 2006, only 135 such crimes were recordedWe have made it perfectly clear that we will seek to deport foreign nationals who have committed a serious crime in the UK."
Oil above $82 a barrel after US rate cut
Oil prices have reached fresh highs above $82 a barrel after the US Federal Reserve cut interest rates. The cut in the cost of borrowing helped to allay fears about the US economy being stifled ahead of peak winter demand for fuel.
Under the big Brown thumb?
British banks will be able to borrow from the Bank of England for three months using mortgages as collateral, the central bank announced in an extraordinary U-turn. Up to now, Mr King has insisted that such action would be tantamount to bailing out banks that had made risky lending decisions and would sow “the seeds of a future financial crisis” because it provides after the event insurance for risky behaviour. Bye bye economy, hello to the latest addition in tha long, proud line of polical book-cookers.
"There has been a role reversal between the world's financial markets and the economy. Before this summer's credit crisis, it seemed to be the economy that was driving markets forward, and now it is the markets, and how well they can weather this crisis, that appear to hold the key to the future direction of the economy. We have uncovered a lot of astonishing facts and figures in our research into the causes of the credit crisis, but what is most surprising is how little we can unravel about where these enormous liabilities have ended up.
The cycle is buckled and broken
Mortgage funding is proving more difficult to originate and mortgage debt more difficult to sell on, resources are becoming stretched and forcing some lenders to up their rates and tighten criteria. With no end to the crisis in sight, the market it starting to brace itself that total lending in 2007 may not be what it was once hoped to be.
What's going on now ??
The Bank of England today moved to bring down three-month borrowing costs by making a surprise £10 billion injection into the UK banking system, signalling a U-turn on its hands-off stance during the current financial crisis.
As many as half of the 450,000 subprime borrowers whose mortgage payments increase in the next three months may lose their homes because they can't sell, refinance or qualify for help from the U.S. government.
Less flights is this a slowdown?
Note they cite the slowing car industry as a reason... Is this the start of a bigger slowdown? Will jobs go as routes go?
chief constable has demanded more staff for her force to help cope with the effect on crime of the rise in migrant workers.
There is also a problem with "feuds" between foreign nationals being brought across to the UK, Mrs Spence told BBC Radio 4. We recently had a murder and it was a Lithuanian on Lithuanian and it could easily have happened in Lithuania. "But it didn't, it happened in Wisbech, so one of my staff spent a lot of their time in Lithuania trying to get underneath what was actually happening with the crime and criminality, which brings costs that you wouldn't have had before, which means something else has to give."
Time to invest in gold as Bernanke devalues the dollar
Yesterday's half-point cut in US interest rates may have sent stock markets around the world soaring, but it's left sensible investors with only one choice.
Still not out of the woods!
Northern Rock is poised to draw on the Bank of England's funding lifeline after bundling up £5bn worth of mortgages as collateral.
Will house prices crash
Can't keep sweeping dirt under the carpet forever
A spokesman for Neelie Kroes, the competition commissioner, said the ban on government subsidies to banks could be waived in exceptional circumstances of "systemic risk", but not on a long-term basis. "We're monitoring the situation," he said.
In The US the FED has announced it is on RECESSION watch!
The Federal Reserve sent the stock market soaring yesterday. So can it stop the decline in home prices, too. Don’t count on it. Guys take emotion out of this. The storm has only just begun. I am not an expert and value opinion but I feel this is may just be a cat and mouse game to the bottom.
One e-mail, purportedly sent by a trader at Lehman Brothers on Friday morning, urged, “load up on Northern Rock for your children, your mum, your goldfish” – just as the bank was suffering the first of two days of heavy losses.
Time to make a mark in the sand: got a prediction?
Is Buy-to-let UK's bubble blower?
Makes the claim that in the future people might perceive 'buy-to-let' in the UK as even worse an idea than subprime in the US was. A very interesting read that tries to compare UK and US markets.
Same data but different Interpretation to the BBC
How? Why? What?
Northern Rock’s largest shareholders have been selling shares fast in the past two days. Baillie Gifford, the Scottish fund management partnership, is understood to have sold most, if not all, of its 6 per cent holding in the bank, realising a loss of up
Baillie Gifford, formerly Northern Rock’s largest shareholder, made the sale at some time in the past two days, according to people close to the group. The move took place during unusually high daily trading volumes in Northern Rock of more than 242m shares on Friday and 277m on Monday.
Very good appraisal of the FEDs mad decision.
Interest rate cuts by Federal Reserve Chairman Ben S. Bernanke will spur inflation, cause the U.S. dollar to collapse and push the world's largest economy into recession, investors Jim Rogers and Marc Faber said. ``Every time the Fed turns around to save its friends on Wall Street, it makes the situation worse,''
The Dollar Index against six other major currencies sank to the lowest since September 1992 after the Fed cut its target rate for overnight loans between banks by the most since November 2002 amid concern that the worst housing slump in 16 years and increased borrowing costs for companies may threaten economic growth. Most analysts predicted only a quarter-point cut.
Buy-to-let faces a Wile E Coyote moment
LONDON (Reuters) - Buy-to-let property investment is Britain's version of subprime and the Northern Rock debacle will prove to be the needle that pops the bubble. Lending terms will be tightened, rates will rise, and most important of all, confidence will be hit. The army of small British property investors now taking on risk on a heroic scale will realize that an investment that costs more to own than it generates in income and stops rising in price is a bad idea.
So clearly the plan is to fiddle the inflation figures to high heaven, even more than they have already been doing. Clearly shows that the economic powers that be are completely clueless when it comes to fiscal policy. Panic 0.5% rate cuts, banks being bailed out by tax payers money, central banks ploughing cash into the markets. They are going to have to rewrite the Econonics curriculum in schools after this palava!
Yeah! I got there first - Turn the taps on again!
The Federal Reserve lowered its benchmark interest rate by a half point to 4.75 percent, the first cut in four years, hoping to keep the U.S. from sinking into a recession sparked by spreading housing-market fallout.
"The banks have been lending to amateur people who are investing on the basis that house prices will only ever rise"
Reuters journalist tells it like it is on BTL: fave quote - "Almost unbelievably, many buy-to-let investors have bought property as an alternative to a pension plan. While surely property belongs in all pensions, the idea that a highly leveraged, totally undiversified asset should be relied upon for old age support is, well, aggressive." Yes, aggressive is one word - the world "insane" also springs to mind...
It added that at least 600,000 households are likely to experience mortgage stress by the end of the year
Stress levels among Australian mortgage borrowers are on the rise and potentially some 113,000 households, or 1.6 percent of the market, could be forced to sell their homes, according to an industry report released on Tuesday. Housing affordability has worsened as the pace of house price growth has outstripped increases in disposable income, said the report by Fujitsu Consulting and JP Morgan.
Goebbels is "Alive & Well" and living at the BBC
What an amzing suggestion by the beeb, showing pictures of people closing accounts and using text and images " to the contrary". For the the well informed, we recognize that this is no longer a "free society", but this article merely confirms this. If only Churchill was alive to see this. Because indeed, this is our darkest hour.. and lets hope that the markets wipe these neo-fascists governments of the face of our world.
The Blame Game Continues.
“From Dutch tulips to dotcom shares to Japanese land prices, and now UK house prices, we see banks and individuals entrusting their money to a market which seems to offer a one-way bet,” said Mr Cable. “Until it bursts, the bubble has a logic of its own, inflated by uncontrolled credit expansion and rampant speculative demand.”
Crash averted? If there is only a 10% chance prices will drop then that means that there is unlikely to be a crash :( :(
Inflation is going down everywhere-it's official!
Zimbabwe's annual inflation rate slowed in August to 6,592.8% from July's record of 7,634.8%, according to the Central Statistical Office (CSO). The CSO stated the reduction was due to cheap i-pods and cinema tickets + a lack food to skew the figures. An official at the CSO said "We are in the process of adopting the CPI model of inflation and expect September's figure to be <2.0%" The official added, "If it works for the UK, it can work for us. Happy Days!".... Trying to lighten the mood.......
Will it sell for £1 like ING
Financial Times: Northern Rock trade sale for nominal sum or run-off now most likely solution, banking sources say
A trade sale for a nominal sum or a run-off scenario are the most likely solutions for UK-listed bank Northern Rock, banking sources have said.
State Guarantee = Profits Taken from share Trading
Northern Rock up 8.2%, Alliance and Leicester up 28%, I wonder how many privvy to this information have bought and sold today, nice little earner. If this wasn't the BofE of HM Gov I wonder what it would be classed as!
Were these savers screened for signs of mental illness
Demand 0.3 million units, supply 0.7 million
Excess supply may lead to a decline, predicted Gonzalo Bernardos, an economics professor at the University of Barcelona, who expects a 20 percent HP drop by 2009.
"Nesting, not profit, key driver in home ownership"
Who will be next?
We feel reassured by the government, but...
Three major lenders are being seen as particularly vulnerable following the Northern Rock disaster. Here they are profiled by Deputy City Editor Lucy Farndon. hmmm... I wonder how may more lenders can be bailed out by the Government. Clouds are gathering on the Pound
Fresh wave of defaults inc
Free-market principles turned upside down
Anyone who plays the housing market IS in effect being bailed out right now, with the costs carried by all taxpayers. Petition the Prime Minister not to bail out mortgage holders and mortgage lenders with our taxes. http://petitions.pm.gov.uk/NoCityBailout
20% chance of a 10% drop in London
Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (Rics), told Reuters that while talk of a "crash" was legitimate and not irresponsible, homeowners were unlikely to see a repeat of the previous slump. Mr Rubinsohn said he had revised down his forecast for the market over the next 12 to 15 months from 3% growth to a flattening of prices. In London, however, he said there was a 20% chance of a 10% decline in prices over the next 12 months
Another Rate Cut on the cards, HPI about to increase again...
Inflation unexpectedly fell to 1.8 percent, its lowest in more than a year in August, giving the Bank of England room to cut borrowing costs if the credit crisis deepens. Only last month markets were gambling that interest rates would need to rise again this year, but a global credit squeeze has put paid to that hawkish outlook and woes at mortgage bank Northern Rock have raised hopes of an imminent rate cut.
Another 4.4 billion pounds of tax payers money injected into the system.
The Bank of England pumped an emergency 4.4 billion pounds into money markets on Tuesday to bring overnight interest rates down after they had shot up in the wake of the crisis engulfing Northern Rock. Overnight rates hit 6.5 percent on Monday -- 75 basis points above the Bank's official rate -- on concern the troubles at Northern Rock
Is anything worth investing in just now?
A couple of months ago, there was talk of a snap election. Now Gordon Brown will want to put as much distance and time as possible between the queues at Northern Rock and the queues at the polling station. But in the meantime, who can he turn to to bail him out of this mess? Why, the people he‘s always turned to, of course - the taxpayers…
Inflation should be going up not down!!!
Messages for the wider economy and markets
This 'no-nonsense' financial website has regularly plotted long-history 'real' house price indices (ie realtive to general inflation) to support bubble claims. Evidence the US bubble had burst has now been followed in short order by the UK. You don't need house price databanks to realise that the psychological shock of queues of depositors outside Northern Rock marks the end of the great bull market. As a liquidity crisis gradually transforms into a credit cycle, it also marks the end of the Great Stability: politicians' hollow claim to have tamed both inflation and the business cycle. Always circumspect about economic forecasts, No Monkey Business is unusually confident in predicting recession because of the predictablity of real house price cycles and their knock-on effects.
We've only just begun.........
The Bank of England made emergency loans to U.K. banks to shore up confidence in the financial system, saying it received ``intelligence'' that demand for money may prolong a surge in overnight borrowing costs.
So now there's a 1 in to chance of a housing crash, amazing how sentiment changes in a matter of months
There is a "one-in-10 chance" of a 1990s-style housing market crash, the Royal Institution of Chartered Surveyors (RICS) said on Tuesday, after scaling back its expectations for house price inflation. He also said there was a "20 percent chance of a 10 percent" decline in London house prices over the next 12 months, and said talk of a looming "crash" was legitimate and not irresponsible.
The RPI inflation measure - which includes mortgage interest repayments - rose to 4.1% from 3.8%.
Not in the real world it didn't
The U.K.'s inflation rate unexpectedly fell to the lowest since March 2006 last month, adding to evidence the Bank of England doesn't need to raise interest rates from a six-year high.
Rightmove, the largest advertiser of property for sale in England and Wales, has published figures showing the largest monthly fall in asking prices since the survey began. The surprising news is that London is no longer immune to the slowdown, average prices across London fell by 2.5%.
First-time buyers heading toward extinction
The NAEA have still got their heads in the sand, but what would you expect. They report that activity has increased since July, but also that " first time buyers took a smaller share of the market this summer as their percentage share was reported at 9.7%, compared with 13.4% in August 2006."
