July 2008 Archive
Wednesday, July 30, 2008 
APPROVALS to build private homes in NSW have plunged to their lowest level in nearly half a century, new figures show.
smh: Building slump swings to the '60s
That interest rate relief could come sooner than expected.
Boom turns to dust
creditman: Europe's Housing Markets Come To Rue High Indebtedness As Boom Turns To Bust, Says Report
The risks posed by high levels of household indebtedness among European economies are thrown into sharp relief by the collapse in the U.K., Spanish, and Irish housing markets, says a research report titled "European Economic Forecast: Boom Turns To Bust In Exposed Housing Markets," published today by Standard & Poor's.
Some losses to make the Lloyds TSB writedown look like chicken feed
Reuters: Global writedowns & credit losses
A breakdown of an estimated $341 billion of credit-related writedowns and losses recorded by major institutions since the credit crunch hit in the third quarter of 2007.
Said is said!
FT letters: No transfer, no need for scheme
Sir, You report that the government is considering an extension of the scheme whereby the Bank of England swaps mortgage-backed securities for gilts (“Darling looks at new mortgage plan”, July 28). Treasury aides are quoted as saying that “the risk would remain with lenders, not taxpayers”. If there were no transfer of risk from private lenders, there would be no need for the scheme as the mortgage-backed securities would be marketable without the Bank's help. John Whittaker, Economics Department, Lancaster University, NB - John W is also a UKIP MEP for the Northwest Region.
Off topic. Is it just me or is this man an arrogant, self serving, pontificating, condescending tw@t?
BBC: Miliband denies 'leadership' bid
David Miliband has insisted he is not "campaigning" for the Labour leadership - despite writing about the party's future with no mention of Gordon Brown. He said he was prompted to write his Guardian article because of the sense of "fatalism" in the party after its defeat in the Glasgow East by-election.
And it made print!
BBC: English home prices 'set to rise'
Average house prices in England are set to rise by 25% by 2013, a National Housing Federation report claims. It sees prices falling 4.4% in 2008, 2.1% lower in 2009, recovering by 2010 and rising at over 9% in 2012 and 2013.
Socio-economic mood will worsen considerably if this is true
Telegraph Online: 1.7m UK homeowners to fall into negative equity, warns S&P
About 1.7m homeowners - or one in seven - may fall into negative equity over the next year as the UK housing market deteriorates further, the world's leading ratings agency has warned. According to a report today from Standard & Poor's, house prices across Britain could fall as much as 26pc before the market bottoms out next year, which will see 14pc of homeowners with outstanding mortgages slip into negative equity.
How MEW helps you lose your house in a downturn
Yahoo News: 'Extreme Makeover' house faces foreclosure
Not strictly MEWing, they took out a loan against a house they fully owned. Don't borrow more against your house than you can afford, if it goes down in value and you can't afford the loan.... After the Harper family used the two-story home as collateral for a $450,000 loan, it's set to go to auction on the steps of the Clayton County Courthouse Aug 5.
Britain has outstanding mortgage debt equal to more than 50 percent of GDP
Reuters: House prices have further to fall
S&P said the average cost of a house would revert to about 4.4 times average annual earnings -- near back to where it was in 2000 -- if prices fell by 25 percent overall.
35% increase
times online: British Gas raises energy bills by 35%
Centrica, the owner of British Gas, said today that it is raising gas prices by 35 per cent and electricity by 9 per cent after profits at its residential business fell by 69 per cent in the first half. The move is in response to a rise of £2 billion in market commodity prices.
1300 to lose their jobs at Northern Crock.
BBC News: Northern Rock unveils job losses
A few more for the dole queue.
Another 10% off please
Times: County-by-county: completion prices as a percentage of asking prices
Asking prices down, completion prices - another 10% off.
Is anyone, anywhere, and any bank safe?
Telegraph: Lloyds TSB warns of house price misery after posting 70pc profit slump
High street bank Lloyds TSB today warned of a slowing economy and a 10pc-15pc tumble in house prices this year after reporting a 70pc slump in first half profits on the back of further credit market writedowns and volatility in its insurance business.
1.7m borrowers are facing the prospect of negative equity
FT Alphaville: S&P estimate on Negative Equity
Negative equity based on a conservative estimate of a further 17% decline. "We have researched the risk of negative equity under various house price scenarios, and estimate that: – The average U.K. mortgage has a loan-to-value (LTV) ratio of only around 54%. – Nevertheless, around 70,000 or 0.6% of U.K. borrowers are currently in negative equity. – A further house price decline of 17% would raise this number to around 1.7 million (14%). – Borrowers in the buy-to-let and nonconforming sectors are more exposed to negative equity under this house price decline assumption." I will post the report as a comment here because it is buried halfway down the FT Alphaville piece and I can't find the original S&P report online.
Inflation problems solved!
BBC: Zimbabwe introduces new currency
Zimbabwe's central bank has said it will introduce a new currency on 1 August as part of efforts to fight the effects of hyperinflation. The bank's governor has announced that ten zeros will be lopped off the Zimbabwe dollar, making 10bn dollars one dollar. Zimbabe's inflation is running at over 9,000,000% So far this year, Zimbabwe has been forced to print Z$100m, Z$250m and Z$500m notes in rapid succession, now mostly worthless. The new Z$100Bn note introduced last week is not enough to buy a loaf of bread.
The end of lending from the Swiss
BBC Website: Bank Losses shame disgruntled Swiss
When banks were offering 125% six times salary mortgages the great mystery was where the money was coming from. Now the tap has been turned off we find out a major source was the Swiss. However I doubt if they will be doing it again in a hurry.
If you can get enough people to buy a home for no money down, you can buy their country for no money down.
SOTT: Mortgage Market Musing
Normally moving money out of a government in excess of the total taxes that year would be hard to do. However, I could use securities fraud. I could issue a lot more government securities and government agency (like mortgage agencies) securities than I recorded on the government books and sell them abroad. I would have to make sure not to publish audited financial statements as that would increase the liabilities of engaging in this kind of fraud. It would help a lot if I could pool mortgages and sell government agency securities to finance those mortgages in a process where the same mortgage could be sold many times into the same pool. Investors would not notice or care because the securities were government guaranteed.
