August 2008 Archive
Saturday, August 30, 2008 
Labour Government Admits Living in a Fools Paradise
Guardian: Economy at 60-year low, says Darling. And it will get worse
Chancellor Darling admits that he was clueless as to how serious the credit crunch would become and declares that Britain is now facing "arguably the worst" economic downturn in 60 years which will be "more profound and long-lasting" than people had expected .
David Smith, now you know it didn't take most on HPC by surprise!
Sunday Times: Speed and severity of downturn have taken everyone by surprise
Is this the worst housing recession of modern times? In the past year, mortgage approvals have plunged by two-thirds while house prices, according to Nationwide and Halifax, have recorded double-figure percentage falls since last summer. How does this compare with the peacetime housing slumps in the 1930s, the 1970s and the early 1990s? Government figures, which go back to 1930, suggest house prices fell by 10% in 1932, during the Great Depression, and continued dropping for a couple more years, for a fall of 15% in all.......... When inflation is taken into account, the drop was even more pronounced. From peak to trough, Nationwide’s index fell by a staggering 37% in real terms. In cash terms it took until 1998 before prices got back to their 1989 peak. In real terms it took until 2002. .
....but Labour simply doesn't have a mission or message - that's the problem!
Guardian: Labour
Open revolt? ''Britain is facing "arguably the worst" economic downturn in 60 years which will be "more profound and long-lasting" than people had expected, Alistair Darling, the chancellor, has told the Guardian today. In the government's gravest assessment of the economy, which follows a warning from a Bank of England policymaker that 2 million people could be unemployed by Christmas, Darling admits he had no idea how serious the credit crunch would become''
More anti-BTL broadsheet comment
Independent Newspaper: The buy-to-let chickens come home to roost
The last 3 paragraphs are very bearish on BTL, and rightly so. 1. Huge increase in rental supply causing falling rents. 2. Fixed rate resets causing increases in costs to landlords. 3. Landlords cannot sell up even if they need to as the market is illiquid.
Fox on the run
Breaking News: Fox at bay
It can only be a matter of time before Foxtons collapse under the weight of debt.
Gordy and Darling aren't out of the mucky brown stuff yet
Times online: Bradford & Bingley was so close to the edge
Bradford & Bingley gave us a glimpse on Friday of how dicey things were early in July. The bank came uncomfortably close to becoming a second Northern Rock. It might be fanciful, but a collapse could even have brought down the Government if things had got seriously messy and the contagion had spread.
A hurricane threatens to halt much of the Gulf of Mexico's oil production
CNN: Gustav: What's at stake
The Gulf of Mexico is home to 4,000 drilling platforms and 33,000 miles of pipeline, which send 1.3 million barrels a day to the Gulf Coast's 56 refineries. But a hurricane threatens to deal a powerful blow to the oil-rich region. Hurricane Gustav, which just smacked Jamaica with heavy rain and winds, is heading towards the Gulf of Mexico, and forecasters predict its path will steer right through the heart of the region's biggest concentration of oil and gasoline producers.
Consumers: The 21st Century Weeble
CNN: Consumers: The 21st Century Weeble
Despite tough times, the consumer has wobbled but kept spending. But will Americans pull back now that cash from the stimulus checks are mostly gone?
Brown in the Berlin bunker....
Mail: Recession and the disturbing lesson of history from a Prime Minister in denial
''...In particular, Brown was utterly certain that he had produced a miraculous formula which had brought to an end the economic cycle. He must have declared hundreds if not thousands of times that, thanks to his policies, there would be 'no more boom and bust'. Gordon Brown was not making this claim for mere political effect. He genuinely believed that he had solved a problem that had baffled some of the world's finest minds for centuries...''
Bye Bye B&B
Telegraph: Bradford & Bingley to cut new lending after unveiling £27m loss
Rod Kent, B&B's chairman, said the past few months - when B&B repeatedly re-negotiated a rescue rights issue and saw private equity firm TPG walk away from a plan to inject cash - had been "as tough as it can get". Mr Kent denied B&B's only options were to run the business off or put it up for sale. Richard Pym, who has been B&B's chief executive for just eight days, will present a strategic plan at the interim management statement in the autumn. B&B has already cut 110 of its mortgage advisers and further job cuts are likely. Alex Potter at Collins Stewart said the results were "little short of appalling".
Sensible advice for FTBers
Telegraph: Why first-time buyers should wait for house prices to fall further
News that house prices are falling at the fastest rate seen since the slump of 1990 prompts a predictable outcry from an unholy alliance of estate agents and politicians: “Something must be done!” Rather than parade the naked self-interest of middle-aged homeowners – or people like you and me – most of these calls for action focus on help for first-time buyers.