A run on the Bank
Notice how the media initially suggested that the people taking money out of the bank were stupid. Now, "The UK Financial Services Compensation Scheme offers full insurance only for the first £2,000, albeit with 90 per cent insurance for the next £33,000. That is enough to keep widows and orphans from starving, but not enough to reassure Northern Rock customers who, quite sensibly, have decided that they would sleep more easily with their savings in a different bank. "
Daily Mail questions whether King is fit to rule
Alex Brummer takes a hard look at The Guv and concludes: Mervyn King, the hero of the fight against inflation, has not proved adept at battling in the turmoil in the markets and the most dramatic run on a British bank seen in modern times.
How's that for a "prediction"
Or have I seen this story played out time & time again
Crude Soars to New Record
Current generation sacrificing a pension for a home
The collateral damage from over-priced housing funded by excessive multiples and lax lending practices has potentially robbed the current generation of it's retirement prospects. The effects of the current governments policies with regard to housing, credit and pensions during their 10 years in office will be felt for the next quarter of a century.
The lost generation sacrificing a pension for a house
This is London: Pensions crisis looming for young people as many are gambling on property to pay for their retirement
When we talk about knock on effects of the potential collapse of the UK housing market due to chronic over-valuation and ridiculous lending multiples and lax practices this article highlights the problems we are storing up for 20-30 years time. The current labour government has sponsored the robbery of the current generation for the next quarter of a century to stay in power for 10 years.
Even the Gruniard now puts the boot in.
Well its wake up time for the city pundits as it dawns on them that the UK economy is based on an Empire of Debt. I predict house prices will be 8-10% lower than they are now in a years time - the drop off will be MUCH sharper than folk expect.
If the shopper can't afford to buy the carpet now, how can they do so in 2009?
I've never understood how a store can offer to sell, say a houselot of new carpet, with no deposit and nothing to pay on the hire purchase agreement for 18 months. If the shopper can't afford to buy the carpet now, how can they do so in 2009?
So will savers at all banks have their deposits guaranteed?
Darling and the BoE come to the rescue of beached whale Northern Rock by guaranteeing the deposits of savers. With at least one other lender being pummelled on the ropes and yet another about to be bloodied will the same guarantees secure savers at the other banks. Also, I've not read the small-print of the guarantee but it "may" be a good time to buy back into Northern Rock.
Ooops! Here we go again...
A run on these 3 banks matter of time?
It is understood that there is particular focus on Bradford & Bingley, the Alliance & Leicester and Paragon, all three of which have high loans-to-savings ratios: they lend out far more than they take in deposits.
Pound drops as Northen Rock woes continue
Well don't say we didn't predict this. Who needs David Smith's site? (New) Labour = high interest rates and devaluation. I am not so sure that one should vote Tory now, these characters should be forced to clear this up... isn't there a saying rather like cats' faeces and noses?
Northern Rock's Shares Keep Tumbling....
ANYBODY FANCY BUYING A BANK? "...Further fallout from the squeeze on credit could yet follow in the U.K. Northern Rock's rivals Alliance and Leicester and HBoS similarly rely on liquid credit markets, albeit to a degree that's "smaller in magnitude," Collins Stewart's Potter wrote in a research note Friday. But the anxiety's not limited to Britain. Spooked investors dumped shares in Spanish, French and German banks Monday. Northern Rock, in other words, may not be the last financial institution to find itself in a hard place...."
4 Corners episode tonight
Mortgage crisis spreads to sub-prime car loan market
Guardian reports top of the market
Given the current turmoil in the loan markets, the problems at Northern Rock, and further evidence that the housing market is cooling fast, it takes strong nerves to complete a purchase this week. If you are one of those currently going through it, then you've probably spent a sleepless weekend. After several years of strong house price growth, one word sums up the current market outlook: uncertainty.
Kaletsky has got some nerve............
Less than a week ago he was singing the praises of the UK economic model and pouring scorn on the idea that the credit crunch would amount to anything. Now it has suddenly dawned on the reprobate that perhaps you can't run an economy on a mountain of debt. I wonder what the Times pays him for this tosh........
Why should savers have to bail the banks out?
The Northern Rock crisis has brought home the reality of Labour's 'economic miracle' and everyone's looking for a scapegoat. But don't blame the Bank of England for refusing to pump even more money into the system...
More Greenspan, it's rich as he caused it!
Britain is more exposed than we (USA) are - in the sense that you have a good deal more adjustable-rate mortgages," ..... referring to the standard variable rate loans that many households have chosen over fixed-rate deals.
Sure that IRs are going down?
Greenspan also warned that inflation soon could pick up dramatically and the Bank of England, which has raised interest rates five times in the past year to their current 5.75%, may have to take them into double figures to keep prices down.
But noone worries hear, after David Smith said that it won t happen!
Greenspan said that recent increases in house prices - particularly those in London and the South East - were unsustainable. "There are going to be some difficulties," he says. "Can [the boom] last No. You're already beginning to see the mortgage rates are moving; a lot of the two-year fixes are beginning to unwind, and the teaser rates are going," he adds, referring to mortgages where rates jump after an introductory period. He says that banks are already being forced to write off billions of pounds of debt. "It's going to turn, it's got to turn," he says. Mr Greenspan also warns that Britain is more vulnerable to the effects of the credit crunch than the US.
Senior American intelligence and defence officials believe that President George W Bush and his inner circle are taking steps to place America on the path to war with Iran, The Sunday Telegraph has learnt.
Pentagon planners have developed a list of up to 2,000 bombing targets in Iran, amid growing fears among serving officers that diplomatic efforts to slow Iran's nuclear weapons programme are doomed to fail
UK housing market set for a painful correction, Greenspan warns
"Britain's housing market is heading for a painful correction, according to the world's most renowned economist and central banker." The more it goes (Tiddly Pom) The more it goes (Tiddly Pom) On correcting. And nobody knows (Tiddly Pom) How low it goes (Tiddly Pom) How cold my toes (Tiddly Pom) Are growing.
House price growth 'to halve over next year'
The housing market is likely to be one of the main casualties of the credit-crunch that has seen Northern Rock fall into difficulties.
UK housing market set for a painful correction, Greenspan warns
Mr Greenspan also warns that Britain is more vulnerable to the effects of the credit crunch than the US. "Britain is more exposed than we are - in the sense that you have a good deal more adjustable-rate mortgages," he says, referring to the standard variable rate loans that many households have chosen over fixed-rate deals.
Food supports housing boom in NZ
Bank’s credibility on the line
The Northern Rock bail-out was formally a joint decision of the UK Treasury, the Financial Services Authority and the Bank of England. However, their Memorandum of Understanding (MOU) states that “ultimate responsibility for authorisation of support operations in exceptional circumstances rests with the chancellor [of the exchequer]”. This makes sense: the taxpayer is on the hook when public resources are put at risk. Unfortunately, it is the Bank’s reputation that is damaged. It had to provide credit after the governor took a strong public stand against bail-outs.
Investment banks 'to lose $30bn'
A Must Read In Simple Terms - Gordonomics and your Mortgage
Even at the height of the ruinous US housing boom, US banks weren't offering 125% mortgages or six times earnings to people on £18,000 a year. Yet that is what British high rollers such as Alliance and Leicester and Northern Rock have been doing and have "helped" first-time buyers get on to the "housing ladder" with 40 year interest only mortgages which are so good you don't even get to own the house.
Prime only mortgage lender? Errrr think not.
Gurgle gurgle went the plug-hole
"People with accounts at the Northern Rock have withdrawn almost £2bn since Friday... the firm, the UK's fifth biggest mortgage lender, is bracing itself for more withdrawals in the coming days. It is also understood that the firm was close to being sold to one of two UK banks before it sought emergency funding from the Bank of England. However, these deals fell through because of the state of world markets."
Will Hutton's sane take on insane lending
"After hubris, nemesis," declares Hutton, never one to allow himself to be too swept up in the froth, bubble and CDOs that are threatening to pummel Northern Rock into Northern Pebble or even Northern Gravel. He'll be preaching to the converted with most HPC readers. But before one starts to gloat best remember that no two corrections or crashes are the same. There's little to be smug about when bad lending hits innocent savers. The fallout from August 9th and this last month of financial woes may even come lapping and the feet even of those who were wise before the event....
Go on, fill your boots, knock ya'self out
The sub prime mortgage crisis in the US has pushed up the cost of money for lenders, leading them to raise the risk premium on mortgage rates. So even though the UK base rate was held last week, mortgage rates are still on the rise...Meanwhile, about half a million borrowers are coming to the end of fixed rate deals in the next 6-12 months and many of them are buy to let investors.
Risk your money not theirs
Norwich and Peterborough Building Society (N&P) has opted to reduce its maximum loan to value (LTV). In times of unrest within the mortgage and housing markets, lenders are taking measures to protect their interests and limit their exposure to market risk...N&P is the latest mortgage lender to revise their rates as a result of this, reducing its maximum LTV down to 90%.
The writing on the wall could not be more clearly spelt out
The worldwide credit crunch that pushed Northern Rock to the brink of collapse could make a housing market slowdown worse, Earley warned. 'I think all it can do is make it [the market] cooler: that comes through sentiment, and through expectations.'
'Answers' to your questions.
How much will investors withdraw?
A little history
The upstart from the North East thought its wheeze of securitisation backed by a lean machine with great IT was a licence to print money. Alas, the world changed, writes Iain Dey 'The world stopped on August 9," says Adam Applegarth, the chief executive of Northern Rock. "It's been astonishing, gobsmacking. Look across the full range of financial products, across the full geography of the world, the entire system has frozen."
Sunday lunch for bears
Experts warn that a decade-long borrowing binge has left Britain dangerously exposed to the fallout from the global liquidity crisis US Treasury Secretary Hank Paulson flies in to London tomorrow to discuss the worsening global credit crisis with Chancellor Alistair Darling, as fears intensify that the lending squeeze could be the last straw for Britain's buy-now-pay-later economy.
Still in denial
NOT for the first time, the vultures are circling over the housing market. America’s sub-prime mortgage market has sneezed, but some say we will end up with the worst cold. A piece in America’s Business Week warns of “Britain’s coming credit crisis” – it claims that British house prices are 11 times the average salary (almost double what they actually are) and says Britain could suffer a worse fate than America.
I don't think so!
The credit crunch has dented confidence in the homes market and growth is forecast to slow to a standstill. HOMEOWNERS were warned last week that the credit crunch in the financial markets could usher in a period of stagnation for the property market, after years of robust growth.
The consequences of a decade of Gordonomics and your Mortgage
Even at the height of the ruinous US housing boom, US banks weren't offering 125% mortgages or six times earnings to people on £18,000 a year. Yet that is what British high rollers such as Alliance and Leicester and Northern Rock have been doing and have "helped" first-time buyers get on to the "housing ladder" with 40 year interest only mortgages which are so good you don't even get to own the house.
I wonder if this is happening here?!
Nicely put: we are inflated... correction due
"Together with sterling and house prices, British self-regard has become unnaturally inflated. It is due for a correction" and more worryingly .... "At June 2007 UK banks’ cash deposits at the Bank of England were £2.4bn ($4.9bn), while the notes and coin held in their tills were worth just under £8.8bn and their holdings of Treasury bills were under £8bn. By contrast, their total sterling liabilities were over £3,150bn."
Why savers aren't silly to pull money out of Northern Rock
The media is criticising people as lemmings for getting their money out of Northern Rock, but what's the incentive to stay put? They're not being compensated for the extra risk that's emerged, after all. From the article: "What does a depositor owe the company? Banks have ceaselessy encouraged us to jump ship with great rates for new customers, whilst shafting existing customers by letting the interest paid on their older accounts dwindle away to nothing, and even refusing to move their money into the higher rate ‘teaser’ accounts if they do happen to notice. They’ve turned banking into another branch of Buyrite Britain PLC. Well, if you live by the sword, you die by the sword."
If savers start a run on Paragon, B&B and A&L, these will be in deep sh** soon
Even Lex thinks the game is up
Northern Rock Customers Withdrew 1 Billion Pounds on Friday
Northern rock has a "queue" too many?
Negative Equity USA !!
Sarkozy and the ECB
PARIS (Reuters) - French president Nicolas Sarkozy on Saturday resumed his campaign for lower interest rates in Europe as he issued thinly veiled criticism to the way the European Central Bank had handled the credit crisis.
Could this be why the US may need double didget interest rates? Soon coming to a town near you!
Soaring food costs pushed inflation to 6.5 percent in August, more than double the 3 percent annual target of the People's Bank of China.
We've been saying this for a while now.