Don't do it Mr Brooon
Times Online: They mustn't mortgage fairness to buy votes
You can see the temptation so clearly. Government in the doldrums; poll ratings tumbling with the economy; housing market frozen (frozen my assets - it's just collapsing); and - hey, what's this? - a plan to kickstart the Government's fortunes by kickstarting the housing market by underwriting mortgage lending.
70% of Landlords surveyed see house prices falling in 2008 (but rising rental yields and a long term view make it a good time to buy)
mortgagestrategy: 70% of B2L investors to expand portfolio this year
In the face of falling house prices and fears of a recession 70% of property investors are planning to grow their portfolios this year, reports the Property Investor Show. The event surveyed UK buy-to-let investors and found that the majority are looking to take advantage of rising rental yields.Landlords are not unaware however of the struggling economy as 65% of respondents believe the UK is heading for a recession and 70% see house prices falling in 2008.
Grim Picture Leading to the Grim Reaper
Wall Street Journal: U.K. Retail, Mortgage Data Paint A Grim Picture of Economy
LONDON -- The U.K. economy's outlook darkened further as retail-sales growth and home-mortgage activity slowed sharply. The Confederation of British Industry, a business group, reported Tuesday that its measure of July retail-sales volume tumbled to its lowest in 25 years. Bank of England figures showed mortgage approvals in June slumped to their lowest since the data series began in 1999. The central bank also reported sharp drops in consumer and mortgage lending.
Sir James circumspect about bail out for lenders
Telegraph: Homeowners face call to act responsibly
"Sir James Crosby, the former HBOS chief executive who is leading a review into wholesale mortgage finance for the Treasury, may propose a regime of "tough love" for Britain's cash-strapped homeowners."
Precipitating further price falls?
FT: UK Mortgage Market
In summary there is a stand off between buyers and sellers and at some point soon sellers will capitulate and we'll see some proper price falls. As if they aren't underway already..
Globalisation was a con anyway
The Telegraph: Doha world trade talks collapse in blow to globalisation
The Doha round of world trade talks has collapsed in what one former trade chief called the biggest blow to globalisation since the end of the Cold War
Food prices rising fastest in UK
This Is London: News Article
"Supermarkets in Europe do a better job of sheilding shoppers from price rises than supermarkets in in UK"........Inflation is the fault of greedy supermarkets and petrol companies. nothing to do with the 20% devaluation in sterling then? That's lucky because we want to print another 90 billion pound notes.
Italy is sliding into a deep structural crisis and risks being forced out of Europe's monetary union as the region's economic downturn gathers pace, according to a new report by Capital Economics.
telegraph: Growth slump may force Italy out of eurozone
Italy can at least take some comfort that other euro members are feeling the strain too, reducing the risk of EMU break-up. France's Insee consumer confidence plunged to a 21-year low in July.The epicentre of the unfolding crisis is Spain, where the number of houses built this year is expected to collapse by half from the 760,000 constructed in 2007 at the peak of the bubble. Spanish unemployment is rising by almost 70,000 a month, touching 10.6pc at the end of the fourth quarter. However, Spain has a much small public debt than Italy.
It is now clear that the Antipodes are tipping into a serious downturn. Australia's NAB business confidence index fell to its lowest level in seventeen years in June. New Zealand's central bank began to cut interest rates last week on fears that the econo
telegraph: Australia faces worse crisis than America
The world's financial storm has swept through Australia and New Zealand this week amid mounting signs of contagion across the Pacific region. . Housing starts slumped 20pc in June to the lowest since 1986. Both the Australian and New Zealand dollars have fallen hard in recent days and now appear to be breaking down through key technical support against major currencies, including the US dollar. "The Aussie is going down, big time," said Mr Redeker.
Tuesday, July 29, 2008
Crazy, but it might just work ...
FT: Labour MP tells premier to resign for sake of party
Not the PM resigning bit, this bit: "Another Labour MP, Rob Marris [Wolverhampton South West], called on Mr Brown to consider imposing one-off taxes on oil companies and on banks, as part of setting a "clear direction"."
Canada's national net worth reached $4.5 trillion by the end of 2005, or roughly $137,300 per person, Statistics Canada said Friday.
Canadian Broadcasting Corporation (CBC): Canadians worth $137,300 each: Statistics Canada
I got this article, from Alan Watt's website. His response to it: "Since I'm losing out here and sure others are too, and since the government's claim we are each worth $137,300, then I figure the government must have my $137,250.12 and I'd like it back please. Like minded people should do the same." We wouldn't need mortgages at all if we did!! Check out Alan's excellent podcast to really understand what's going on in the world, on http://www.cuttingthroughthematrix.com/audio.html
Socialism recieves a massive bail out.
Asia Times: Bailout cure worse than disease
With President George W Bush no longer threatening a veto, the subprime mortgage and Fannie and Freddie "bailout" bill was able to sail through the US Congress. In anticipation of its enactment, congress had the foresight to raise the national debt limit to US$10.6 trillion. Who says that politicians don't plan ahead? - Why are they doing this? And increasing national debt in the process? Its because the government can't stand the thought of the useless eaters being able to buy a house on one salary. They can't stand the thought of less being dependent on social housing and benefits, of more being in a position to home school. Of more being able to juggle family life and running a business. So, mortgage company's will be bailed out to ensure that house prices are high enough to enslave us.
A bit old blog, but quite entertaining
The Tragic Column: Phil and Kirsty Couldn't Have Done It Better...
Quote - "I’m waiting for the day Kirsty turns round and asks if they’ve tried swallowing."
Reality is finally biting
Cantos: Property deal volumes slump 50%
Liam Bailey at Knight Frank considers if any parts of the UK market are proving immune to the current downturn. "...the reality is for most people now if you want to sell your house people are accepting they have to take 10 per cent less than they would have got last October." "...In a sense you could argue what we have now is actually a normal mortgage market. I mean certainly 10 or 15 years ago this was normal." "...when do prices stop falling and then begin to rise, and probably that's 2010"
American Proffessionals Contemplate Engineered Reposession
BBC: America's house price time bomb
As Bush contemplates massive intervention in the US mortgage market a little known quirk of US law threatens to drive down house prices even faster.
What now, Kaletsky?
Guardian: US house prices fall at fastest rate on record
US house prices plummeted at their fastest pace on record in the year to May. Standard & Poor's Case Shiller home price index fell 0.9% in May from April and 15.8% from a year ago. This is the biggest annual decline since the series began in 2000. The sharpest declines in the index were in Las Vegas and Miami, where prices fell 28% on the year.