Changing sentiments
This is London: Hurrah - now we can stop talking up house prices
It's all been so tickety-boo. The Tv programmes - Grand Designs, Location, Location, Location and so forth, have been nothing but incitements to covet and gloat. Buy this! Or this! Or this! Grab it quick. These shows were always a mucky pleasure. Now that property is depreciating, all this is going to have to stop. There's not much to look forward to in the economic horrors ahead, but maybe at least a change in the attitude we have to property will be to the good. It became morally repugnant during the boom.
The Wider Picture
F.T.com: Prospect of exchange-rate crisis looms
"Wherever the credit and commodity boom has pushed up property markets to unsustainable highs, there is a serious risk to growth, particularly where banking system portfolios are less seasoned," Russia can play the economic game just as well as anyone else and it would be wiser to be more friendly and respectful to a country that is as much part of the West and its history as we are in reality.
Georgia Bank fails with $1.1 billion in assets
Credit Writedowns: Georgia Bank fails with $1.1 billion in assets
Yet another US bank foreclosure. Just wait for Friday nights and we're destined to see one.
There's always a way
FT: UK home sales boosted by desperate vendors
Rather than waiting for chains to clear, agents say vendors have begun to buy the properties of people further down the chain to clear the way for their own home to be sold. One homeowner engaged in such a process told the Financial Times she had only been able to sell her house for £450,000 – in order to upgrade to a £700,000 home – by buying an apartment at the bottom of her chain for £200,000. “I know several people doing this,” she said. “It allows you to retain some exposure to the property market and gets everything moving so you can sell.”
Friday, August 29, 2008
Sharlene Goff boosted by desperate vendors
FT.com: UK home sales boosted by desperate vendors
Desperate vendors are spending hundreds of thousands of pounds buying houses they don’t want in order to sell their homes. And in a related development, desperate property owner Sharlene Goff, no longer able to keep up her shameless property ramping, resorts to VI-ness masking itself as bearishness.
How not to run an economy by Alistair Darling
The Times: Alistair Darling to be put under pressure over offshore profits
Business leaders sought urgent clarification from Alistair Darling last night on the rules around corporate tax after Regus, the office rental group, became the third company in as many days to say that it was quitting Britain for more a favourable tax regime...Time for a general election me thinks.
So called Mortgage Professionals exposed
Guardian: Mortgage fraud adds to Bradford & Bingley's woes
In June B&B revealed a £15m charge to cover losses from fraud..........Chairman Rod Kent explained that most of the scams uncovered in the last six months related to the activities of mortgage professionals and had come to light as a result of falling house prices. He said the alleged culprits were being pursued by the police and the regulator. .
US: Prime Foreclosures greater than subprime
Credit Writedowns: Prime Foreclosures greater than subprime
It looks like the US is in for a lot more pain than some are anticipating because the foreclosures are moving out of subprime and into prime territory. Brace yourself.
This should help the cost of living!
TIMESONLINE: Energy groups increase pain with gas price rises
Npower and ScottishPower today became the last of Britain's big six energy suppliers to raise gas and electricity bills, adding at least another £162 a year to millions of customers’ heating costs. Npower, the UK’s fourth-biggest energy group, will increase gas prices by 26 per cent and electricity bills by 14 per cent. From today, the company’s 6.6 million customers will pay an average £162 more each year for gas and an extra £60 for electricity. At the same time, ScottishPower has raised its gas bills by 34 per cent, the second largest rise after British Gas increased its gas prices by 35 per cent last month. ScottishPower also announced today that it has increased its electricity prices by 9 per cent, which will come into effect on September 1st
Land Registry says house prices down 2%
Yahoo: Land Registry says house prices down 2%
as if... anything connected to this government is total lies...
Is no one going to post this one???
Land Registry: -0.6 drop from Landregistry
Less than I was expecting, but then it is a government stat.
Peak Oil: When Demand Exceeds Supply
chrismartenson.com: Peak Oil
Forget electric cars. We're running out of energy. Two scary/sobering videos (17 and scroll down for 17b) by Chris Martenson, whose "Fuzzy Numbers" presentation was widely discussed on this site. If you're at work and can't watch them it's worth the wait until you able to do so.
Will the UK follow with Cheaper Dartford Tunnel fees?
BBC: Japan unveils economic boost plan
"Japan has unveiled a stimulus package worth 11.7 trillion yen ($107bn; £59bn) to boost the country's economy. The package also includes discounts on motorway tolls.." The plan only includes 2 trillion yen of fresh government spending, with 9 trillion yen in loan guarantees and aid for small businesses.
No prizes for guessing who didn't make the list
BusinessWeek: The (New) World's Happiest Countries
Not completely directly related to HPC but more a Friday interlude to the constant stream of doom. Curiously, some of these most cheerful places are characterized by high taxes, rugged terrain, poor weather, or low income.