"To keep inflation under 2 percent, ``the Fed, given my scenario, would have to constrain monetary expansion so drastically that it could temporarily drive up interest rates into the double-digit range not seen since the days of Paul Volcker,'' Greenspan wrote."
"the Bank may have agreed to the rescue because it was “bullied into it by the Treasury and the FSA”.
Bank independence? What independence?!
Now its more of a commentary on which bits of the market will suffer worse, rather than a debate about whether or not a crash will happen. About time!!
One for the history books
In the past 100 years, the rollercoaster ride that is the world of high finance has seen some spectacular lows. Sean O'Grady looks back at four episodes that not only came to define their times but also served as lessons for the future
Alan Greenspan is now admitting that he was aware that the successive interest cuts under his stewardship of the Federal Reserve were encouraging an explosion in sub-prime lending but that he was slow in realising the dangers that the trend carried for th
Blink and you'll miss the crash!
"approximately £5.9bn was wiped off the share value of the UK house building, estate agency and banking sectors, not including the £846m decline in the value of Northern Rock itself".
"A joint statement from the Treasury, the Financial Services Authority and the Bank of England declared that Northern Rock was "solvent", trading properly and had strong assets".
Wow, the treasury doing a statement on behalf of a bank!!
"This is the sort of event that happened in America after the Great Crash of 1929. For Northern Rock, this is catastrophe. For the rest of us it marks the end of an era of easy money."
You know something's up when Hamish Mcrae does the front page piece!
When Will Prices Start To Drop
Now we have all waited for this moment, how long will it be before things start getting tasty?
Gold: pros & cons
Collapsing Finance companies and a plateau in the property boom are fuelling a modern-day gold rush, with small investors flocking to the security of solid gold.... Economist Donal Curtin, head of the Vestar investment committee, warned people were getting interested in gold too late, given the rising price, and should consider banks were offering high interest rates at present.
The Spin Machine is Fired Up
Now where's the scapegoat, ahhh, here it is 'UK chancellor Alistair Darling has joined growing calls for a probe into the role that credit agencies have played in the world financial crisis.'
This is so typical of NeoLiebor, say nothing and ignore a problem when it works in your favour and bleat like crazy when it's not.
Anybody for 7.05%
For the first time in six years, it is now possible to earn interest on your savings of 7%. "Lenders are looking for alternative ways to fund their mortgage lending, and it seems as if increasing deposits has been the first port of call for many," Wow the savers have become the lenders but surely this will only push the lending rate higher and higher! 50 to 70% drop in house prices if this goes on!
Read all about it......
UK house prices have seen their biggest monthly fall in five years as turmoil in the world's financial system unnerved both buyers and sellers, according to property website Rightmove. Average UK asking prices dropped 2.6pc in September to £235,176. Estate agents have seen just 121,000 properties come onto their books this month - the lowest figure for September since 2004.
Can anyone see a hurricane?
Oil Prices is just simply used as a pawn.. like th gold standard, and now that Nippon Oil has bought its first consignment in Yen, and Iran demanding other currencies rather than the dollar.. The dollar in effect is worthless. Euro's, sterling or even yen.. are the way to go. But safest of all is GOLD. Today made me proud to British, because the public spoke with their feet.
A Hurricane in or near Texas - No Chance
Just any excuse to raise all prices. Wait until October when the US bomb Iran. That will be like a hurricane, in terms of an effect on the markets. It just seems like everything is pointing towards inflationary pressures, China increasing interest rates - again. Oil prices up, but with technology and the internet we are all waking up to the "big great swizz". As was revealed at OPEC, it is not the supply, but the refining capacity. And with the B of E, saying one day we will not intervene in a "Bail Out" and the next "they do". Then who are people to believe?
Is this a "Run on a Bank?"
I don't believe I have seen a "run on a bank" so I am not able to judge whether this is one or not. Please read the article and let me know if you think it qualifies as a "run." Can anyone tell me the best way to buy gold? (Not that I wish to be alarmist, of course. I just think it would be a good investment anyway.)
WOW, I missed this, with all the NR excitement...
Leeds, manchester, Liverpool - they're all going to go the same way.
Front page of the Yorkshire Evening Post reports on the coming carnage in Leeds due to the oversupply of flats (sorry, executive apartments): There are 6,300 homes in the city centre and 2,500 under construction. Another 10,800 are in the pipeline, which will take the total to 19,600. But the report says there is a "question mark" over the need for so many. Council Tax data for Leeds city centre shows that only 65 per cent of existing homes are occupied and the report says high vacancy rates are set to continue.
It is one slippery slope from here
City jobs will be hit and house prices will go down the drain. I say it again: by Thanksgiving. "Bankers are saying that Rock's problems will be the trigger to reprice all mortgages — making them much more expensive and slowing down the demand for new homes, particularly at the top end." You bet! and the City job losses will add to repossessions.
Doomsday or just a return of common sense?
"One senior director at a FTSE bank actually wagered that, at some point over the next three years, UK house prices will have fallen by 50% from the level they are at now. I don't subscribe to that doomsday view, but nor do I believe the likes of Barclays' Bob Diamond when he argues this is just a temporary blip."
The reason they are bidding is that they can probably get it for a bargain basement price. Losers will be the Shareholders first (50% valuation), Savers second (as they are given a 100% upto £1000, 90% upto £30,000, and 0% thereafter take it leave it deal) and borrowers third (higher reates imposed or lose their homes). Familar.1929? The older generation have seen this before and are taking their money out. Too late I am afraid. Opps the BOE and FSa have failed again in less that 80 yrs on!!
Now then, back on the subject of house prices
Miles Shipside, Commercial Director of Rightmove comments: "Whilst there was a surge of '4 bedders' coming onto the market for just one week at the end of July, there has been a much greater dearth of them in the four weeks since. If this happens with the remainder of the phased introduction of HIPs, the concern will be that impulse sellers are being put off by the additional costs and hassle of a pack. Whilst it should all settle down with time, it will take longer as sellers are now facing the challenges of a cooling market and the highest interest rates for 6 years".
Yes and I may have to keep breathing to stay alive
Throughout Nulabours reign the BBC has tried to provide unbiased news coverage. Even when it is obvious to people that the economic model of Brown cannot buck worldwide problems. Particular when US lenders had offloaded them elsewhere (UK). It seems the BBC is waking up to the fact that UK plc does not live seperately from the world but actually has to interact with it.
It really is different this time, no really, as in worse than other financial disasters
This is an economic landmark – it is the first time banks have changed a swath of their mortgage rates because of what has been going on in the markets rather than because of a change in the Bank of England’s base rate. Northern Rock is suffering in particular because it is most reliant on money borrowed from its fellow banks. Welcome to the 21st-century chaos economy – the butterfly’s wing-beats in one tiny, unknown part of the financial world that cause a hurricane in another. Like it or not, no one can choose to ignore economics any more.
London House Prices Fall Most in Three Years, Rightmove Says
Sept. 14 (Bloomberg) -- London house prices fell the most in three years in September after five interest rate increases in the past year and financial market turmoil sapped buyers' confidence, according to a Rightmove Plc report. The average asking price for a home in London declined 2.5 percent to 384,439 pounds ($774,000) from August, according to Britain's biggest real-estate Web site. The reading is taken from a survey conducted from Aug. 12 to Sept. 8. The release, which was originally scheduled for Sept. 17, appeared on another housing Web site today. For the U.K. as a whole, prices fell 2.6 percent, Rightmove said.
Global interest rates still rising.
China has AGAIN raised it's interest rates to curb inflation. This will lead to higher import costs of Chinese goods for the UK yet again and another reason that the BOE can't cut rates. The UK is set to import ever more inflation, oh dear.
Reports of a good old fashioned bank run on NR
"Northern Rock customers appear to be ignoring the bank's call to stay calm over fears of its financial future." "... People in the queue burst out laughing when one staff member asked them: "Does anyone want to pay money in?" .. " Can this really happen in 2007 Britain? Sounds like a scene from 1929.
Crikey! BBC shows queuing outside N.Rock branches
Never seen anything like it in my adult life in the UK. They must have deliberately shut down their internet system to stop withdrawals. If I had money on deposit with them I would be straight round, bugger the lines of people. I wonder how much the BoE will loan them before they pull the plug???
Senior Quant Analyst – Synthetic Credit Derivatives
Has the gravy train not come to an end yet? Calling all PhDs.
Senior Quant Analyst – Synthetic Credit Derivatives
Top-tier US Investment Bank
Package Circa £250k - £500k Total, London
A crisis of epic proportions
Northern has a massive £113bn of loans and other assets on its balance sheet, having worked aggressively to grow market share during the first half of this year. It grabbed nearly 19% of all new mortgage lending, knocking Halifax off the top slot. Northern's shares have already almost halved in value this year. Unfortunately for investors, the worst is probably still to come. Other big UK banks may not have the same structural problems as Northern because of their major high street presence and broader spread of businesses, but they will all be affected by the crisis of confidence. So will the rest of us, as the values of our pensions, investments and perhaps our own homes fall.
David Buik sums the Northern Rock crisis up nicely!
Northern Rock's financial problems are due to its exposure to sub-prime lending - giving money to people with "pretty doubtful" credit ratings - finance house BGC International's David Buik told Sky. The City expert said the firm had "dug its own grave".
They both throw darts only one wears a blindfold
The governor of the Bank of England, Mervyn King, has warned against the BoE taking drastic measures to bail out banks in order to avoid generating a future crisis...the image to the left is of the other Mervyn King, he throws darts into a board for a living..fill in the punch line at your leisure...
The reality of Brown's economic 'miracle' revealed
Northern Rock has been forced to borrow from the Bank of England at the penal rate as other sources of funding have dried up. Shares have already plummeted, but what will happen if customers rush to withdraw their cash?
The workers could apply to stay permanently after five consecutive years in any EU state.
Britain faces being swamped by a wave of new migrants after EU chiefs announced yesterday they want to let in an extra 20 million workers from Asia and Africa. Skilled migrants would be granted special 'blue cards' giving them the right to settle in member states, including Britain - if the Government agrees.
Behind the times
I've been saying this would happen for a long time
TUMBLING house prices and the bail out of the Northern Rock will lead to the resurrection of the dead, Armageddon and the beginning of the End Times, leading Christians confirmed today.
Oh Dear - Northern Who?
"Pampers Time" @ NR and that is just the customers.. lol How much were the management being paid again?
Will they go under or is this a buying opportunity?
Shares in one of the UK's largest mortgage lenders, Northern Rock, have fallen by 24% after the Bank of England decided to offer it emergency funding. But experts say it does not mean Northern Rock, which has £113bn in assets, is in danger of going bust.
Take the quiz - I scored 9!!
The PE industry should be closed down!!
this piece of special pleading carries such a strong smell of arrogance that it's worth examining.
A healthy slowdown instead! House about that? David...
"A credit crunch is going to hit industries like private equity and hedge funds very hard indeed. This is important because it has been where all the growth is coming from and it has been difficult for the Bank to control this industry using short-term interest rates when many of these firms borrow in the long term. A slowdown in this sector will be welcome. You can't run an economy with house prices rising by 10-12% when you have an inflation target of 2%. But the problem is the market usually over-reacts and it can be difficult to stop the turbulence."
This will hit other banks
...Britain's fifth-largest mortgage provider. It has become the first major UK financial institution to run into serious difficulties as a result of the global credit squeeze, which has seen lending among banks shudder to a halt.
The pound dropped after the Bank of England's Governor indicated that he may cut rates if the financial crisis heightens
In his first comments since the credit crunch erupted, Mervyn King compared it with a bank run, but insisted that the financial system would recover, and that the experience would strengthen it in the long run. He also warned of more bumpy and difficult times for financial markets in the weeks ahead.
Rightmove leak - fall in UK prices of whopping 2.6%
Poster 79 on Nouriel Roubini's blog claims a leak from Rightmove (see below): ''To add to the woes of Northern Rock (which specialises in sub prime mortgages in the UK), there is a leak of the rightmove.co.uk data on asking prices (due for release on the 17th) which shows a fall of 2.6% nationally in the UK in the four weeks to September 8th compared with the previous four weeks, with London asking prices falling 2.5% and all regions except West Midlands experiencing falls. Parts of London are showing declines of over 7.5% in the month''. Staggering if true!!!!
Interest rates on their way down? fat chance!
Prospects of first egg shortage since last world war, price of a loaf above £1. Heavy stuff.
Two and counting!
After Victoria, now the turn of Northern Rock... but wasn't it different here in the UK? BoE can bail out banks but it is unlikely will slash rates to ease the credit conditions. Too many implications for inflation, currency etc. Please do not forget that this credit crunch is due to the ongoing right-pricing of risk. This has nothing to do where you set the "risk-free" BoE base rate, which s got to do purely with inflation.
and now Canada????????