Vicious circle .. er ... noose tightens
Daily Telegraph: IMF: US housing slump at centre of financial crisis
The world economy is now trapped in a "vicious circle" as the financial crisis is worsened by slumping housing markets on both sides of the Atlantic, the International Monetary Fund has warned. It said the greatly-feared "negative feedback loop" it warned of in previous reports had now materialised. It also cautioned that it remains far too early to call a bottom to the housing slump in the United States, which lies at the centre of the recent crisis.
'Maximum pessimism' is the time to buy. But have we reached it?
MoneyWeek: 'Maximum pessimism' is the time to buy. But have we reached it?
Markets bottom out when investors are at their gloomiest and all hope seems lost. But how do you tell when that is? John Stepek sheds a little light – and tips the best sector to invest in now.
My area would probably show up bright red
Telegraph: Crime maps to show offences for every street
Crime maps giving details of offences that have taken place in every street in the country are to be published for the first time. Residents are to be given access to Google-style internet maps of actual streets identifying assaults, muggings and burglaries in towns and villages across England and Wales, under Home Office plans. There are concerns that publishing details of neighbourhood crime could affect house prices or that the information could be abused by criminals
More destruction coming up
Daily Paul: The Silent Crash is Starting to Make Noise
This is the Dow priced in real money - gold. It is down 73% to date from its peak. If Congress, the Fed and the Treasury had not been colluding to inflate the our currency and destroy the dollar, this is what the nominal Dow would look like, too. And according to his analysis, it soon will
Mortgage lending hits a new low
BBC News: Mortgage lending slowdown goes on
Official figures have underlined the slowdown in the UK mortgage market. The number of new mortgages approved for house purchases fell to 36,000 in June, down from 41,000 in May, according to the Bank of England.
Ex-property developer and securities underwriter blows the lid of world events
Google Video: George Green (The Big Picture-An economic forecast for coming times)
What Is Going On With The Housing Market, The Price Of Dollar & Gold, The Coming Financial Situation, & The Solutions
Bailing out the banks - why?
BBC: Treasury's mortgage rescue plan
The Treasury may give a taxpayer guarantee to billions of pounds of bonds known as mortgage-backed securities created by banks out of high quality mortgages, in a radical attempt to revive Britain's rapidly shrinking mortgage market. Officials from the Treasury are examining such an ambitious and controversial scheme in response to a dire assessment of the outlook for mortgage finance to be published at 10am today by Sir James Crosby. This would be pretty controversial, as it would be seen as taxpayers underwriting a huge slug of the mortgage market. Some would argue that our entire mortgage industry would be nationalised, although that would probably be overstating it.
Mismanagement on a grand scale....
BBC News: Plan to revive mortgage lending
''...Sir James Crosby's - the deputy chairman of the City watchdog, the Financial Services Authority - assessment of the health of the British mortgage market is about as gloomy as it's possible to be....This former banker blames a collapse in demand for mortgage-backed securities, or investments created out of mortgages and sold to banks and big investors...''
Back to the 1790's
Times online: Britian's 10 worst recessions ever
If the media's constant talk of "recession", "credit crunch" and "downturn" is depressing you, bear in mind that our ancestors have had it much worse. Here Times Money looks at ten of the grimmest decades in British history – when economic troubles often coincided with bloodshed and famine...
But will Darling listen?
Times: Sir James Crosby [ex-chairman of HBOS] tells Alistair Darling to reject US idea
"Sir James Crosby is expected to reject any suggestion that the Government set up a mortgage agency similar to Fannie Mae and Freddie Mac, the two troubled American companies that nearly collapsed recently. It seems unlikely that it would be right to tackle Britain's problems with last century's solution, particularly given the time that it would take to create any such agency. When the review was launched in April, Sir James said that he wanted to find market solutions to the problem." HERE'S A SIMPLE market solution: house prices are too high, let them fall and everything will be fine again. Luckily we can trust politicians to delay making a decision for long enough!
Merrill's mortgage CDOs fell 78% from $30.6bn to $6.7bn!
Times: Merrill Lynch forced to take emergency action ahead of writedown
Another day, another bank, another billion: "Merrill Lynch sought to bolster its balance sheet and reduce its risk last night as it announced moves to raise $8.5 billion and the sale of $11.1 billion worth of high-risk mortgage-backed securities. The group said it would record a $4.4 billion writedown in its third-quarter from the sale of the CDOs. Merrill has been particularly hard hit by the US housing crisis. Merrill Lynch acquired the CDOs that it sold yesterday for $30.6 billion. By the end of Q2 this year they had declined in value to an estimated $11.1 billion and Merrill agreed yesterday to sell them to Lone Star, the private equity fund, for $6.7 billion."
No end insight.
BBC News: Merrill warns of further losses
Merrill Lynch has said it expects to write off another $5.7bn (£2.9bn) in the current three-month period because of mortgage-related losses.
Monday, July 28, 2008
Oh No Not the 'N' Word
BBC Newsnight: Now somebody's saying the banks will be nationalised!
Banking analyst Bruce Packard of Pali International believes that Nationalisation is on the agenda for UK banks. We have looked at the Nordic banking crises of the early 1990s for potential lessons that might be applied to UK banks and a worrying measure is that UK indebtedness (loans/GDP 150%) is currently much higher than in the Nordic countries during the Nordic banking crises (less than 100%).
One of the biggest Australian sellers on eBay has gone bust and its owner has fled to China, leaving hundreds of buyers out of pocket an estimated hundreds of thousands of dollars
smh: Hundreds out of pocket as eBay trader goes bust
In the past three months ebusiness-supplies sold over $1 million worth of goods. It is the seventh biggest Australian eBay user in terms of the number of items sold. eBay was made aware of complaints about the seller weeks ago but did not disable the user account
If you can't screw the buyer, screw the seller!
Independent: House prices plunge again – as estate agents raise their fees
Many of Britain's biggest estate agents are raising their prices in a desperate bid to increase their earnings from the ever-dwindling number of homes they are now able to sell.