US GDP mirage
YouTube: Go Back to Bed! Everything is Fine. Goldilocks is Back!
Think of it like this: It was all just a bad dream....
Hmm ... looks like the BBC missed this one today
Land Registry: June 2008
Average price £178,364 Monthly change -0.6% Annual change -2.0%
Time to kiss goodbye to the oil crisis ...
Tesla Motors: Reducing Dependence on Foreign Oil
A Peaceful Solution to Oil Wars - You need only open the morning paper to understand the importance — and urgency — of America‘s reduced reliance on foreign oil. The instability of the Middle East makes our 58% dependence on foreign oil a dangerous and costly proposition. 0 - 60 mph in 3.9 seconds. 256 mpg, with 220 miles per charge, 8 minutes to charge on 3-phase (3.5hrs single phase with special connector).
The second-most costly four words in the English language
MoneyWeek: The second-most costly four words in the English language
The cry of 'something must be done' about the property crash is ringing out around the country. But why subsidise those who want to buy or sell a house? What we should really do, says John Stepek, is help people pay off debt and build up their savings, not bail out the housing market. And that means cutting taxes.
BrightSale writes to Chancellor with Housing Crisis Solution
BrightSale Online Estate Agents: BrightSale Urges Chancellor to Act on Housing Crisis
Today BrightSale announced that it had written to the Chancellor demanding the removal of the restriction on SIPP pension schemes investing in residential property. BrightSale argued that such a measure would have a hugely positive impact on the housing market and (unlike the removal of stamp duty) would cost the Exchequer nothing in lost revenue.
Credit Crunch part 2
dollardaze: credit crisis 2
The credit crunch looks far from over, with the rot likely to spread. Is Gold the only safe haven?
Good forecast for housing market
EDP24: Bleak forecast for housing market
NEWS Bleak forecast for housing market ADAM AIKEN, EDP DEPUTY BUSINESS EDITOR 28 August 2008 19:59 Property prices in the east of England are not likely to return to last year's peak until 2013, according to figures published yesterday. The analysis of the regional market came from property firm Savills on the day it said profits in its estate agency business nationally had slumped 88pc during the first half of the year.
Bear food for the man in the street
The Sun: House price fall fastest for 18yrs
HOUSE prices are falling at the fastest rate for 18 years, it was revealed yesterday. They tumbled another 1.9 per cent this month. And that took the annual rate of decline to 10.5 per cent — not seen since the 1990 property crash. The drop was revealed as a CBI survey showed high streets are suffering their worst sales slowdown for a quarter of a century. House prices have now fallen for ten months in a row. And Nationwide’s chief economist Fionnuala Earley warned a recovery was unlikely in the near future. She said builders had reported much lower interest in new houses.
House price plunge fuels recession fear
guardian.co.uk: House price plunge fuels recession fear
Fears of recession this winter intensified yesterday after the CBI reported the weakest high street activity in 25 years, the Nationwide building society said house prices were falling at £150 a day and a Bank of England policymaker warned of two million unemployed by Christmas. Amid predictions that 2009 could witness the first year of falling output in Britain since 1991, government hopes of mounting an autumn political comeback suffered a setback when employers' organisation the CBI and Nationwide both said they saw no let-up in the tough conditions facing retailers and the property market.
Sub Prime woes hit the Costa
Telegraph: Concerns for Spanish banks after downgrade on mortgage securities
Fitch Ratings has downgraded six sets of Spanish mortgage securities issued by Banco Santander, heightening concerns that the damage from Spain's property crash is spreading to the country's strongest lenders. The loans were "sliced and diced" and packaged in an identical way to sub-prime mortgage bonds in the US, belying claims by the Spanish government that the country had avoided the sort of lending practices seen in Anglo-Saxon economies. The cluster of residential property securities, worth €4.06bn (£3.27bn), were all based on mortgages that exceeded 80pc of the house value, and many were 95pc or even 100pc. They were all issued in 2007 at the height of the property boom. Fitch downgraded the lower tier A, BBB, and BB tranches of the securities. The upper levels remain stable.
Gordon Brown is set to usher in a new era of council housing
Times: Property crash opens door to the new council house
Gordon Brown is set to usher in a new era of council housing by helping local authorities to buy repossessed and unsold properties. Cash and powers will be made available so that town halls can intervene in the housing market, The Times has learnt. The measures – which could be announced as soon as Tuesday – will encourage councils and housing associations to offer struggling borrowers financial help in return for a stake in their homes or outright ownership. The number of council homes has plummeted since 1981 from 6.1 million to 2.5 million. Hundreds of millions of pounds of extra cash earmarked for social housing could now be released early to buy up newly built properties.