Canada to drop
Good news: house prices are going to drop.
The upshot is that London, which in the past few years has become the world’s richest city largely through its dominance in international finance, is about to suffer a big knock. And this setback will be even more severe, at least in the short term, if Britain takes a tougher line against financial bail-outs than the authorities in Europe and the US.
If Northern Bank collapses and the Bank of England hold their nerve this could be the start of the crash. If however the BoE slash rates I see a situation like 2005.
Subprime infects global property
LONDON (Reuters) - The global credit crunch is spreading, adding commercial and residential property in Britain and beyond to its list of victims.
Be our guest, chase the market down
"Our in-house research suggests that many of the 14,000 landlords registered with our site are selling their properties at once. It seems that UK landlords are looking to buy more property but a lot have decided to cash in on their domestic investments, with some of them making £80,000 profit in six years from a simple two bed terraced house. They have decided that market conditions are looking bleak here, so they're paying off debts and trying their luck abroad. However, many have failed to allow for capital gains tax, which has hit some hard."
House prices going down!
This data shouldn't be available till Monday, but some clever sod on HPC found it anyway. "Average asking prices fall 2.6% (£6,298), as Home Information Pack implementation distorts the market. Average price drop exacerbated by 41% slump in 4+ bedroom property numbers; the high end of the market. Lowest September for new sellers since 2004. Average stocks per estate agent remain static as low listings matched by low buyer demand."
The buffer has been used...
The survey also showed that more than two-thirds of respondents expect borrowing costs to rise again in the next 12 months. Only 4% thought they would fall.
The Blame Game.
Perhaps Mr Darling of 11 Downing Street should ask which idiot allowed this situation to happen. I suggest he tries the house next door. He told the newspaper: "Institutions themselves need to open their own eyes and be more honest.". Not that politicians would ever behave like that.
Why cutting rates to save housing is a bad precedent
"[...] evidence of UK economic weakness, particularly in the housing market, has potential to trigger expectations of UK interest rate cuts and consequent sterling weakness,” said Adrian Schmidt at Royal Bank of Scotland. “While the Bank of England is not going to cut UK rates just because the housing market flattens out, the turn in momentum of UK house prices will get the market thinking that way.”
Redundancies at cash-cow HQ
So brutal redundancies are now only days and weeks away, as it becomes commonly accepted that the turmoil in financial markets will depress certain lines of business for months if not years. The boss of one investment bank tells me he expects a first wave of job cuts that will see individual banks reduce their headcounts between 5 and 15 per cent.
Driving ourselves further into debt ?
Fuel prices are forecast to return to £1 a litre within weeks after oil prices break through $80 a barrel for the first time since the 1980s. But inflation will remain at 0.000000001.
another gone bust
A UK-based fund of fund manager Forsyth Partners, which had about $1.8 billion (889 million pounds) in assets under management, was the latest victim in the market turmoil as it said on its Web site that it had gone into administration. this bit is from yahoo link is - http://uk.biz.yahoo.com/13092007/325/ftse-edges-banks-offset-gains-oils.html
House Price Crash starts in London?
The UK housing market is in trouble. 6 out of the 9 regions in England registered falls this month, with asking prices for homes in Greater London falling fastest of all, by 1.2%, the Home Asking Price Index report revealed today...The overall drop for England and Wales was 0.4%, which equates to a loss of £1,030 in a single month for the average homeowner, while the average London property lost £4,208.
London down 1.2%
The UK housing market is in trouble. 6 out of the 9 regions in England registered falls this month, with asking prices for homes in Greater London falling fastest of all, by 1.2%, the Home Asking Price Index report revealed today. The overall drop for England and Wales was 0.4%, which equates to a loss of £1,030 in a single month for the average homeowner, while the average London property lost £4,208.
Oil looks like a good investment, whilst UK house prices start to fall
Inflation under control - NOT
Some clowns on bloomberg this morning were actually saying they reckoned the BoE will lower interest rates, but yep you guessed it, they were people from investment banks who now having had it from the horses mouth that the BoE wont be doing them any favours with regard to injecting liquidity at cheap overnight rates, have decided that the next best thing would be to claim that the BoE's next move on base rates will be downwards and that if they shout it for long enough it will happen..........well looking at this report, plus the fact that wheat has gone ballistic, food is rising, no more cuts in engery prices are expected, and $85 for a barrell of oil is expected, I think I know which way rates are going to go....UP UP UP.
RICS index is a good leading indicator
"Surveys from organisations such as the big mortgage lenders, the Department of Communities and Local Government, and the English and Welsh Land Registry, have all reported house prices continuing to go up at a brisk rate." ...partially wrong: the LR index was just 0.1% up in August!! "however, Rics has traditionally had its finger on the pulse of the market when it has changed direction - as during the property slump of the early 1990s, when many other commentators refused to acknowledge that prices were falling" aha aha aha.
Interesting to note that most ordinary people perceive the inflation rate as higher than it currently is and that they expect 6pc interest rates sometime soon. Althought city bankers expect an easing (suprise suprise!) Although I think the impact of the credit crunch is lost on most ordinary folks, maybe now mortgage providers have started to increase rates independant of the BoE base rate people will realease what a sticky wicket we are playing on now.
Are we all endebted to the credit crunch ?
Higher mortgage rates; slower retail sales; the Bank of England refusing to help banks under pressure; and a government about to squeeze the growth of public spending. Is Britain's long boom coming to an end?
Where is the demand, where is the supply, where is David?
"Surveyors around the country told Rics last month that sellers were finding it harder to get their asking price as higher borrowing costs and the fear of more interest rate rises before the end of the year made purchasers reluctant"... has the demand collapsed, has the supply increased?... noooooo... credit is tight!!
The last train to STR is now leaving the station...
The first signs that Britain's long-running housing boom could be over have begun to appear
House prices fell for the first time in nearly 2 years in the three months to August
Here we go.how long before sentiment changes now?any comments David?
LONDON (Reuters) - House prices fell for the first time in nearly 2 years in the three months to August and the outlook for the market is subdued because of higher borrowing costs and financial market troubles.
Kiss goodbye to a Base Rate of 6%
When the going gets tough, the tough get cutting! Oh dear.
The Government is looking to shift the blame for the coming recession.
Darling is preparing the ground ..... At a meeting of European Finance ministers, he will attempt to introduce international regulation of banks to try to stop any future credit crunch. He has seen the future and his actions could be seen as: Firstly, passing the blame for the approaching recession on "irresponsible lending by Banks." Secondly, proving Labour's economic credentials by regulating to prevent re-occurrence. So Labour isn't responsible for the economic condition of the UK then.
In an interview with The Dail Telegraph, the Chancellor signals the end of the era of easy money, calling on large international banks to think about returning to "good old-fashioned banking". (Is that a photo of Darling shutting the gate after the horse has bolted?)
Declining prices outnumber gains
UK house prices fell for the first time since 2005 in August after five interest-rate increases in the past year discouraged buyers, the Royal Institution of Chartered Surveyers said.
Dip: It's not a crash but it's a start.
If it keeps going up, rates will have to rise eventually.
If prices can be this high with not much happening and OPEC offering 500,000 barrels a day, then I honestly believe that a major supply shock would send prices to £100+ It took Katrina to get it not this high before, we are in uncharted territory.
The tide has turned
Homeowners can expect a double whammy of higher mortgage bills and falling property prices this autumn after turmoil in the financial markets and interest rate rises
Mervyn's the man!
"Mervyn King today ruled out emergency cuts in interest rates or easier credit terms to bail out the City as he warned Britain's banks that they would have to face the consequences of excessive risk-taking in the past." Good. Let the reckless borrowers learn a lesson.
Wanna know where your taxes really go?
Provident Financial target the financially illiterate at the bottom end of the economic index - families most likely to be on Social Security. This year, immune from the lending crisis, they reported another massive rise in take from your taxes. For those who like to know where their taxes are going Provident have a minimum APR of 70%. Their CEO is aptly named Crook. Let's hope there's a credit union nearby to pick up the pieces
foreclosures hit the wealthy too
House prices were unchanged over August
House prices were unchanged over August, the lowest rate of monthly growth for 20 months. This represents the fifth consecutive month of slower month on month house price growth. Weaker market conditions are generally to be expected over summer, but we believe this is further evidence of a more deep-rooted slowdown resulting from increased affordability pressures and more cautious buyers.
more pain on stretched home owners
anyone want a cheap house?
next on the 'implodeometer'?
Edeus managing director Alan Cleary has forecast a 50% drop in expected business in 2008 from £3bn to £1.5bn...At the start of the year edues, which launched October 2006, had been forecasting £3bn in completions for its second year trading based on its future prjections. The global credit crunch has forced the lender to readjust its forecast to £1.5bn.
When in hole stop digging
The majority of people who take out a personal loan to consolidate existing debts go on to build up more debt and struggle with the consequences...Research commissioned by price comparison website moneysupermarket.com shows 28 per cent of Brits (12.7 million people) have taken out a loan to consolidate some or all of their existing borrowing. Worryingly, of those who took out a personal loan to merge their existing debt, 8.4 million people (66 per cent) continue to build up even more debt. While still paying off the original loan, five per cent of them took on another loan, 12 per cent went into their overdraft, 28 per cent racked up more debt on their credit card, and 21 per cent did a mixture of the above. Thirty per cent would consider consolidating again or are about to do so.
Mortgage rates take on life of their own
Risk of credit crunch reported by BoE last summer
"If the UK's debt bubble bursts, house prices could fall by as much as 25% over three years, the Bank of England warned in its Financial Stability Review. The Bank said a sudden jump in borrowing rates - potentially caused by a further surge in the oil price - could cause a 2% fall in economic output and wipe out a year's worth of bank profits, this year estimated to be £40bn. A sharp fall in credit conditions worldwide could cause a 1.5% contraction of the UK economy, a 25% fall in house prices and a 35% drop in commercial property prices over three years, according to the scenarios mapped out by the Bank."
As Autumn is referred to by many "experts" as a key time when UK house buying kicks in after the summer, a leading index delays its figures by 2 days. Call me cynical, but wonder why ? "Home.co.uk apologises that the Index due for release on 12th September will be published on 14th September" http://www.home.co.uk/asking_price_index/
"Market players" get offended by not being given free money
LONDON (Reuters) - The latest market turmoil has been caused by a mispricing of risk and central banks need to balance moral hazard against a possible shock to the financial system, Bank of England Governor Mervyn King said on Wednesday,"If risk continues to be underpriced the next period of turmoil will be on an even bigger scale," King said. The BoE has come under fire from some market players for not following the Federal Reserve and the European Central Bank in flooding the financial system with cash.
David, David... prices did go up yesterday, but will go down tomorrow
"Further evidence of a slowing housing market has emerged as the latest figures from the Council of Mortgage Lenders (CML) reveal that the number of people taking out home loans fell in July. The number of mortgages taken out for house purchases dropped by 8 per cent in July, from 102,000 to 94,000" 8% drop... wow! One question springs to mind, where is the booming demand?
At last the truth about the stupid planners
About time, in the final analysis the truth will come out - planners/government artificially constrained the supply of land and encouraged the boom all the way. If, like me, you have ever had to deal the the imbeciles that are planners you'd know exactly what I mean. We are surrounded by land 87% is virgin untouched land.
A Rather Gloomy View of the World's Favourite Reserve Currency
Paul Tustain, of www.BullionVault.com, forecasts a gloomy outlook for the dollar. He suggests the US needs independent central bankers, like Paul Volcker, who are prepared to be hated for throwing the US into recession by holding rates high, and sacrificing both the weakest businesses and millions of jobs, to avoid the US wealth entirely dissipating. A bit too bear-ish for my view but there is good read-across to the status of the Pound. I can not believe the UK's BoE will keep interest rates high enough for long enough because they are tied to the flawed CPI measure of inflation.
Tories are trying!
The Conservatives are promising to act to stop rural villages becoming preserves of the middle class and middle aged by offering incentives for landowners to provide land for development on the guarantee that it is only offered to local people and families.
BoE Does Need To Do Anything: It's Job Is Being Done For It ...
Yvette Essen and Richard Tyler are being gloomy too. Sorry about posting two articles today but this second one highlights my assumption that rising mortgage costs will lead to more repossessions. It is not, just, mortgages though: "Provident Financial's finance director, Andrew Fisher, said higher gas, electricity, food and council tax bills were reducing disposable income. He said the company had turned down 50,000 applications for loans and seven out of 10 applications for credit cards in the past six months." Could this be the end for Credit Card Rate-Tarts? For a debt-based economy, the end of cheap, available credit is not good news.
Servicing a mortgage becomes more expensive.