IMF predicts more housing-related pain
The Times: Business News Article
The IMF predicts more housing-related pain and sounds a warning that financial strains remain and persistent stresses in global financial markets leading to still mounting losses for banks on both sides of the Atlantic and threatening to aggravate the worldwide economic downturn. This is fuelling the dangers to world economic prospects.
Foreclosures in the US continued to climb in the second quarter of 2008
wsws: US housing slump “without precedent”: foreclosures up 121 percent over 2007
Foreclosures in the US continued to climb in the second quarter of 2008, experts acknowledge that the current housing slump is “without precedent” in the modern era, and the resulting stress is taking both an economic and emotional toll: a 53-year-old Massachusetts woman committed suicide July 22 only hours before her family’s home was to be put up for auction. In the three-month period April through June, some 740,000 foreclosure filings were recorded in the US, an increase of 14 percent over the first quarter and 121 percent over the same period in 2007. According to RealtyTrac, one in every 171 US households received a filing, which includes notices of default, auction sale notices and bank repossessions
London leads the way down
evening standard: Biggest fall this year for house prices in London
Statistics from the Government's Land Registry show that prices in the capital are falling faster than anywhere else in the country. The average London home sold last month cost £345,136 - nearly £10,000 less than in May
It clearly shows how disgusting and ridiculous the system of government we live under is.
sott: Signs Economic Commentary for 28 July 2008
Driven by a sour economy and skittish consumers, U.S. business bankruptcies saw their sharpest quarterly rise in two years, jumping 17 percent in the second quarter of 2008, according to an analysis by McClatchy. Commercial filings for the first half of 2008 are up 45 percent from last year, as the national climate for commerce continues to deteriorate amid rising energy and food costs, mounting job losses, tighter credit and a reticence among consumers to part with discretionary income.
It May Be Wise To Assume A Sustained Crash
CNNMoney.com: Stocks tumble amid ongoing jitters
NEW YORK (CNNMoney.com) -- Stocks plunged Monday, with the Dow losing nearly 200 points, amid renewed fears about the financial sector and a lack of economic news. With about two and a half hours left in the session, the Dow Jones industrial average (INDU) fell 1.6%. The broader Standard & Poor's 500 index (SPX) fell 1.1%, while theNasdaq composite index (COMP) sank 1.3%. For Those who know what they are doing and haven't already done so,it would be wise to review your portfolios. The correction is going to be long and sustained.
An interesting article for our techie's
Naked Capitalism: Has Deleveraging Even Begun? (Not For the Fainthearted)
It no doubt seems absurd to question the idea that deleveraging in underway. We've had three heroic central bank interventions, starting in August 2007, to reverse seize-ups in the money markets. The asset backed commercial paper market has been almost in run-off mode. Leveraged buyout loans have been scarce to non-existent. Banks have cut home equity credit lines and credit card borrowing limits. Commercial and industrial loans have fallen. The private mortgage securitization market is a shadow of its former self.
UK House Prices to Rise by 25%
The Market Oracle: UK House Prices to Rise by 25% States National Housing Federation
The National Housing Federation (NHF) is forecasting that UK house prices will rise by 25% by 2013, that will take house prices upto an estimated £274,000 by 2013 from their current levels of approx £180,000 based on the Halifax House Price data.
That's not an Iceberg!
Bloomberg: IMF Says U.S. Housing Slump End `Not Visible,' Credit to Worsen
The International Monetary Fund said there's no end in sight to the U.S. housing recession and warned that deteriorating credit conditions for consumers and banks may prolong a period of slow economic growth. ``At the moment, a bottom for the housing market is not visible,'' the IMF said in its Global Financial Stability Report, released today in Washington. ``Stemming the decline in the U.S. housing market is necessary for market stabilization as this would help both households and financial institutions to recover.''
Ten predictions for 2008
Credit Writedowns: Ten predictions for 2008
With 2008 now half over, it's obvious that the global economy has lurched to the downside. While many have remained unrealistically optimistic about the workout of the present credit crisis, downside risks have been the determining factors in keeping things soft. Where are we headed? See what I say as far as the UK is concerned as well as for other economies.
Bush administration: 2009 deficit will approach $490 billion, record driven by economy sag
AP - Yahoo: Bush administration projects record 2009 deficit
The next president will inherit a record budget deficit approaching $490 billion, according to a new Bush administration estimate. The official said the deficit was being driven to an all-time high by the sagging economy and the stimulus payments being made to 130 million households in an effort to keep the country from falling into a deep recession. A deficit approaching $490 billion would easily surpass the record deficit of $413 billion set in 2004.
Will the next PM also face a record deficit?
BBC Business: Record deficit for next president
The next US president is expected to face a record federal budget deficit of almost half a trillion dollars. The White House is tipped to lift its deficit forecast for 2009 to $490bn (£246bn) up from $407bn. The budget deficit measures how much more the government is spending than it is raising through taxes. The slowing economy is reducing the tax take and the government has launched a stimulus plan by making payments to 130 million households to boost spending.
Firstly, why is the personal finance correspondent reporting on this, secondly what happened to the Halifax figures released today?
Telegraph: House prices fall for tenth month, says Land Registry
House prices have fallen for the tenth month in a row as the rate of growth hit a record low, new figures show.
Bring on the destruction
Google Video: The Crash -- Coming Financial Collapse of America
A very scary and possibly real situation that could unfold very shortly.
Southern Slump
The Times: Southern slump drags house prices down 1%
"Prices in the South West are 5.2 per cent lower than a year ago, while those in Greater London and the South East have fallen by 5.1 per cent and 4.6 per cent respectively."
Is it time to pass the parcel (aka Poison Chalice)?
Times Online: John Prescott: Forget about replacing Gordon Brown. None of you lot is up to the job
"John Prescott led a backlash against Cabinet plotters yesterday, saying that none had the skills or experience to rival Gordon Brown, while the Prime Minister’s allies gave warning that he would sack disloyal ministers." ... "In a statement the Justice Secretary (Jack Straw) said it would be a “big mistake” for the party to ditch Mr Brown. “I am absolutely convinced that Gordon Brown is the right man to be leading the Labour Party,” he said. He added: “It would be a big mistake for the Labour Party to now turn in on itself and indulge in a summer of introspection.”" What a lot of hot air, looks like they all say one thing to your face and another behind your back. Just make a 1% cut in Tax this will give a 2% boost to the economy without affecting the housing crash ...