37k to qualify for most competitive mortgages
first rung: First time buyers or those who have entered the property market recently will struggle to qualify for the most competitive mortgages
Homebuyers now need a deposit of £37,119 to qualify for the most competitive mortgage deals, new research from mform.co.uk shows. The average deposit necessary has soared by 43 per cent from last year when it was £20, 980, the online mortgage company says
I'd hate to have bought a BTL in some empty block
press association: Unsold properties plan for councils
Councils could get help to buy repossessed and unsold properties under new plans to be announced by the Government, it has been reported. The measures, which are expected to be announced next week, will give councils and housing associations the means to intervene in the flagging property market. Local authorities will be able to offer financial help to borrowers unable to pay their mortgages in return for a stake in their homes or outright ownership,
One for the sheeple
mirror: BIGGEST HOUSE PRICE FALL FOR 18 YEARS
if the get to the business section
Surprised?
BBC News: Bradford & Bingley announces loss
Bradford & Bingley (B&B), a buy-to-let loans specialist, has reported a loss of £26.7m in the six months to 30 June, with impairment charges up sharply.
Thursday, August 28, 2008
Sounds familiar
Times: Mortgage rescue at the ready as property slump gets even worse
Alistair Darling, the Chancellor, and Caroline Flint, the Housing Minister, are planning to announce an emergency “mortgage rescue” package next week. Under the plans councils will be encouraged to offer low-income families at risk of repossession the chance to sell a stake of their houses in return for financial help. First-time buyers will also be given council-backed assistance with deposits and town halls will be given extra money to buy up empty unsold new-build properties from developers. A more radical proposal under which councils would have competed as mortgage lenders has been vetoed by Darling.
Inflation vs Deflation
Bloomberg: Boeing Payrises
38% pay increase. Nice if you can get it.
What recession?
FT: Stocks rally on surprise US GDP boost
Woes of the US sub-prime meltdown have been with us for the best part of 18-24 months but the US is still resolute in not tipping into a technical recession. It's fair to say that the US is certainly not out of the woods yet but this data will provide a much needed boost to an economy that many doomsayers proclaim as being on its knees.
Interesting development across the Irish Sea
4NI.co.uk: NI Developer Cuts House Prices By 40%
A Northern Ireland building firm has slashed its house prices by almost 40%, in a fresh bid to inject life into the ailing property market. Fraser Homes has trimmed £90,000 off the price of its semi-detached properties in Glengormley, reducing the price from £229,500 to £139,950.
Dont be fooled by
CNN: The economic growth mirage
Sure, the economy grew at a decent clip in the second quarter. But economists say the gain may be temporary and warn of tougher times ahead.
Lehman to lay off 1,500
CNN: Lehman to lay off 1,500
The troubled investment bank's plans to shed up to 6% of its workforce amid a slumping stock price, concerns about its future.
Brace Brace Brace for more bad news on petrol prices...
CNN: Gulf oil braces for Gustav
With Tropical Storm Gustav setting its sights on the Gulf of Mexico, oil facilities in the region are facing their first major threat since 2005, when Hurricanes Rita and Katrina knocked out nearly every barrel of oil production and sent prices soaring to then-record levels.
My local EA is selling more than that!
Times Online: Sales at Taylor Wimpey sites slump to half a house a week
Taylor Wimpey is selling less than half a house a week on each of its sites despite offering incentives with its new homes, it emerged yesterday. See also: http://extras.timesonline.co.uk/pdfs/taylor_wimpey.pdf
Someone deport this guy
Telegraph: MPC dove Blanchflower to vote for rate cut
Blanchflower indicated he would be calling for interest rates to be cut by more than 25 basis points at next week's Monetary Policy Committee meeting. Mr Blanchflower said his earlier forecast that house prices could fall by 30pc was looking optimistic and that the jobless total could soon touch two million as construction companies and banks lay off workers. The US-based academic, who has called for lower interest rates for 10 months in a row, said the UK could learn from Federal Reserve's prompt action and interest rates should be much lower than 5pc as a matter of urgency. "I've obviously voted on quite a number of occasions now for small cuts but we need to act and we probably need to act in larger amounts than that."
Lex is a big bear - a BIG bear!
FT - Lex: Bleak Houses
The pace of collapse reflects, in order of significance, the ludicrous valuations ahead of last October’s peak, a fundamental shift in buyer psychology, and credit withdrawal by lenders. The average house price is now 11.5 per cent down from the summit in nominal terms. Economists forecasting 35 per cent peak-to-trough nominal falls, once outliers, are rapidly finding themselves rejoining mainstream opinion.
The fall is now a crash!!
aboutproperty.co.uk: When does a fall become a crash?