Mr Edmund Conway is reporting doom and gloom again - or perhaps he is merely saying it as it is. I like the picture-caption quote "The average SVR rose by almost a quarter percentage point to 7.69pc last month." This is a large increase from the 2-year fixed rate deals of about 4.5% to 5%. Perhaps David20040_0 could help me learn why house prices are likely to increase despite rising mortgage costs increasing the supply side of the supply vs demand equation. (I'm assuming that rising mortgage costs will result in even more houses being repossessed from indebted families.)
Fears of a bloodbath on the high street
Simon Wolfson, the chief executive of Next, said that despite a tough summer for retailers, he was “acutely aware” that millions of homeowners had still to feel the full impact of the higher cost of borrowing.
Roger Bootle Speaks Out
Roger Bootle Speaks out... The house price boom of recent years has brought "misery" to thousands of people and represents a "failure" of policy, a leading economist has argued. Most people see the UK housing market as a story of great success," he told an industry event in Wales. "I don't. On the contrary, I see it as one of the UK's most unbridled failures." The root of the problem was the lack of land being made available for new building, he said. "I wish the government would forget all the gimmicks - affordable housing, key workers and the like," he added.
David you are wasting your time reporting old information
The Land Registry information on July prices, released at the end of August, reflects more recent house purchases than the DCLG data on completed mortgages that have turned David on so badly. Land Registry: "House prices in England and Wales exhibit slow monthly growth for transactions that completed in July 2007. Although still positive, the 0.1 per cent rate of monthly increase is the lowest since June 2006" David it was 0.1% monthly or 1.2% per year... it was an appalling return, wasn't it?
The irrelevance of FTB and how house prices are still booming are shown here.
First-time buyers are suffering an increasing squeeze on their incomes as they get on the property ladder, says the Council of Mortgage Lenders (CML). Its latest figures show that average first-timers are now borrowing 3.39 times their incomes, a new record.
another 400 jobs going
maybe these people who lose their jobs might rent..
.....and then the rents start to boom, rather inevitable consequence of booming house prices, rents start to rocket.
Easy Living, no mortgage, no bills, no washing, no laundry etc
If I do not have money to buy, how can I pay a high rent?
Stupidity and greed are at the heart of this urban legend that priced-out FTBs may be fueling the btl market. Eventually it will become clear that affordability is key to sustain both the sale and letting markets (and that the two are very closely linked). Since there is a conscious effort by the govt and BoE to put a lid on salary inflation, rental yields are capped and house prices will have to fall to reach long-term equilibrium.
Cheap housing found
Would hate to see an "incident" damage markets any further
THE REPORT that the Air Force flew six nuclear-tipped cruise missiles from North Dakota to Louisiana by mistake late last month is disturbing, not because of what might have happened, but because of what the incident says about the state of U.S. nuclear forces. Dispelling the 'Bin Laden' Options Trades - News & Analysis PS: NORAD is leading the search for Steve Fossett. - shouldn't it be looking for those weapons? After all a NucFlash will spook the markets even further.....
The concern to date is that large companies are going to find it harder and more expensive to borrow,
Britain's smaller companies are facing collapse as a direct result of the credit crisis, leading organisations have warned, as banks claw back profit by charging the highest rate of interest on business loans since the late 1980s.
Moody's is predicting a slide in the housing market into 2009
Predictions are now of a recession and falling house prices for at least two years and then subdued market activity after that in the US. This has happened in a matter of months in the US. Anyone confident that it can't happen in the UK has their head in the sand. Personally, on all the current evidence I would put the chance of a HPC in the UK in the next three years at above 90%.
Enquiries about bankruptcy jump 50% - CAB
Credit card debt and problems with unsecured loans dominated, accounting for 40% of the CAB debt caseload. One in four of all debt enquiries concerned credit and store cards. Consumer credit debt problems of all kinds increased by 14%, while problems with overdrafts and unsecured personal loans increased by more than 18%. Enquiries about bankruptcy jumped by 50%. But the figures also indicate that many hundreds of thousands of people are increasingly struggling to meet their day-to-day living expenses. Gas and electricity debt problems shot up by a third (33%), while council tax debt enquiries went up 25% and telephone debt problems by 19%. Problems with mortgages and secured loans were up 11%.
Know when to hold 'em...
Buy-to-let investors returned to the market as rental growth reached record levels. Tenant demand for rental property has been boosted by declining accessibility, rising uncertainty and a slowing housing market which has reduced the impetus on would-be home buyers to enter into the market, says the RICS Lettings Market Survey...
This is financial suicide
The Mail: "is it really time to abandon property?"
"Special report: Property is on edge. As the world's financial markets struggle with a credit crisis, the experts have issued warnings that the good times may be about to come to an abrupt end." Look also at the special section on Buy to Let millionaires
Sell to rent back companies prey on desperate sellers
Clouds are gathering over the UK housing market - and desperate sellers are increasingly turning to sell-to-rent-back companies. But homeowners should be wary of this unregulated industry.
2008 will be an interesting year, and so 2009 and 2010...
For the first time the word "contagion" is used by the CML "This appears to be an instance of a lender suffering as a result of the contagion of US sub-prime problems." and then goes on... "Most other lenders are managing by adjusting their product ranges and pricing.” oops... nice way of dealing with contagion... "Lenders have been increasing their rates for sub-prime borrowers in recent weeks as a result of turmoil in the credit markets. GMAC, Mortgages Plc, and Kensington Mortgages have increased their rates, while DB Mortgages, part of Deutsche Bank, is no longer accepting applications from first-time buyers on its sub-prime range of home loans." 2008 will be very interesting... 10% rates ahead!
Credit crunch takes a scalp
Shrewd or insane?
Currently sub-prime is all the rage and talk is that it will drag the US economy and then the western world into recession. US investment bank Bear Stearns has been heavily hit by sub-prime problems but just when you thought it was safe to say, "I wouldn't touch Bear Stearns with a barge pole" along comes billionaire UK investor Joseph Lewis and buys a 7% stake. Is Lewis seeing something that others are not or is Bear Stearns so unpopularly that it was too good a chance for Lewis to turn down? I just don't understand Lewis' motivation on this one. Thoughts?
No-one wants to buy junk any more
High-yield bond and loan investors have shunned new debt sales so far this month, extending a buyers’ strike for risky assets into the traditionally busy first week of September as concerns linger over the shaky state of the credit markets. Just one $50m (€36m) bond issue was sold last week, marking the lowest new issue volume for the first week of September in more than a decade. The week after the US Labor day holiday is usually one of the busiest of the year as bankers and investors return to their desks after the summer hiatus. In 2006, the same week saw more than $2.4bn of new debt hit the market.
Do somebody know something we don't?
Yale prof warns UK you'll be next
Rent-a-mob causes property prices to bomb
Some BTL-ers will find times ahead rather hard. Oh dear.
Firstly: The article refers to professional investors "with over 100 properties." I doubt whether these are the people who will suffer. Many will likely have a lot of equity within their portfolio which will tie them over. The people who will likely suffer are the amateur landlords with 1 to 5 properties who joined the party late and who do not have much equity. Will these be in sufficient number to trigger a house price decline?
Hips we go
the three-month Libor is currently the highest it has been above the Bank of England's base rate for 20 years
Well, a bit more bearish than the Times article. As we all must know by now, 20yrs ago was exactly, erm at the peak of the last crash, which was proceeded by the muppet rally of all time. The amazing thing is that this is the result of just one lender going under, because the markets know how much dept is out there, so, this seems to be an extreme reaction very early on in this part of the cycle. For those into secular cycles, it looks from the Libor rate graph that the Libor rate has been on a trend upwards since the last crash, that 1998-9 was a blip and signal of things to come, brought on by our ejection from the ERM, this lends weight to suggestions that we could suffer a depression.
Three-month sterling Libor rates, the benchmark borrowing rate, rose slightly to 6.98625 per cent — the highest rate since November 1998, the British Bankers’ Association said.
Oh dear, growth may fall to 2%, I honestly couldn't give a t*ss given that the growth is not benefiting me directly and my costs are going up at and above the 4 and something % RPI. Just when will Libor rates reach those not seen since the last crash, 1988-92?! Taken into context, houseprices were about 80k last time LIBOR rates were this unfavourable, boomshakala!
Running on Empty
Oh dear, how sad, never mind......not long now
The greedy balloon heads of the financial markets should take note, the fed cutting rates wont stop this runaway train.....anyone for a ride on the price crash special...all aboard...woo-a-hoooo!!!
Victoria Mortgage Funding Ltd in administration
Victoria Mortgage Funding Ltd, based in London SE1, went into administration on 10 September 2007. The firm focused largely on sub prime lending.
Present day lending
Check out the anecdotes of how easily people can borrow and the mess they are in
Bank of England fears that fire fighting could unleash a wave of pyromania
Nobody can say they weren't warned. Back in April, the International Monetary Fund produced its half-yearly health check of the global economy and made a point of highlighting the risks from lax lending to sub-prime borrowers in the US housing market. "In this sector, there was clearly an excessive relaxation of lending and underwriting standards," the IMF said.
I am waiting for the "2008 will be an interesting year " quote. House price crash suspended again? Looks like it.
HOUSE prices rose by two per cent during July, suggesting the market is holding up despite higher interest rates, Government figures showed today. The jump in prices pushed annual house price inflation up to 12.4 per cent for the year to the end of July, its highest level since March 2005. Advert for Citibank It is the third month in a row that the annual rate of growth has increased, leaving the average home in the UK worth £218,479.
That dreaded word; off-balance sheet
I would have thought $1,400 would cause more problems, but i bow to his superior judgement.....
ONS views oil prices as having gone down ...
A billion billion Universe lifetimes later......
[In Finance there are many Russian sounding names from statistics, Chebyshev, Sobolev, Kolmogorov-Smirnoff)
Felix Salmon asks what the hell David Viniar, Goldman’s chief financial officer, meant when he said:
We were seeing things that were 25-standard deviation moves, several days in a row [last week].
David Viniar's is my favourite - this is NOT a rescue
And this man is the CFO of Goldman Sachs? He is also famous for the "25 Standard Deviations" move quote.
Almost a 40% drop in the market cap of Bear Stearns in just 6 weeks
Last month Bear was at $21bn. This deal values Bear close to $12bn. Crisis? What Crisis
Please don't feed the Bear
[C]apitalism without financial failure is not capitalism at all, but a kind of socialism for the rich. - James Grant, Grant's Interest Rate Observer
UK more exposed to the credit crunch than the US
High house prices and a dependency on financial services makes the UK economy highly vulnerable. Consumer spending has skyrocket on the back of cheap credit and house price inflation has been greater than that in the US over the last 10 years. Danny Gabay, director of Fathom Financial Consulting in London states that "Britain is likely to suffer more severely than the U.S."
Prominent London bankers have described the summer seizure in the global money markets as the worst financial crisis they have seen for 20 years.
Thus the gap between official interest-rate benchmarks and the rates actually paid for three-month loans is now almost twice as wide in London as it is in Frankfurt and three times wider than in New York. Despite the Bank’s protestations that it can operate only on overnight rates and can do nothing about the more important three-month bank rates, the Federal Reserve Board and the European Central Bank have worked hard on their three-month rates - and have get them under much better control.
Pwned!!! House prices rising even faster
Average house prices in the UK are accelerating again, according to the Department of Communities and Local Government (DCLG). Its latest survey shows that in July prices across the country rose by 2% to an average of £218,479. The annual rate of house price inflation rose from from 12.1% to 12.4%, its highest since March 2005. The main factor was soaring prices in London and the South East. Outside those two areas, prices in the UK in fact slowed down and were rising at a rate of just 10.6% a year, compared to 10.9% in June.
FTBS now paying 13.2% more than last year
The average price paid by first time buyers across the whole of the UK was £167,314 in June. The UK house price inflation rate for first time buyers rose from 12.4 per cent in June to 13.2 per cent in July. There was a rise of 1.6 per cent in the prices index between June and July in the properties bought by first time buyers compared with a smaller rise of 0.9 per cent over the same period last year...
Only a shock to those with IQs under room temperature
Some of the grandest names in the hedge fund world suffered last month having failed to anticipate the turmoil in the markets and failing to produce the absolute returns they promise investors. The list of badly-hit hedge funds in August reads like a Who’s Who of the best-known on Wall Street, according to investors. They include Paul Tudor Jones, philanthropist and head of Greenwich, Connecticut-based Tudor Investment Corp; his friend and former colleague Louis Bacon of Moore Capital; Bruce Kovner, super-secretive head of Caxton Associates; and Matthew Tewksbury, who bought Wall Street trader Monroe Trout’s hedge fund business and renamed it after himself.