FT's expert view
FT: Rebuilding the housing market
One of the Ask the Expert series from the FT. An antidote to some of the rubbish appearing in the other papers. Quite long but worth a read, for instance this quote on unemployment: "I would therefore argue that any bounce back will take time to re-assert itself and that we are still in the very early days of the correction. It is worth noting that unemployment actually only began to rise from May 1990 with housing acting as a lead indicator."
"House prices will rise 25%" said Vested Interest
Sky News: House Prices will soar 25% in the next 5 fives
House prices fell for the 10th month in a row during July - but there are claims the property market will bounce back stronger than ever. (Advertisement) Homes in England and Wales lost a further 1.2% of their value during the past four weeks, new figures show. The average cost of a home has now slumped by 4.4% during the past year. That is the fastest annual rate of decline since property intelligence group Hometrack first launched its index in 2001. But separate research carried out for the National Housing Federation predicted that the house prices in England will rise by 25% during the coming five years. DENIAL IS UGLY
The bailouts will continue until the robbery is complete
The Telegraph: Fannie Mae and Freddie Mac: Congress backs rescue package
World markets are poised for a major relief rally today after the US Congress met in a rare weekend session to pass the most far-reaching rescue package for America's financial system since Franklin Roosevelt's New Deal.
Cornwall is a microcosm of what we're seeing nationally because of the credit crunch, but it's exaggerated by the earning to house price ratio
The Independent: Cornwall: A land of haves, and have nots
Cornwall was at the bottom of the table of wealth in a recent EU survey, level with former eastern bloc countries such as Slovakia and Slovenia. As the only county in England to qualify for emergency EU funding, it is actually one of the poorest parts of Europe. A world away from the catamarans of its Kensington holidaymakers, the area is on the front line of the global credit crunch.
Falling mortgage rates won't stop the housing bust
MoneyWeek: Falling mortgage rates won't stop the housing bust
House prices are dropping, but now's not the time to stake your future on a buy-to-let 'bargain'. Hoard cash for a rainy day, hope you don't use it and have a nice pile to invest when the storms clear.
A solvent professional struggles to get a mortgage from high street lenders
pw.com: Can we get a mortgage?
Just how hard is it to get on the housing ladder? As first time-buyer Justin Wood discovers, even a 10% deposit no longer guarantees a mortgage.
Hometrack - House Prices 1.2% Lower in July. Biggest Annual Fall on Record !!
Reuters: House prices fall in July
House prices fell for a 10th straight month in July to stand 4.4 percent lower on the year, a survey by property consultants Hometrack showed on Monday. That was the biggest annual fall since the survey began in 2001. Prices were 1.2 percent lower on the month.
David Smith: renting is not dead money after all
Times Online: Is homeownership still an aspiration?
Article from David Smith in the Times suggesting that the younger generation are just not interested in buying a home any more as they have student debts, more pressing costs or just prefer to save their money. Of course he doesn't conclude with the obvious corollary that if young people aren't buying anymore then demand must fall, which means..... house prices will be permanently lower..
London not immune to a house price crash after all then
Firstrung: London house prices crash by 2.4 percent in the single month of June
The June data shows a monthly price change of -1.0 per cent and an annual increase of 0.1 per cent. Accounting for seasonal adjustments, the data for June marks the tenth consecutive decrease in annual price change in England and Wales. This is sustained evidence of the weakening in annual growth rates that began approximately ten months ago. The average house price in England and Wales stands at £180,781, which is a decrease from last month.This month's 2.5 per cent fall in London house prices is greater than the average for the country as a whole. London's positive annual change of 2.4 per cent is being sustained due to higher monthly increases at the start of the previous twelve months.
Biggest monthly drop yet
Land Registry: June Land Registry Report
June LR figures out show the biggest monthly drop yet -1.0%. More to follow as this indictor lags 3 months.
Land Registry not yet yoy negative
BBC News: House prices 'dropped 1% in June'
House prices in England and Wales fell by 1% in June leading to a tiny rise of 0.1% over the year, according to the Land Registry.
The 25% house price rise NHF report in all its glory....
Firstrung: Despite fears of a housing market crash house price in England will rise by 25 per cent over the next five years - NHF
The average house prices in England will rise by 25 per cent over the next five years to reach £274,700, despite fears of a housing market crash - according to a new report published today by the National Housing Federation. The document - researched by independent economists Oxford Economics - forecasts that house prices will fall in 2009, start to recover in 2010, and then rapidly increase from 2011... The paper, entitled Home Truths 2008, says that house prices will increase by: 5.2 per cent in 2011 9.2 per cent in 2012, and 9.3 per cent in 2013 - with the typical price at the end of the period being well above the average in 2007 of £222,600.
House prices 'up by 25% by 2013' - BBC
BBC: House prices 'up by 25% by 2013'
Average house prices in England are set to rise by 25% by 2013, a National Housing Federation report says. It sees prices falling 4.4% in 2008, 2.1% lower in 2009, recovering by 2010 and rising at over 9% in 2012 and 2013.
House prices now back to October 2006 levels
Firstrung: UK house prices now 4% lower than July 2007 as London prices begin to crash - Hometrack
House prices in England and Wales have fallen for the 10th consecutive month during July, losing a further 1.2% of their value, figures released by Hometrack today have shown.The latest annual rate is the lowest since the survey began in 2001 and sets a new record for the most months showing consecutive house price falls. Hometrack also reported that the falls were heaviest in southern England, particularly London...
The Screw Tightens on the People
BBC NEWS: MPs warn of energy price impact
"Rises in gas and electricity bills in the near future will have serious consequences for millions of households, an MPs' committee has said."
Another two US Banks go bust.
TimesOnline: Two more US banks collapse as defaults soar
So another two banks in the US go bust this week, it should now only be another two months before the CDS fiasco failures start to occur in the UK. Its appears that Financial authorities in Washington spent last week securing a rescue deal for two insolvent mortgage lenders in Nevada and California amid the latest signs that America's banking crisis is deepening. The collapse of the two banks - which had combined assets of about $3.6 billion (£1.8 billion) - came as a senior financial regulator told The Times that there was no end in sight for the crisis gripping the banking industry.
You love it!
Express: http://www.express.co.uk/posts/view/54301/House-prices-to-rise-by-25-
HOUSE prices will soar by nearly a quarter over the next five years, it was predicted yesterday.