The torrent of negative news for the UK property market continued unabated today, leading analysts to question – is this now a house price crash? What's the evidence? Figures from the Nationwide released today illustrate the scale of the problem now facing the market. Average property prices have fallen across the UK by 10.5 per cent over the course of the last year, and what's more the pace of decline is accelerating. While prices fell by an already dramatic 1.5 per cent in July, this accelerated to 1.9 per cent in August, with activity "very subdued", according to Nationwide.
Retail sales hit 25 year low
Yahoo: Retail sales hit 25 year low
They always use an excuse like wet weather or snow etc, what about plain speaking people can no longer afford to shop!!!!!!!!!!!!!
are people now stopping buying cars?
CNN: Toyota lowers 2009 global sales target
When will toyota lay people off? Is it now a matter of time, places like North wales will be affected!!Or will it just affect the USA?
Dropping like a sack of sh**
bbc: UK House Price Calculator
Look at houseprices in your region, against prices last year and in the last quarter. Intersting stuff this, because I thought prices were going up in the Ribble Valley, but in the last quarter they have registered a 20% drop overall.
Northern Rock: yet more of your cash down the drain
MoneyWeek: Northern Rock: yet more of your cash down the drain
Surprise surprise – Northern Rock's mortgage loans are going bad more quickly than the Government expected. But it's just the tip of a very big iceberg. As banks make borrowing money ever more difficult, Britain is heading for a major slump...
Peter Bolton King, chief executive of the NAEA threatens to throw his toys out of the pram
FT: Indecision on Stamp Duty impacting property market: NAEA
Consumer confidence in the property market is being hampered by the government's indecision on a possible Stamp Duty holiday. A second survey of members of the National Association of Estate Agents (NAEA) revealed 98 per cent of estate agents now believe consumer confidence has been further damaged by the hold-up. This is up from the previous survey, when 92 per cent said the indecision had increased consumers concerns. The NAEA said the wait was causing property sales to fall through, with 56 per cent of agents claiming to have lost at least one sale since the first talk of a Stamp Duty holiday was made.
A Dose of Reality at Last?
Times Online: Deepening recession may throw Britain into full-year GDP fall
"Britain's economy is set to shrink over the next year as a deepening recession inflicts the first full-year fall in national income since 1991, a leading forecasting group predicts today." .......................... "The Chancellor is expected to bow to the inevitable in the autumn and downgrade drastically his present forecast that the economy will grow by at least 2.25 per cent next year."
going down going down going down
bloomberg: U.K. Annual House Prices Drop Most Since 1990, Nationwide Says
The fastest inflation in more than a decade, a stagnant economy and the rationing of mortgages by banks have sparked the worst property slump since the last recession in the early 1990s. Bank of England Governor Mervyn King said this month that home values face ``a significant adjustment'' after a decade-long boom.
Fastest falls since 1989
Time online: House prices falling at fastest rate in nearly 20 years
House prices are falling at their fastest rate in nearly 20 years, new figures show.
Double Digit Drop and Accelerating ...
The Times: Nationwide says house prices falling fastest in 18 years
"Grim evidence" ... etc etc.
Should have seen it coming Crash Gordon....
The Renegade Economist: Boom Bust n' Bankers
Three short films here - all relevant.
Record fall, record rate of fall
Nationwide: House Prices Continue to Fall in August
Fionnuala Earley still squiggling away to the best of her ability on Radio 4, but Evan Davis, gently probing with simple questions, knew she had nowhere to go. He pointed out that the 3-month rate of falls is now around 18%.
Apparently ''estate agents are optimistic''......hahaha
BBC News: House prices 'fall 10.5% in year'
''...UK house prices have seen an annual double-digit fall for the first time since 1990, according to the latest survey from the Nationwide. The 10.5% annual decline came after house prices dropped by 1.9% in August, the building society said. ...''
The Olympics are over and the truth about China's fragile economy will also become increasingly obvious. China's amazing growth and looming global dominance are constantly hyped, but evidence is mounting the country won't avoid a financial and economic cr
abc: The China Bubble
Despite the brilliant spectacle and excellent organization, the Beijing Olympics revealed the true nature of China's ruling regime: goose-stepping soldiers in the opening ceremony and tanks in front of stadiums were pure totalitarian dictatorship. The Olympics are over and the truth about China's fragile economy will also become increasingly obvious. China's amazing growth and looming global dominance are constantly hyped, but evidence is mounting the country won't avoid a financial and economic crisis. A crisis would have a number of implications including an impact on the Australian economy. But it could also seriously affect China's path to political freedom, which began with economic liberalization.