Talks over how to value losses
Fat Tony:[THICK BROOKLYN ACCENT] "Ok Jamie, we're basically f**ked. Big Al ain't goin' to get us out of this one this time. We need to start whacking some people" Dr John:[FAUX ENGLISH ACCENT / CONNECTICUT PREP]:"That's all a bit vulgar, how about a distraction, like a 'terrorist incident'?" Fat Tony:"Well if something's going to happen it better happen now! Does Mr F have the firework?" Dr John:" We don't know. He's hiding out in Nevada right now. If it goes off, we'll make at least 5 yards (USD5bn) on those puts on DJ Eurostoxx"......
London prices 40% overvalued by rent analysis
Monevator.com: Warning: buying a flat in West London will cost you thousands a year more than renting
Comparing renting versus buying a one-bed flat in Hammersmith shows buying, even with an interest only mortgage, works out a conservative £395 a month more expensive than renting the equivalent property, or in percentage terms about 40% more expensive.
UK lender goes into Administration
Victoria Mortgages a specialist mortgage lender goes into administration. The 1st in the UK so far!!!!! Who might be next??????
last one out switch off etc....
The top 1 per cent own 21 per cent of the nation's wealth - three times as much as the bottom half (who own 7 per cent). (HMRC) The UK has twice as many poor children as Sweden, Finland and Denmark and half as many again as Germany and France. (Eurostat) Of the 12 EU or OECD countries wealthier than the UK, 11 are more equal. (comparing GDP per head to Gini coefficient) The average house price has gone up four times faster than the average wage over the last ten years. (DCLG)
Less Bailouts In Uk Than Us?
Bov the Builder, Can he do it?
The refinancing of the commercial paper is expected to start tomorrow and end on September 20. In that short period the City is braced for huge market volatility.
LEADING bankers are warning of the worst crisis in the money markets for 20 years, which will come to a head this week when $113 billion (£57 billion) of commercial paper – market IOUs – comes up for refinancing. This huge refinancing, mainly through London, exceeds the $100 billion that became due in mid-August, and which sparked the most serious phase in the money-market crisis, which has seen banks scrambling for funds and market interest rates rising sharply. “This is a serious pressure point,” said one leading banker.
Yen carry trade faces implosion as investors sell shares to return cash
The “yen carry trade” investment gambit that has driven highly leveraged hedge-fund bets around the world may be on the brink of collapse and could trigger months of extreme currency volatility
TUC claims taxbreaks for super-rich are fuelling the breakdown of society
Union leaders want the Prime Minister to close tax "loopholes" for Britains super-rich. Basically ending non-domicilliary status and abolishing tax relief for private equity firms. The TUC general secretary is worried that the super-rich's bonuses & huge salaries distort the housing market and help lead to the breakdown of society.
Supreme Court figures show there were just under 2300 writs of possession between January and July this year
The jump in repossessions could influence the looming federal election because several marginal Coalition seats on Sydney's outer fringe are in affected areas. While the worst-hit suburbs are in the safe Labor seats of Prospect, Reid, Blaxland and Chifley, the number of repossessions in the more vulnerable Liberal-held seats of Lindsay and Macarthur is also relatively high
"No-one seriously thinks the pay of our cleaners and nurses has contributed to inflation."
Three cheers for the Credit Crunch!
A pressing need by some banks and building societies to raise cash is fuelling fierce competition in the savings market. Turmoil in the wholesale lending market has increased the cost of financing for lenders making it increasingly economic for them to chase deposits from individual savers. Ron Stout, of Northern Rock, said: “We are pitching our funds at a good, competitive price and we are continuing to raise money.” However, there are warnings that what is good news for savers will probably lead to greater costs for borrowers. LOL!!! :)
Repossessions at auction on the up...lots more predicted in 2008.
RICS property auctions research, Quarter 2 2007 The number of residential properties offered at auction rose by 32% in Q2 2007. The increase was pushed by repossessions, as affordability conditions deteriorated following interest rate hikes, says RICS research. In the second quarter of 2007 there were 5 120 residential properties sold at auction, the highest number of sales in over two years and a 22% rise on the previous quarter. Residential lots offered at auction should continue to pick up with the RICS estimating that repossessions could rise to in excess of 45, 000 in 2008, amounting to 124 repossessions per day.
This will be interesting
Britain's biggest banks could be forced to cough up as much as £70bn over the next 10 days, as the credit crisis that has seized the global financial system sparks a fresh wave of chaos.
Best quote "The sub-prime crisis has exposed the structured credit asset class as highly dubious. In five years' time it won't exist." so it looks like easy mortgages on lax terms will not exist as well.
some knock on effects "slowly" kicking in..
the end of the beginning ?
According to this article around £70bn (~$140bn) of debt to be rolled in the coming weeks. Not a problem in the past apparently. However now ...
First time buyers confident in la-la land.
"With property price growth finally cooling and stabilising in some areas, first time buyers appear to be confident in their financial security. They are looking to buy before prices start to go up again."
Shame on you New Labour.
The biggest mortgage lender in the United States, Countrywide Financial, says it is making big job cuts.
The firm expects new mortgages to fall by 25% in 2008, compared with 2007. "During the past two years the growth in home price appreciation has stopped dead in its tracks," wrote Mr Mozilo in a letter to staff, "and in many areas of the country it has turned in the wrong direction."
It was so clear this was going to happen
Jamie Dimon of HSBC, Bob Diamond, Stan O'Neal better get some good lawyers.
Spain set for Crash
Spain, the site of Europe’s biggest property boom of recent years, is bracing itself for a price crash of up to 30%. The Spanish market has been slowing down since last November but the fall is starting to gain momentum. Hundreds of estate agencies in the popular resort areas of south and south east Spain are closing. Over 250,000 Spanish properties have British owners. The slowing of the UK market and the expected rise in mortgage rates may mean a mass exodus from the Spanish market by British owners looking to consolidate their finances. The last decade has seen a property building boom in Spain which has boosted the national economy. A thriving construction industry and revenues from property taxes has made Spain one of the best performing economies of Europe in recent times.
Australia better than Scotland?
Thousands of Scots emigrate every year, citing better jobs, more favourable weather and large ex-pat communities as their motives for the move. But finance comes into it too.
Abrose is the man
Will gold get punished again or is this it?
Even if gold is punished again in the credit crunch it will bounce back quickly.
Read: Ambrose Evans-Pritchard: When will gold go ballistic?
It's worse than that it's dead Jim
Er.. I am going to ask this one more time guys and one more time only. What is your exposure again?
Its all subprime (well a lot of it is)
Same headlines but more ominous!!
But this is not a repeat of 1998, when Alan Greenspan provided three "coups de whisky" to juice Wall Street, and the world. That was a time of falling inflation, thanks to cheap Asian imports. Now the "China effect" is working the other way. Prices are creeping up. The easy trade-off between growth and inflation is behind us. Nor is Ben Bernanke the son of Greenspan. "It is not the responsibility of the Federal Reserve to protect lenders and investors from the consequences of their financial decisions," he warned over the weekend. Bet against him if you dare.
Very good news
Borrowers face tougher checks and potentially higher interest rates when applying for credit cards, loans and mortgages, experts have warned. Lending criteria are being tightened following the global credit crunch that rocked stock markets last month and continues to dog financial institutions.
SPECULATION is mounting within the Liberal Party that John Howard could call an October election as early as Wednesday.
news.com.au: SPECULATION is mounting within the Liberal Party that John Howard could call an October election as early as Wednesday
PM tipped to call poll next week SPECULATION is mounting within the Liberal Party that John Howard could call an October election as early as Wednesday. As ministers and backbenchers killed off suggestions that the Prime Minister would step down in favour of Peter Costello because of poor polling, attention shifted to the resumption of parliament next week and Mr Howard's scheduled address to Coalition MPs on Wednesday morning. He could then allow parliament to sit for the rest of the week and on Friday issue the electoral writs for an October 27 election.
Correct, this is just the beginning, confirmation here
To the point, we (what is this "we" business) are in trouble. The shocking events of August 20 have no parallel in modern capitalism. A panic flight to safety caused the yield on three-month US Treasury notes to plunge at the fastest rate ever recorded, outdoing the 1987 stock market crash and 9/11.
Britain is likely to suffer more severely than the U.S.
Steep housing prices and a dependence on financial services make its economy vulnerable Could any country be more exposed to the current credit crunch than the U.S.? You bet, and that place is Britain. Unlike most of its European neighbors, Britain shares many of America's financial traits—and problems. Access to cheap credit has fueled a decade of unprecedented growth, with home prices tripling over the past decade, a faster rise than in the U.S. Consumer spending has skyrocketed, now making up roughly two-thirds of the country's total outlays. And the overall economy in Britain is more dependent on financial services than it is in the States.
US loses jobs - one recession comin' ride up
The US economy lost jobs last month for the first time in four years in a dramatic reversal that raises the risks growth will be wiped out and that the downturn in the housing market will cause a recession.
Looks like the USA has just hit reverse.
Against forecasts for an increase of 110,000 in the payroll numbers, the figures showed there had actually been a decline of 4,000 in August. Economists were alarmed by the figures. Rob Carnell of ING in London described them as "downright awful". "For those wishing to see some evidence of the impact of sub-prime on the broader macro-economy - look no further," he said.
property market is overvalued by as much as 30 per cent
Hundreds of estate agencies across southern Spain have gone out of business in a trend that experts say signals the end of a buoyant housing market that has fuelled the country's economy over the past decade.
US Loan woe 'to hit UK mortgages'
UK Investors Say Buy Buy Berlin With Overseas Property Specialist
Overseas investment property specialist, David Stanley Redfern Ltd. has signed an exclusive deal with a major German bank to offer 75% LTV mortgages in Berlin. The unbeatable loan to value mortgages are designed specifically for property investors with a fixed interest rate for currency exchange.
London effect increases national prices by over 2%
"As we go on to show, regional differences in England are considerable, and stripping London out of the analysis would bring the annual rate of house price inflation down to 7.2%. We note the London effect is getting greater over time reflecting the fact that the market there is out of kilter with the rest of England and Wales. The London 'effect' is now over 2 percentage points."
Current financial turmoil is identical to that seen in earlier stock market crashes
Lehman Brothers has announced that they are withdrawing from the second charge market resulting in the closure of London Mortgage Company. The reasons given are due to the global credit crunch. To date no estimate has been given as to the potential job losses that will inevitably result from the closure and re-structure of two of Lehman's lending arms...
Unbrideled optimism from the EAs !
EVERY day more statistics attest to the slowdown in the property market. With pressure building from pricier borrowing and even bigger supermarket bills, pessimists are starting to talk about the potential for a slump.........However, as our survey of leading estate agents and key economists shows, the mood in some areas remains cheerful. Yeh - now me, I believe that England is going to win the World Cup, George Dubya's gonna grow a brain and Bin Laden gonna get a job as UN peace envoy. Must be in the spirit of us Brits to remain optimistic in the face of adversity.
A jolly wheeze for Gordon B
Mortgage rates may increase without a leading increase in the BoE's Base Interest Rates. Wow. Good news for HPC doomsters. It may be good news for Gordon too. He can still swaggered around claiming to have delivered an economy without boom or bust because the BoE's Interest Rates remain low. Any "bust" caused will be due to those nasty banks raising their mortgage lending rates which isn't his fault. Max interest rate 6% this year with cuts early next year due to the meaningless CPI.
Money looks to be getting more expensive...
''It won't be long before the increase in the interbank rates starts to appear on the bank statements of every single borrower."
The line between illiquidity and insolvency is an extremely fuzzy one
Is the housing market just illiquid or is it insolvent that is the question and as central banks have always drawn a line between illiquidity and insolvency. There however seems to be a bit of a dilemma when it comes to the mortgage business and intervening to bail out insolvent firms would, however, encourage irresponsible behaviour that should in theory be resisted.
It will be 'developed' countries NOT developing countries if they continue this way
I dont like to point out that SOME developing countries that are importing expensive milk & wheat probably export some equally useful food produce .. if they could only break that damn currency imbalance. As i say, i dont like to point it out so I will leave that analysis to someone else.
Cheapening of money
Bank Bailout - The Big Mistake
Plans to bail out banks who have lost significant sums of money in the US and probably eventually in the UK is repeating exactly the same mistakes that Japan made in the 1990s and we all know what happened there.
You can’t separate the markets from the 'real' economy
Forget any division between the markets and the real world. Right now the markets are in trouble – and that means the real economy is in trouble too.
You thought UK housing chains were a problem?
Home sale deals are collapsing at six times expected levels and setting up the worst jobs bloodbath in years - but Uncle Sam is still sending mixed signals when it comes to cutting interest rates.