A report published by the National Housing Federation shows that demand is growing but the supply of new housing has fallen dramatically.
As a result, the impact of the credit crunch – with lenders reducing the supply of mortgages – will be out-stripped by the increasing demand for homes.
The average house price is set to reach £275,000 by 2013.
Sunday, July 27, 2008
"Petrol's gone up 50p, so let's buy a £500,000 house"
Times: Top ten places to buy property on the coast
More rubbish from the Times' property section: "Because of rising air fares and the strong euro, holiday homes in Britain are looking increasingly attractive. Prices haven’t collapsed as some predicted, but you can negotiate a bargain if you’re breaking into the market. Houses are likely to be cheaper than last year and cheaper than in two years’ time. While Salcombe is holding up well, more people are releasing property in cheaper locations nearby, such as Dartmouth, that they perhaps shouldn’t have bought in the first place. In Whitstable, it is difficult to buy a beachside house for less than £500,000. “It’s a good bet for investment over the next five to 10 years", says a local estate agent. Broadstairs will benefit from faster rail services using the high-speed track to St Pancras."
Fraud! - Everyone is doing it.
Scotsman: City watchdog sinks teeth into mortgage fraudsters
Decent article from the Scotsman with the ever robust and tell it strait comments from the readership that reveals some rather alarming trends that the Scotsman would never dare print in its main article!
It's carnage - big falls across the board
Halifax: Quarterly report out now
London down 4.3% on the quarter, 16.1% annualized. South East down 6.4% QoQ, 23.3% annualized. East Midlands down 7.2% QoQ, 25.9% annualized. The North down 9.3% QoQ, 32.4% annualized. Northern Ireland down 14.6% QoQ, 46.9% annualized. But hey, the Isle of Man is still rising!
Kaletsky bear-baiting again
Times: Pessimists are basing their gloom on old news
My view is that this episode is likely to be remembered as one of those extremes of panic in financial markets, which tend to reoccur once or twice every decade, then turn out to be simply wrong. In making this argument, I have been accused of ignoring market realities and being blindly contrarian. The true contrarians at present are the bankers and headline-writers who keep predicting economic Armageddon. The markets are taking heart from the government guarantees offered to Freddie Mac and Fannie Mae - hence the 40% rise in financial shares this week. And US house prices, which almost everyone believes to be in freefall, have actually been going up for the past four months, according to the National Association of Realtors.
Manufacturers like Johnson & Johnson and Hasbro raise prices, pressuring retailers to do same
AP - Yahoo: As costs rise, inflation's next front is retailers
Coming to a store near you: Even higher prices. Most inflation this year has come from food and fuel, as retailers resisted passing along to strapped consumers the higher prices manufacturers charged them, but coming increases from companies such as Johnson & Johnson and Hasbro Inc. may leave them with no choice.
Halifax Q2 London - down 4.3% qoq, 7.3% yoy
Halifax: Quarterly Regional Comments
The bigger they are, the harder they fall...
House price optimism in high at HPC, they are going down at long last!
This is money.co.uk: House price optimism in short supply
The web is full of chatter about house prices and where they are heading. In one chatroom, a miserable vendor begs advice. One reader's guidance is blunt, but practical. 'Drop the price. Drop it again. And keep dropping it until you get an offer.'
Gathering pace
ThisIsMoney: House prices to plunge a third by 2010
In a report released today, leading accountancy firm Deloitte says: 'We now expect UK house prices to fall by about a third by the end of 2010 with severe adverse effects on household spending and investment.' Roger Bootle, economic adviser to Deloitte and Touche, predicts that interest rates will have to be slashed to 3.5 per cent by the end of next year to tackle rapidly weakening growth.
Many interesting similarities to the problems we face now
Liberal Manifesto: October 1974: Why Britain Needs Liberal Government
I came across this little gem whilst surfing this morning. I was amazed at how similar some issues were in 1974 to those we face today. “ In ten years the price of an average new house has risen three times, the cost of a mortgage has risen five times whilst the proportion of an average family's income spent on mortgage repayments has increased from 25 per cent. to 50 per cent. The average price of a new house at over £10,900 is well beyond the reach of over half the population and unless steps are taken soon to alleviate the situation, home ownership will become a thing of the past.”
You can get a good reduction now - but unless you can negotiate at least 40% off the asking price, why bother?
Telegraph: Summer sale: mortgage rates set to fall
The next 18 months will, without a doubt, be even harder for many families: house prices will plummet much further, the squeeze on families' incomes will intensify and hundreds of thousands will lose their jobs. With every period of economic gloom comes an excellent buying opportunity for those who can afford it. As the late investor Sir John Templeton said, the best time to invest is at the moment of "maximum pessimism". There is every indication that that moment will arrive over the next year and a half.
Taxpayers to the rescue!
Telegraph: Treasury plan to rescue mortgage lenders
The Treasury is preparing a radical rescue plan for the housing market which may involve pumping billions of pounds into the stricken mortgage markets. Alistair Darling, the Chancellor, has asked his leading advisers to investigate a plan to provide government support for lenders until the financial crisis has abated. The proposal is being investigated ahead of the completion of Sir James Crosby's report into the funding struggles faced by UK banks.
Britain: A land of haves, and have nots
The Independant: Cornwall: A land of haves, and have nots
A microcosm of the social division that rampant hpi has brought to Britain under New Labour.
Hutton feels the pain
Guardian: A week that taught me home truths about the housing crisis
In today's housing market, you don't argue with a potential buyer. Selling our house required us to exchange and complete in seven days and of course we agreed. The house price surveys don't convey the scale of the crisis in the market or the price falls.
US government finally gets to socialize banking losses
AFP: US Senate approves sweeping housing bill
"President Bush will sign this bill when he receives it, despite our concerns with some provisions, including nearly four billion (dollars) to help lenders, not the homeowners this legislation is intended to serve". "As more homes are dumped on the market, home prices fall further, driving further mortgages underwater, leading to further foreclosures, further homes dumped on the market, and further home price declines," said economist Richard Kelly at TD Bank.
14% of mortgages are unaffordable...?