End of 0% deals means more belt-tightening ahead
Express (sorry): Card costs are set to rocket
THOUSANDS OF credit-card holders now enjoying interest-free borrowing face a payment shock this autumn when their introductory periods expire and hefty interest bills kick in. Between April and October last year, 5 million people switched their debts to a credit card provider offering a temporary interest-free period, says new research. This means millions of 0 per cent balance transfer deals are now on the verge of expiring. Stricter lending conditions, imposed because of the credit crunch, mean thousands of these customers will struggle to switch the debt to another 0 per cent offer because they cannot count on being accepted by a new card provider. So when the deals end, borrowers may have to meet much higher repayments, with interest charged on top of the money they already owe.
Boo hoo hoo, we borrowed more than we could afford and now we can't repay it, please bail us out, waah
Independent: The real victims of the housing market crisis need all the help they can get
Taylor Wimpey's chief executive hit the nail on the head yesterday in admitting there is little the Government can do to fix the housing market. Instead, the Government's priority should be to protect the real victims of the economic slowdown – those who face the prospect of losing their homes because they can't keep up with mortgage repayments. In the current housing market climate, these borrowers don't have the option of selling up before the bailiffs arrive and they need all the help they can get. The CML expects repossessions to rise significantly in the coming months and to reach about 45,000 this year. -- IT'S NOT EXACTLY A HUGE NUMBER! How many tenants are evicted or move out of their homes each year when they can't pay the rent? There are 4,000,000 people on council waiting lists!
Labour 0, Lib Dems 1 - they've been right about the bubble all along
FT Blogs: The Treasury minister who thought the housing crash was a joking matter
Vince Cable held a press conference this morning to outline various ways to ease the pain in the housing market. I’m not sure any of his suggestions will make a massive difference (they include letting housing associations borrow more to buy up empty homes). But credit to the Lib Dem Treasury spokesman, who has long been alert on this issue. As he reminds us, Labour MPs were literally laughing at the idea of an imminent housing crash - as recently as the spring. Here, as a sorry reminder of government complacency, are extracts from the Hansard account of a debate in April on a Lib Dem-led motion on the housing bubble....
Wednesday, August 27, 2008
number of repossessions higher at NR
Telegraph: New fears over quality of Northern Rock mortgages
The number of repossessions and the value of problem mortgages in Northern Rock's £40bn securitisation vehicle Granite, which holds the bank's better loans, have jumped far more sharply than at rivals, according to research by credit rating agency Standard & Poor's. Of Granite's total of £40bn of mortgages, £508m of them are behind with repayments, S&P said.
Londoners borrowed up to the hilt
London Evening Standard: Building profits fall 96 per cent as crunch hits Londoners
I feel a Dire Staights song coming on ... "I want my, I want my, ...." "Examining mortgage and personal loans, overdrafts, credit and store cards and hire purchase agreements for goods such as cars and televisions, the report found that Richmond has the highest total borrowing figures per resident, at £53,533."
Shut up, Cable
Daily Mail: Banks should be banned from seizing homes, say LibDems
Banks should be banned from seizing homes from families struggling to pay their mortgages except in extreme circumstances, the Liberal Democrats said. People would first be asked to sell off a chunk of their property to the local council or housing association under a 'buy back' rescue package. It would allow cash-strapped families to reduce their mortgage payments without the fear of being made homeless. The Government should also allow councils and housing associations to borrow billions of pounds to buy developers' land-banks and empty new homes, said Lib Dem treasury spokesman Vince Cable.
Polish squatters - you couldn't make it up!
London Evening Standard: Families in £1million homes tell of 'nightmare' as 300 squatters take over entire housing estate
Residents in a street where houses cost more than £1 million each have been besieged by an army of squatters because of a council blunder. But the squatters, including around 100 young Polish men, took residence in the 45 flats just before the handover after hearing it was empty by word of mouth.
Why we are where we are now?
Yahoo Finance: Fannie, Freddie shares rise for 3rd straight day
Very interesting article talking about why Fannie and Freddie's shares have risen in the last three days. Its all based on articles by three analyst. One being positive one being neutral and the last less optimistic. Have a read through the article. It details with excerpts the positive opinion, brushes over the neutral and write one line about the negative and I quote "Other analysts, however, continue to express a gloomier outlook." Thats it.
Bankruptcy filings surge 29%
CNN: Bankruptcy filings surge 29%
the number of people and businesses heading to bankruptcy court has spiked. Bankruptcy filings surged 29% in the 12 months that ended June 30, according to government figures released Wednesday.
Unless they can sell and downsize - illiquid goldmine will be circled by equity release sharks!
MoneyMarketing: UK Elderly sitting on £726bn equity
Homeowners aged 65 and over still have £726.43 billion of equity in their homes. The latest findings from Prudential's Equity Release Index reveals that despite falling house prices, homeowners aged 65 and over still have billions in equity remaining - over 40 per cent of which belongs to those living in London and the South East.
As my dad used to say 'You'd stick your hand in the fire, if they told you to. Wouldn't yer!''