That'll take their 'worse' sub prime to 10% then
Ian Giles, director of marketing: "As you might expect from an experienced lender like Kensington, we will continue to review our pricing and criteria whilst the global capital markets remain in their current volatile state. We will communicate any necessary changes at the first opportunity to ensure that our actions remain transparent and easy to understand. We will also be looking out for the key signals of market recovery and ensure that Kensington products remain competitive in a changing market."
Jeremy Grantham's view
First, house prices may move on euphoria in the short term, but long term they depend on family income - the ability to pay mortgages and rent. At levels well above the normal four times family income, the market gradually loses first-time buyers until prices break and fall back to affordable levels. House prices are in genuine bubble territory in the U.S., Britain and many other markets. In Britain and in some critical large cities in the U.S., for example, the multiple of family income has risen to over six times from below four times, and in London last year the percentage of first-time buyers was the lowest since records began. From these high levels, prices are guaranteed to fall. In doing so, they will reduce consumer borrowing and spending power.
Better hurry up with those bunker busters
Has the idea of a house as an 'investment' gone too far?
Merryn Somerset Webb: "So deeply ingrained is the new idea that a house is a moneymaker not a home that property presenters regularly tell people that they don’t have to like their first homes. It is, they are told, not about where or how they want to live, but about making money (this is why everyone is always so shocked when you tell them you rent your house because as its cheaper to rent these days you get to live somewhere nicer by doing so)..."
BIG NEWS for the USD and the US
A sharp drop in foreign holdings of US Treasury bonds over the last five weeks has raised concerns that China is quietly withdrawing its funds from the United States, leaving the dollar increasingly vulnerable. "This comes as a big surprise and it is definitely worrying," said Hans Redeker, currency chief at BNP Paribas.
Dear Jo Public, you have all been utterly fleeced
Fantastic set of figures here showing how utterly fleeced we have been by the 43% increase in wages since 1996 compared to the 180% increase in house prices. E.g. South East: Median pay 1996 £18K, 2006 £25K. Median house price 1996 £75K vs 2006 £203K. We have ben robbed - it is official. Personally I have been amazed at how accepting people have been of this trend...
The problem is they dont know their losses ...
If this had just been a matter of clarity then it could all have been worked out from day one. I use the word clarity carefully. Clarity is where the banks get together and decide what these things might be worth and hopes everybody buys it. Another word is transparency. This is different. People should be very careful what they call for in this regard as the quants. that put together these instruments have little clue what these things are worth and the answer may be zero. Transparency might lead to "You are insolvent." , "We are insolvent". That kind of thing. One thing that can be guaranteed; they will try to get away with a minimum shift to make as good a set of reports as possible without going to jail. Then the problems will return
Danger: Steep drop ahead - And british housing market gets a mention!
China heading for the EXIT buy buy Dollar!!!!
The Morality of National Borrowing: Let Our Grandchildren Pay the Bills
An Open Letter to Future Generations Dear Future Generations: We come to you hat in hand to borrow trillions from you to pay off our insanely risky gambles in the housing bubble. Because you can't vote yet, and our spineless, morally corrupt and short-sighted politicians are so cravenly desperate to win the next election that they will gladly sell you down the river to pander to the Greediest Generation now, well, you don't really have a choice.
Free market economy - my articoke!
Why Fionnula Earley, Bob Diamind et al are all turkeys
Taleb has many useful insights to offer. He questions our reliance on the "narrative fallacy", the way past information is used to analyse the causes of events when so much history is actually "silent". It is the silence - the gap - the missing energy in the historical system, which produces the black swan. Imagine, says Taleb, the problem of turkeys: "Every single feeding will firm up the bird's belief that it is the general rule of life to be fed every day by friendly members of the human race 'looking out for its best interests', as a politician will say. On the afternoon of the Wednesday before Thanksgiving, something unexpected will happen to the turkey. It will incur a revision of belief."
What a remarkable coincidence ?
"The research comes as the Bank of England's Monetary Policy Committee begins its two-day interest rate setting meeting. "The fall in each of the consumer confidence indices is not surprising given the five increases in interest rates in just a year," said Nationwide's Fionnuala Earley." Of course Nationwide has no vested interest to keep the BoE rate below 6%.
So are we heading for boom or bust?
After the summer slump, the market's poised for action. But will we be hit by meltdown or swept along by yet more rises? Rob Griffin pinpoints the key signs to look for, and selects the strategies for success – whatever comes our way
More turmoil to come
Pressure is mounting on the Bank of England to intervene in the credit crisis after money-market lending rates jumped to a 20-year record and economists warned that central banks have "not properly recognised the dangers" ahead.
Food inflation on its way
This is a secular rise in food prices. It is both a demand and supply issue of massive proportions.
Robert Shiller: "We have a housing crisis developing"
I have often written and talked about the US housing situation being the Achilles heel of the US economic outlook. As stated before, the unwinding of the US housing situation has some way to go before the system rids itself fully of all the excesses accumulated during the multi-year upswing. This article features a video clip of an interview with Prof Robert Shiller, economist of Yale University and of Case-Shiller Home Price Index fame, warning of a significant US recession risk if house prices drop more. Click on the link below for the interview. http://investmentpostcards.wordpress.com/2007/09/05/robert-shiller-%e2%80%9dwe-have-a-housing-crisis-developing%e2%80%9d/
House prices must fall ...
Right now, we are seeing the first signs things may be about to get easier for first-time housing buyers. It couldn’t come at a better time. Across the country there are millions who just cannot afford to get onto the housing ladder. These aren’t just the young. Many of them are well into their 30s, in professions such as nursing, care homes, teaching and those who work for local authorities.
Research by Paragon Mortgages has shown landlords' confidence is at record levels, as average rental yields increase... Paragon's buy-to-let trends survey of landlords shows that despite rising interest rates, landlords are more confident than ever in their property investments. The index - based on the value of their property portfolios now and the expected value of their portfolios in twelve months' time - stands at 160, up from 155 last quarter and from 150 this time last year.
Prices rose by 1.6% between June and August
House price growth is slowing..... The three monthly increase in house prices - a good indicator of the underlying trend - has slowed sharply over the past few months. Prices rose by 1.6% between June and August compared with a 4.5% in the three months to March...
STAGGERING! - Why hasn't this market crashed yet?!?
The cost of getting on to the housing ladder has risen to near record levels, thanks to soaring house prices and five increases in interest rates over the last year, a report said yesterday. A deposit and stamp duty would have taken up 21 per cent of a first-time buyer's annual salary 11 years ago. The figure now stands at 90 per cent, according to the Royal Institution of Chartered Surveyors (RICS).
Get a car, Free!
Builders are so desperate to offload their houses, they've upped their freebies to tempt buyers. Now you don't have to worry about being able to afford a car or the furniture. The only thing you need to be able to afford is the house!
Financial Stress as the Slump Approaches
First-time buyers must spend almost five times more than they did a decade ago to get on the housing ladder, with poorer families having to save almost a year’s salary for stamp duty and a deposit.
research! Where would we be without it!
This research, published by the Federal Reserve Bank of Cleveland and co-authored by University of Wisconsin-Madison business faculty, finally pinpoints the cause of the housing problem. Apparently "relaxed credit constraints could explain why house price apreciation has outpaced incomes" and "the availability of subprime variable-rate martgage programs will sharply curtail.This will reduce the demand for starter homes, causing their prices to fall..." Wow! You learn something new every day!
This is very serious!
If this situation continues, it could potentially have very serious implications
If we stay stuck, the patient is going to die!
The penny drops - and so does the price
At last the penny seems to have dropped. Buyers are no longer willing to pay inflated prices so sellers have lowered their expectations.
Rents in the City of London could stop rising as a result of the turmoil in financial markets, property group Hammerson has warned.
ft: Rents in the City of London could stop rising as a result of the turmoil in financial markets, property group Hammerson has warned.
“My gut feeling is that the short-term response to the conditions we have seen is that people will be less willing to pay more. That means the spike in rents will flatten off, we will not see so much growth in rents in the next year or two.”
Affordability ultimately hits the economy
"A bigger economic upheaval, Levy says, "isn't about foreclosures," which are making the headlines now, "it's about the spending behavior of those who aren't going to lose homes but have seen their wealth evaporate." Either they don't have as much home equity to borrow against, he says, or they are afraid to spend as they watch the value of their home decline. "
Textbook muppet behaviour
Meet Tom McTague, a graduate with plenty of debts, no spare cash but a vision of getting on the ladder by becoming a landlord in the North-east... He concludes that without help from the bank of mum and dad, there's no chance of getting on the ladder, even in Middlesbrough. You could have knocked me down with a feather with that kind of penetrating insight, Tom.
How long will this credit crunch persist?
Demand among commercial borrowers has remained strong despite the increasingly tight credit market, with the result that rates have increased. Housing economists believe UK mortgage rates will begin to rise if the situation persists as banks pass on the extra costs of lending to consumers.
And you thought AAA was just the next widening of the GCSE Grade Scale
The great exodus begins>
Hedge funds, with an estimated combined $1.9 trillion in assets, posted an outflow of $32 billion in July, the largest outflow since 2000, according to a report by TrimTabs Investment Research and BarclayHedge. August hedge fund outflows, for which complete data is not yet available, could be even greater, according to the report. The report speculates that it was the estimated $55 billion in July redemptions by funds of hedge funds that likely sparked the dislocation in the equity markets in the summer. In July, while regular hedge funds experienced an estimated inflow of $23 billion, the $55 billion in redemptions by funds of hedge funds was equal to nearly 5% of their estimated assets of $1.2 trillion.
On go the dominoes.....where they'll stop nobody knows...
Synapse Investment Management became the latest victim of the recent turmoil on global credit markets after the London-based hedge fund manager closed one of its three fixed-income funds because of “severe illiquidity in the market’’.
You can never have too many reminders of what CDOs are
How'd we get into this mess again?
Do people actually know what they are talking about
Clear signs of stress in the market
The age of inflation?
Japan's economy has slowed sharply over the summer and may now be on the brink of recession, dampening hopes that Asia will buttress world growth as America battles the sub-prime housing crisis.
Maggie Thatcher's legacy?
The Conservatives will today unveil proposals to roll out the "home-owning democracy" first promised by Mgt Thatcher, as their public services policy review group argues that council tenants should be given cash to buy houses in the private sector.
1 in 5 say a collapse in house prices is biggest threat to their retirement fund
Brits are gambling with their futures by betting on the lottery and at the bookies, rather than saving for retirement....But, while some are hoping their numbers come up, others are betting on property to provide their retirement income. Not clear whether all these are BTL or whether some hope to either downsize or release cash from own home in some other way.
end of the line!
"Kensington... is the latest mortgage lender to react to rocketing Libor and a growing distaste among investors for risky mortgage-backed securities. The sub-prime specialist told brokers that its variable rate would rise from 7 to 7.8 per cent on Friday. It said that it planned to reprice and tighten the lending criteria on mortgages for people with a bad credit history." This is the end of the UK housing boom. Any other comment is superfluous.
Who really holds the cards!! China, Japan, Russia and so on
No FTBs please
London's second-largest house was advertised for sale with a 75 million-pound ($151 million) asking price, six weeks after it was listed for less than half as much.
"The survey is a reminder that the economy is still performing pretty well, and that an eventual further interest rate hike is still very possible despite the current turmoil in global credit and financial markets," said Howard Archer, an economist at Global Insight.
German bank losses WAY bigger than first thought
IKB, the German bank that had to be rescued after taking a massive hit from the US sub-prime mortgage crisis, today said that it expects to lose up to €700 million (£473 million) this year. The lender, which is partly state-owned, sent a shockwave through the markets in July when it issued a profit warning linked to its investments in US subprime debt - housing loans extended to borrowers wih poor credit histories. IKB’s collapse was averted with a €3.5 billion rescue by other German banks.
it makes a good read
look at the difference between UK and USA.. it can only mean our crash will be much worse the last couple of lines the C word is mentioned... yes crash crash crash, now does the crash position have the same affect as brace position on a plane? break your neck???
Barclays are bidding high at the interbank committee responsible for setting LIBOR (the interbank lending rate) - above the BoE. Why are they doing this - to force the BoE's hand to provide liquidity to the market? (or do they not want to lend any more money themselves because they are a bit short of the readies right now?)
From small acorns...
Every so often we get a story like this - and most then vanish without trace - but once in a while it gets mega - AIDS/SARS/Bird flu.. Even in a war torn African country, known diseases get quickly identified. When a new one appears that's scoring a 15% mortality rate, we need to be on guard - the human race now has too many people moving around too fast for it's own good...
Pro-Labour rag pushes for IR cuts!