Ipsos MORI: Fear, Uncertainty, Doubt Survey
14% said 'certain, very likely or fairly likely' in response to Q5) "You will not be able to keep up with your mortgage payments"
Saturday, July 26, 2008
More requests for a Bank of England bailout
Guardian: Credit crunch: Call for extra underpinning to support new mortgages
The government will face fresh pressure from lenders next week to ease funding conditions in the mortgage market when it publishes an interim report into the cash-strapped sector by the former HBOS chief executive Sir James Crosby.
We need to bring in a License for BTL landlords
CNBC: Congress Approves Housing Market Rescue Bill
The Congress approved a massive housing market rescue bill on Saturday, offering emergency financing to Fannie Mae and Freddie Mac creating a new regulator for the mortgage titans and setting up a $300 billion fund to help troubled homeowners. It amazes me that you need a license for fishing, your tv, alcohol, taxi driver, street performer, but f**k all to be a landlord.
David Smith talking sense?
Times: Is home ownership still an aspiration
Young adults did not think much of the idea of home ownership. Why tie yourself to a big mortgage when there are better ways to spend your money? Why get lumbered with years of housing maintenance and having nothing more exciting to do than getting the windows done? The old argument that paying rent is dead money left them unconvinced. Only 44% of 18-to 25-year-olds favour home ownership. For some people, renting is indeed the best option.
NAB's other $13 billion of similar derivative exposures, as well as the billions of dollars of exposure the other banks have to these risky instruments.
australian: NATIONAL Australia Bank's write-down of $830 million has put the spotlight on the dangerous risks the banks have taken with customers' deposits.1per cent defaulted, it would wipe out Australia's banking system.
According to the latest Reserve Bank Bulletin, the Australian banking sector's exposure to derivatives was $9.8 trillion at March 31, compared with almost $13 trillion three months earlier. While most of this isn't risky, if 1per cent defaulted, it would wipe out Australia's banking system.
Citigroup banking research reckons ANZ and NAB are the leading candidates. ANZ heads the list with a $23 billion exposure to credit default swaps (CDS) and NAB with its conduits (off-balance-sheet dumping grounds for things you can't sell).
smh: NAB's ugly surprise
As a consequence, local councils all around the country who were sold CDOs by investment banks for their lovely yield, their safety and their credit rating are now sitting on hundreds of millions of dollars of dud securities.
Major banks like Wachovia, Chase and Bank of America are tottering and no one is lending money to anyone anymore.
TBR News via ts: Voice of the White House July 25, 2008
Congress has rushed through a Band-Aid bill to : ‘help’ home owners but it is far too little and far too late to do any good. Major banks like Wachovia, Chase and Bank of America are tottering and no one is lending money to anyone anymore. Credit is drying up, evictions rise, along with gas and food prices and unemployment is just behind all of them but rising. Some of this collapse is the result of overextension, some the result of greed and much more the ineptness of the Bush administration but the fact is, we are teetering on the edge of the quarry cliff and what is coming is slow disintegration
The difference between credit-default swaps on Fannie Mae and Freddie Mac subordinated and senior debt widened.
Bloomberg: Fannie, Freddie Subordinated Debt May Be Cut by S&P (Update4)
July 25 (Bloomberg) -- Standard & Poor's may downgrade the subordinated bonds of Fannie Mae and Freddie Mac, surprising investors who had anticipated the securities would be supported by any Treasury rescue plan The potential downgrade of the preferred stock isn't as surprising, Jackson said. ``The fact that they lumped the sub debt in there seems questionable,'' Jackson said. ``If we are talking about equity capital being contributed by the government, by any measure that we can come up with, that should protect the subordinated debt.''
Could this be the money model for a world economy to replace the dysfunctional financial system now in crisis?
Comer: Money in Trouble
The Chinese government does not seem to carry a national debt and sells Chinese Treasury bonds to cool its economy not to finance it! With so much mind boggling infrastructure construction pouring yuan into circulation, some cooling seems necessary. This May China increased the commercial bank reserve requirement again to now 16% reducing the quantity of loans they can make to a maximum of 6X their reserves. This is an alternate way to reduce bank money creation rarely used in the USA in preference to the “one blunt tool” of increasing interest rates which bankers like! Could this be the money model, a Chinese model, for a world economy to replace the dysfunctional financial system now in crisis? The Committee on Monetary and Economic Reform
Throw your charts away - We simply cannot calculate the negative repercussions of this.
Mr Mortgage: Time to Get Political Folks…Massive Bailouts Front and Center
They are on the move guys. I have always kept my political affiliations and actions a private matter, but what is going on with the Fannie/Freddie, housing, mortgage, Treasury, Fed, Wall St, Washington, rich investor and foreign Gov’t bailout plan could turn out to be nothing short of the largest fraud ever perpetrated on the American people. At least in my lifetime. I feel compelled to use whatever soapbox I have here to get this message out to as many as I can.
BIG PROBLEM - This more micro look at the housing market is coming up with massive house price losses
Mortgage Lender: Massive House Price Losses in Non Conforming Areas
"Fitch Ratings, arguably the only rater with their act together other than Egan-Jones, just finished with its ResiLogic enhancements. Its new mortgage loss model will be released today. In it, its new National, State and MSA-level economic and house price forecasting will make their modeling ‘far more predictive and forward-looking.’ That is a nice way to put it." BIG PROBLEM - This more micro look at the housing market in the 25 MSA’s that in the past have contained the most ‘non-conforming (Jumbo) lending, is coming up with massive house price losses in key areas with San Diego dropping as much as 47% over the next 5-years! San Francisco is looking at an additional 33%. These are your heavy Alt-A areas.
These fast-approaching events will not go unnoticed.
bankimplode: The Crisis Is Upon Us by Ron Paul
"I have, for the past 35 years, expressed my grave concern for the future of America. The course we have taken over the past century has threatened our liberties, security and prosperity. In spite of these long-held concerns, I have days – growing more frequent all the time – when I'm convinced the time is now upon us that some Big Events are about to occur. These fast-approaching events will not go unnoticed. They will affect all of us. They will not be limited to just some areas of our country. The world economy and political system will share in the chaos about to be unleashed."
if borrowers do not repay, the government will
financial sense: Congress Taps Paulson's Helmet
With President Bush no longer threatening a veto, the subprime mortgage and Fannie and Freddie “bailout” bill is now sailing through Congress. In anticipation of its enactment, Congress had the foresight to raise the national debt limit to $10.6 trillion. Who says that politicians don’t plan ahead? Once signed into law, the budget busting legislation will hand the Administration a blank check to prop up the ailing home lenders. The ultimate cost is anybody’s guess. I believe that the price tag will be higher than just about anyone imagines.