Findaproperty: Best Mortgage Deals Require £37,000 Deposit
Prospective buyers hoping to capitalise on falling house prices could actually find they need more cash upfront than they did a year ago, according to mortgage comparison site mform.co.uk.
London market crashes, but some niche property still rising
rat and Mouse: Market's in freefall, but mews houses break records
Mews property in the capital has been breaking record highs during the summer and looks set to continue
Lost World
BBC: From boom town to ghost town
More than 13,500 apartments were built on this area of scrubland. But less than 3,000 have been sold. Drifting along the empty streets and deserted playgrounds the eerie silence is occasionally broken by the slow creaking of an unused swing.
To quote a response - "You really haven't got a clue, Anne."
Timesonline: Savills recovery predictions for the housing market
"By 2012, she suggests that prices in the South East and Scotland should once more be at their 2007 level, thanks to a shortage of homes and local purchasing power. " ........."supply and demand, supply and demand, supply and demand". It's a lot like Dorothy repeating 'There's no place like home, there's no place like home". Supply and demand is just some VI's mantra to help get them up in the morning and therefore total and utter fantasy. "Local purchasing power" must mean she sees a return to mega bonuses and ever decreasing LTV's and ever increasing income multiples. Where do they find these people?
Lib Dems Call for housing market 'rescue'
BBC: Call for housing market 'rescue'
Key Quote - "Treasury spokesman Vince Cable said that changes were needed to stop the "downward spiral" of the market. " The scheme sound a little too complicated. It we much easier to give a small income tax cut to home owners.
Inflation or deflation - which will it be?
MoneyWeek: Inflation or deflation - which will it be?
Whilst imported goods are getting more expensive, houses and financial assets are getting cheaper. And with everyone feeling risk-averse, we’ve got deflation ahead, writes Dominic Frisby.
The Man Who Wasn't There
The Renegade Economist: Brown's Bombsite Britain
We sat in the room off the Chancellor’s office. Brown was absent, and the session was convened by one of his trusted policy advisors. Shriti Vadera pointed to a vacant chair, which she said had to be left vacant out of respect for the man who promised to banish boom/busts.The irony was not lost on me.
BTL'ers jump ship, but what about their tenants?
Mortgage Strategy: BTL repossessions increase by 100%
Buy-to-let repossessions have significantly increased compared to this time last year, making renters just as prone to repossession as homeowners.
Solid As A ****
Times Online: Northern Rock defaults leave taxpayers facing bill
Fears that taxpayers may end up footing an even bigger bill for Northern Rock intensified yesterday after it emerged that the nationalised bank was suffering dramatically high default rates.
America's housing market is sinking fast
FT: How to shore up America’s crumbling housing market
The current decline of house prices in the US is the natural result of the bubble that by 2006 had raised house prices to 60 per cent above their long-term trend. The sharp decline since then means that today’s prices are about 15 per cent above the trend level. But while a further 15 per cent decline may be inevitable, there is nothing to stop prices declining even further. House prices that could overshoot by 60 per cent on the way up could also overshoot substantially on the way down. During the past 12 months, house prices across the states fell by an average of 16 per cent. The large overhang of unsold homes continues to create pressure for further price declines. The record level of defaults and foreclosures continues to add to the stock of unsold homes.
"Ding dong! This is your wake-up call. The final piece in the jigsaw of gloom is about to drop into place!"
The Telegraph: Final pieces in jigsaw of doom drop into place
"Until this year, the missing pieces in the doomsayer's jigsaw were falling house prices and rising unemployment. No matter that consumers on modest incomes were piling up credit-card obligations, taking out mortgages on five, even six, times their annual salaries, and redefining "affordability" to mean servicing rather than repaying debt, as long as house prices defied gravity and jobs were not vanishing, nobody wanted to hear alarm bells" "In case you missed Monday's news ... allow me to pass on a report in The Financial Times: employment lawyers and legal helplines are experiencing a sharp rise in businesses seeking advice on how to sack staff"
Something Is Rotten in the State of Denmark
Telegraph: ECB slammed by Nobel economist as European slump deepens
Denmark suffered its own Northern Rock-style debacle on Monday when the central bank had to launch a rescue of Roskilde Bank after a run of withdrawals by depositors. The state is now guaranteeing $8bn (£4.3bn) of debts. It is the biggest bank rescue in Scandinavia since the financial crisis of the early 1990s.
Buy to Loose
Mail Online: Buy-to-let backfires as number of failures doubles in a year
Soaring numbers of buytolet landlords are struggling to pay their loans or having their properties repossessed, figures revealed yesterday. Between January and June, nearly 1,800 buy-to-let properties were repossessed - twice as many as the same period last year.
House price crash? Bring it on.....