The conclusion must be that, at 5.75%, interest rates are already too high for consumer price inflation. They may not be high enough to have a major effect on company spending or GDP growth or even the money supply, but even before the full effect of the existing rate hikes has been felt, they have done enough to rein in the consumer and get inflation back below target.
one story for them, another for them is it cpi or rpi?
Notice how student loans use RPI to base it rates on? Yet the BOE uses CPI.. what the fu**
Will falling US house prices cause a US recession ?
"The main worry now is that falling house prices in the United States will dampen consumer spending."
This is the big question. David Smith always maintains that a house price crash will never happen without an economic recession. But what if the HPC causes the recession .... ?
Lowering IRs by 1 or 2% won't be enough when the teaser rates cause jumps from 1or 2% to SVR... It depends on the number of households that are at risk I guess.
More for your money?
Householders searching for the best possible lifestyle at the best possible price should move to Beverley. Property affordability was then worked out to determine the position of each location. Beverley's average house price is slightly above the national level at £182,000, while average earnings are £37,000, the report says.
Another monster that could conflict imact on rate setters.
The fastest recorded jump to a category 5, this is a monster, that could end up being very dangerous for the poor people of Central America. Lets hope that not too many people suffer. Some of the predictions show it following the same route as Dean, possibly further damaging and causing shut downs for the Cantarell Oil field (the second largest in the world). There is an outside chance it could head into the Gulf of Mexico towards America's oil fields. Its kinda relevant, because the Fed will be between a rock and a hard place if a hurricane causes an oil price spike just when they want to cut interest rates. All the traders are back home from holiday now, so it could have more impact than Dean.
Nicola Horlick interviewed 8.30am
Nicola and a hedge fund guy agree that a contraction is on the cards and possibly a recession, saying sentiment as having turned to fear in the markets. And lets not forget October is never a good month for markets (1929,1987) and K wave suggests further falls.
A week to watch
Apparently this week is, statistically one of the most bearish of the year. Could it set the scene for the rest of the Autumn?
Sell To Rent
The property business never stands still for long before a new species of entreprenuer or shark appears. The latest stage of this evolution has created companies that buy properties, (typically those that can't sell) and then rent them back to the seller. However, there is concern about the lack of any regulation governing this practise and some homeowners are simply being conned. In one case highlighted by a Citizens Advice official an elderly gentlemen sold his home for £40,000 even though it was valued at £165,000.
US IR drop means what?
Lower rates may trigger a period of high inflation, which would have to be dealt with over time, but this was the "lesser of two evils", said Mr Feldstein.
The fallout from the mortgage meltdown and Iraq war will play out over years, not days.
It is extremely hard to know how big a crisis is while it is actually unfolding. Retrospectively, we tend to think of crises as one-day wonders (e.g. "Black Monday" or 9/11). This notion of short, sharp shocks fits in well with our human inclination to live for the moment. Perhaps it is also a symptom of our era's chronic attention-deficit disorder.
South Africa's Credit Crisis Grows - Get Help!
So good to see that people are still reading the SA Property BLOG, and we're proud to say that it's now the number 1 portal and information station for all South African property and finance related information...Seen as the only ongoing and exciting news in the world of property right now is the national credit act I though we'd put together a little list on how to manage your debt responsibly.
Comical Commentary about US Debt
A funny/sad (tragi)comic commentary: These numbers can't be right ... Must be a long series of typos ... Fun fact, Okay? Since 1776, The United States has accumulated a national debt of $9 trillion ... over half of which was incurred when a Bush was on watch! What a family legacy!
Globes predicts mass bankrupties in Israeli real estate market
Israel’s housing market is committing suicide. This is the basic message of outgoing First American-Israel Real Estate (FAIRE) Fund CEO Avi Tenne, just before he throws up his hands and joins the Israeli developers building overseas. After five years as CEO, and two years before the fund is due to expire, it was clear to him that he could not invest in new long-term deals, which persuaded him to hand over the keys to his successor, Shay Braverman.
Real Stories from Small Town America
If you don't think America's problems will affect the U.K. then read this covering the foreclosure of one families 3 bed house with garden that cost $180K 3 years ago, which is a bargain UK terms. According to Moodys about 1.7 million American households will lose their homes this year and next reaping untold economic damage across the U.S. and beyond.
Lesson on business survival during a depression
Story about a family who ran a healthy business despite all the odds during the 1930s. I particularly liked this quote. "Even though the store was in direct competition with P.Y. Porter, the Mathews dealt strictly in cash or barter and never gave credit, thus were able to offer somewhat lower prices." There's a lesson there...
Debt Is Not An Asset
"I don't know how the financial system is going to survive through October," Lyndon LaRouche commented on Aug. 31, after reviewing recent developments on the global financial front. The rate of this collapse will increase hyperbolically, and the system will be gone by mid-October. The explosions we are seeing now are mere grenades, with much larger ones to come. If the system hits a big landmine, it may not even make it to October.
US rate cut is urgently sought.
Harvard University economist Martin Feldstein said the U.S. housing slump threatens a broader recession, and the Federal Reserve should lower interest rates. Bernanke wasn't in the room for Feldstein's speech, though most other Fed officials were, along with central bankers and economists from around the world who travelled to the annual mountainside conference hosted by the Kansas City Fed bank.
A good explantion of the current market liquidity problems
Bank Exec admits to liquidity shortage in markets
Bob Diamond, the chief executive of Barclays Capital, has made a thinly veiled plea for the Bank of England to intervene in the money markets, and defends his bank's own liquidity position. Sign of desperation you think?
More on Bank of England Emergency Lending
The Bank of England faces mounting pressure from big banks to reveal more details of its emergency lending after cryptic statements about multi-billion pound loans sparked panic in the financial markets.
Where are rates going?
More on Barclays sub-prime exposure
Alex the doorman has in the past few days become used to being asked about one of his residents, Edward Cahill. At an apartment block in London’s Docklands, reporters have come looking for Cahill, a financial wizard at Barclays Capital.
Coming to a town near you??? After the shootings.
WOW!!!!!!!!!!!!! So like my next door neighbour said yesterday. Things in the US are being exaggerated it could never happen here..... and he was a Barclays bank manager!! Read this and you see that there is no way the GOVT can step in and save this problem. Only solution would be for the US to cut IR's and let inflation go. Then see if that worked... back to the old game. This is an amazing read and shows how the whole of the US is in the grip of a MAJOR, MAJOR problem. Any action now could be too late anyway. Who would buy house now just because the FED cut rates in an emergency, and how long could hey hold them down for anyway???
Well I think any sane person knew this 5 years ago
People have to ask in my opinion why this policy was allowed. They should get Greenspan back in the doc and ask why he took actions which would always lead us here. Now if they do cut rates will we have a recession with wild inflation? I suspect that inflation is already high and climbing... this is ignored by all in power at the moment. Mr Milliband made great noise that inflation was dropping in the UK!!!!! Tell that to prison officers, nurses, and just about everybody else!!!! Lies and more lies. If this dose not come now the cracks will last no more than 12 months, debt will have to be payed back or written off. You can not print money with no consequences. Inflation is now part of China as well. Rant Over!
Merryn tells it like it is - credit crunch = trigger
BACK in January when I finally managed to sell my flat to a more-money-than-sense foreign buyer I registered my details with all the local estate agents. The original point of doing this was to find a house to rent, but there was no persuading Paddington’s property experts that was all I wanted. They all demanded details of the kind of house I’d like to own. Eventually, partly so I didn’t have to spend any more time explaining why in overheated markets renting is vastly superior, I told them I’d like a four-bedroom house with a garden near Hyde Park for between £850,000 and £1.2m. And that was the end of that. For the next eight months I didn’t hear a word from any of them. Until last week. Then I had four calls in a row
Here We Go Go.....!!!!!!
Well i still think that the global die is cast. The cat is well and truly out the bag. There is no way the US govt can bail out 2 million households. And this is assuming that these people want be cast in debt for the next 20 years or more. Many may opt to walk away as they did here in the last crash. The R work is out and it is for real. Any talking and moving by the US govt or FED with postpone the inevitable. Debt is now out in the open, bank mis management is clear to all. This is in my opinion the start of the clear up while trying to avoid a major depression. Will it work?
Do even these two now sense the inevitable...
Intersting article.. well, interesting in the fact that I thought I would never hear either of these two talking about reduced prices. Yet they still try to spin it by saying that its a good thing for buyers.. sure.. lets buy now, lets not wait, we might not be able to afford to in a years time when the prices have soared again, yeah right.
Where there is Misery there is Money to be made
Householders facing repossession are ending up homeless after selling their homes to property companies (adverts on daytime TV now), the firms lease the properties back to the ex-owners, are said to be imposing large rent rises whilst others complain that they have received less than the market value for their former properties (doh).
All aboard the Pepsi Max
'Too many such sales can destabilise a market, particularly in poorer urban districts. Often they are of a similar type of housing stock - such as ex-local authority - which tends to put pressure on prices in the area and can create micro-markets of decline.'
The Real Deal
"He agreed to sell his house for £40,000, so that's £120,000 below market value, and remains there - at the mercy, really - of the new owner on a six-month assured short-term tenancy, that can be ended at any point with two months' notice." In Englands green and pleasant land.
A wee fall is still a fall!
ESPC is expected to announce a drop in average house prices in Edinburgh, from £228,845 in July to £216,147 in August. Crawford (Halifax) is not getting too excited though. He said: "Prices will fluctuate in some regions. But strong areas such as London and Scotland should escape. Demand for property in key cities will prevent price falls."
US bond prices fall sharply
For all you guys worried that a bailout by Bush will put off an HPC. Don't be. The R-word (recession) in the US is now in the air. If US bonds fall sharply because of this news then expect another big stocks crash in October. The 1987 stocks crash was preceded by a big bonds sell-off 1-2 mnoths before.
Agent Smith: It is happening exactly as before
No New Mortgage = No New Car
US Car sales are falling as buyers who cannot withdraw housing equity via re mortgaging desert the showrooms. Proof that the US is living beyond its means, is the UK next?
Moronic financial decision-making...
"Word on the street is that today, President Bush will speak to the nation, asking Congress to step up to the plate and try to help distressed American debtors. You know, the ones who bought at the real estate market top and took out terrible subprime loans -- even though plenty of people warned them not to? The ones who didn't bother worrying about resetting interest rates or future payments, because they figured they could always refinance later, or sell into what was then a red-hot, always-inflating market?"
Fed governor calls for swift response on housing
Goodbye Dollar. Explain to me again why other countries are happy to exchange their currencies a this rate. Particularly as food imports get more expensive.
Savings rates hit six-year highs
Entertaining account from well known blogger about trying to buy a house in California
Holy crap, people. I just talked to a mortgage broker about buying a house. Lalala, I am thinking, Mr. B. makes just over six figures and yeah, we don't really have a down payment but you know, with that kind of money and a gold-plated credit rating and no debt it shouldn't matter, right? WRONG.
Lending money to people to buy your products is wrong
This happened to Cisco and other equipment manufacturers in the technology boom.
Please read the 41 comments to this article
"The latest month on month figures from the land registry show a nationwide rise of 0.1%. Bearing in mind the amount of expenditure by homeowners and developers on improving properties, and that the land registry statistics will be over sensitive to property developers, a rise of 0.1% month on month means that prices in real terms are already falling across the country."
Repossessions 'could hit 45,000' next year
mail: The Royal Institution of Chartered Surveyors said as many as 45,000 homes could be taken back by lenders in 2008 - the highest figure since the late-1990s.
total of 5,120 houses went under the hammer between April and June, a rise of 22 per cent on the previous three months.
Do B&B hold most of the cards in the UK version of 'liars poker'?
GMAC-RFC announces its largest ever portfolio sale in its five year trading history to Bradford and Bingley... This is the fifth transaction of 2007 and forms part of the forward sale agreement between the two parties. This £1.1 billion deal comprises of prime, self cert and buy to let assets and was completed on the 31st August 2007. To mark the success, this is GMAC-RFC's 100th portfolio sale
RICS worried about reposessions
The Royal Institution of Chartered Surveyors (RICS) has blamed the 32 per cent increase in auctioned properties on rising repossessions. The number of residential properties offered at auction rose by 32 per cent in Q2 2007 and RICS believed the increase was pushed by repossessions, as affordability conditions deteriorated following interest rate hikes...
Cracking Article on how the American Mortgage Market Misfunctions
Damn good explanatory article containing some good quotes, 'the corruption of the investment banks and bond-rating agencies is terrible news, It is akin to the pope learning Easter morning was a hoax' and 'large builders and investment bankers had incentive to put lipstick on pigs' and 'As we peel this onion, we are finding many purposeful compromises that look much like the insidious corruption that characterizes commerce in some countries. In essence, Wall Street manufactures bad bonds'.