Gordon Brown has just accelerated the degree to which Labour is seen as being out of touch
Market Oracle: Britain in Freefall as Economy, Housing Market and Labour Votes Crash
Gordon Browns Labour party is in crisis mode, time has effectively run out for Gordon Brown as the time for action to arrest the decline in Labour's electoral fortunes was more than 6 months ago, the same old offerings at press conferences no longer cuts it not only with the voters but also with Labour MP's who can clearly see that their jobs are now on the line. There now exists a high probability of a challenge to Gordon Browns premiership most probably at Septembers party conference. This also confirms the view that Labour will hang on for as long as possible into the deadline for a UK general election of May 2010.
Fannie Mae and Freddie Mac are expected to report losses again in the third quarter. So are WaMu and regional bank National City
Money CNN: Banks brace for more pain
Cooling credit fears Heading into this earnings season, banks were dogged by the twin investor fears of credit and capital. Analysts were betting that banks would once again have to beef up their loan loss reserves as the housing market deteriorated further and as the U.S. economy continued to sputter. Banks did just that. At the same time, nonperforming assets and net charge-offs, or loans banks don't think are collectable, continued to rise.
A worldwide recession is coming. China, India, Brazil, and third world economies simply cannot pick up the slack for the US, UK, EU, and now New Zealand.
globaleconomicanalysis: Worldwide Hard Landing Is Coming
Alan Bollard, governor of the Reserve Bank of New Zealand, cut the rate from 8.25 per cent to 8 per cent - still the highest in the industrialised world after Iceland - despite rising inflation, forecast to peak at 5 per cent by September. The move surprised many as it contradicts the Reserve Bank's mandate, which states that achieving and maintaining price stability are the sole objectives of monetary policy. The central bank's stated inflation target band is 1 to 3 per cent.
News To Me How come I Didn't Know?
AFN: Think YOU and YOUR PROPERTY
"Capital must protect itself in every way, through combination and through legislation. Debts must be collected and loans and mortgages foreclosed as soon as possible. When through a process of law the common people have lost their homes, they will be more tractable and more easily governed by the strong arm of the law, applied by the central power of wealth, under control of leading financiers. Remember, it's not a question of "if" the economy will collapse, but "when". And if they can't "steal" your property with the above described scheme, they will take it via sequestration by "conservation easements" and expropriate it to international organizations, corporations and associations at "the extinction of the State" through "concessional" lending. Sustainable Development 1934
The financial system will collapse before "zero-hour" actually occurs.
321gold: It's Always Darkest Before the Dawn... of a Depression
I think we are seeing signs of it in the desperate measures being employed to nationalize companies which trade on market exchanges as private enterprises. There is simply no way to defend the SEC's decision to selectively enforce the prohibition of naked short selling for 17 'fragile' financial companies and to not enforce it for the over 5000 other companies which trade on US stock market exchanges. And plans to rescue Fannie Mae and Freddie Mac breathe of a sort of corporate nationalism.
The housing decline is not yet done, because we will need another year to unwind foreclosures in the pipeline.
321gold: Where Is the Economy Going
The underlying problems have not been fixed with this massive bailout. But the much bigger implication is that the Fed is busy pouring more gasoline on the fire by fighting the collapsing housing bubble, a housing bubble created by excess liquidity, with yet more liquidity. That is the key point that should be taken from this mess. The dollar is now firmly on an even steeper slope to its ultimate demise. Other currencies will be sliding down the same slope, so another paper currency is not the answer.
Lamb to the slaughter
ThisIsMoney: Buy-to-let: The housewife developer
When Emma Wright's husband handed her £1m and asked her to invest it in property, she vowed to try to double the money within three years. Emma plans to purchase up to 30 houses near her home in Wadhurst, East Sussex. Emma has embarked on her buy-to-let portfolio with a two-bedroom mid-terrace house at the end of her road in Wadhurst for £200,000 in cash. She is currently spending £3,000 on redecoration and will be letting it to her housekeeper and gardener for £660 a month. That works out at just 4% yield, but Emma expects that figure to rise in future as prices fall.(?????) 'We haven't really seen a big drop in prices in this area yet,' she says. 'It's a very desirable place in hot demand and easily commutable from London.
Rates are "improving" by just 0.15% points and only with large deposits
FT: Mortgage rate cuts signal improving market conditions
Northern Rock, HBOS and Royal Bank of Scotland yesterday became the latest lenders to cut mortgage rates, in a further sign that the market is improving for borrowers. Northern Rock, which is actively trying to shrink its mortgage book, is now offering some of the best two-year deals on the market. The bank reduced its cheapest two-year fixed rates by 15 basis points, to 6.24 per cent for house purchases and 6.34 per cent for remortgages. These rates are available to borrowers with deposits of 25 per cent, whereas previously the best rates were only offered to those with 30 per cent in cash. However, most companies are only cutting the rates on low loan-to-value deals, and still require deposits of at least 10 per cent.
European banks lend to UK landlords - why?!
FT: Rich look abroad for buy-to-let loans
Wealthy buy-to-let property investors are bypassing mainstream UK lenders to take advantage of the more favourable terms provided by some foreign banks. European banks, including Germany’s Kleinwort Benson, Sweden’s Handelsbanken and Switzerland’s EFG Bank, are willing to make multi-million-pound loans, and often at better rates with flexible terms. Some European lenders are offering lower arrangement fees, higher loan-to-values and less stringent rental requirements. “It’s great news for UK borrowers that some foreign banks with strong balance sheets are aggressively competing for high-quality assets,” said a mortgage broker. “They are taking advantage of the highest pricing levels and most conservative lending terms in the UK market for many years.”
What Price a House in Scotland?
Mail Online: Could Mr Brown be the last Prime Minister of Great Britain?
"However, the feverish discussions of Gordon Brown's political health which have dominated the airwaves over the past 24 hours have obscured a matter of much more enduring significance: whether or not the United Kingdom itself can survive beyond the next General Election." To prevent this a lot of money would have to be diverted North of the border, via tax. And would Scotland then take the Euro by default? All this confusion when house prices possibly reach a trough.