OneStopView Property Blog: Has the Government got a rescue plan up it’s sleeve?
With all the economic figures going the way of a recession and a hard fall in house prices, do we really reckon that the government that has lead us all to this crisis has really got a rescue plan up it's sleeve?
Oh, pwned
BBC: Taylor Wimpey hit by massive loss
Housebuilder Taylor Wimpey has reported a huge loss for the past six months after having to write down the value of assets including land. The firm slumped to a loss of £1.54 billion in the six months to 30 June. The firm is cutting about 900 jobs in the UK as the squeeze on mortgage finance has severely reduced demand for new homes.
UK's Debt league table
daily mail: Middle-class families struggling with the biggest debts in Britain
Middle-class families have the biggest debts in the country with many borrowers owing more than £50,000, a study reveals. Those living in wealthier areas such as London and the South-East have borrowed almost four times as much as those living in Scotland and parts of the North-West. It shows how those living in regions with the highest house prices have been allowed to run up the largest debts.
Times headline based on figures below.
Times: Mortgage lending figures give some hope
A total of 22,448 loans for house purchase, rather than remortgaging, were approved by banks during July. Although this was still a drastic 65 per cent lower than levels a year earlier, it marked a small rise from the record low of 22,369 set in June, according to the British Bankers' Association.
The UK is catching up with the USA
Times: British mortgage approvals plunge by 65%
Fresh gloom descended on the housing market today as it emerged that fewer than 22,500 mortgages were approved last month, a 65 per cent decline on last year and only fractionally above record lows for June. It is thought that the annual, near two-thirds slide in approvals is among the biggest ever recorded by the British Bankers' Association. The figures, which also show an 11.9 per cent slide in the average loan value to £138,000, suggest that there is little relief in sight for embattled British homeowners. David Brooks, the BBA's statistics director, said: "It would be premature to think that the housing market will now start to recover, because overall approval activity continues to be very low."
Tuesday, August 26, 2008
The rate decline isn't quite as sharp as before.....
Times: US house price fall steadies as confidence rises
AMERICA'S ECONOMIC PROSPECTS appeared to take a turn for the better today as new data showed that US house prices, the volume of home sales and consumer sentiment were holding up better than expected. Although house prices are still falling, the rate of decline in the second quarter was only about a third of the drop recorded in the previous three months, according to the S&P/Case Shiller national home price index. ------- Wow this really takes wishful thinking to a new level. This is just a breather before the next wave of price falls. The 2006 and 2007 vintage fixed-rate mortgages have yet to reset to the SVR; when that happens, price falls will accelerate again. The UK is still up to twelve months behind the US....
Mish on UK White Elephants
Global Economic Analysis: More White Elephants
More on our glorious leaders
Japan individual traders who have made risky purchases of the Australian and New Zealand dollars may be getting closer to a point where they are forced to sell, potentially fuelling a further drop in those higher-yielding currencies. Analysts at JPMorgan
ninenews: Analysts warn Japan traders may dump Aussie and kiwi
The yen short position is still quite large," said Sasaki, who estimated that the traders' bets against the yen and favouring foreign currencies totalled about 5 trillion yen ($45.7 billion). "The risk is to the downside."
the magic beans of banks...lol where is jack when you need him most..
CNN: Problem bank list keeps growing
More banks are in trouble than just three months ago according to the FDIC. In its quarterly review of the nation's banking industry, the Federal Deposit Insurance Corp. reported Tuesday that the number of firms on its so-called "problem bank" list grew to 117 during the second quarter - its highest level since the middle of 2003. There were 90 banks on the problem list in the first quarter of this year.
Views of the Eiffel Tower from the balcony...
Bloomberg: French Unsold New Homes Reach a Record as Economy Contracts
"France's stock of new, unsold homes reached a record in the second quarter, when the euro region's second-largest economy shrank. The difference between the number of new homes put on the market and those purchased reached 110,500 in the three months through June, the Environment Ministry said in an e-mailed statement sent late yesterday. Sales dropped 34 percent in the quarter from a year earlier, it said".
the Fed hinted its likely next move may be to raise rates.
CNN: Fed worried about inflation and slowdown
The Federal Reserve expressed concern about both greater inflation risks and a slowdown in the economy that could extend into next year, according to minutes of its most recent meeting.
No real shock here
Yorkshire Evening Post: Shock rise in cases of mortgage fraud
"We're now finding that high levels of mortgage fraud has occurred across both the residential and commercial sectors." Surely not.
How long before unlet speculative commercial new-builds are demolished?
BBC: Buildings 'razed to avoid taxes'
The BBC reports that more commercial properties are succumbing to the bulldozers as landowners attempt to minimise their losses as the dearth of commercial renters deepens.
BBC chronicles housing bust in Northern California
Credit Writedowns: The Housing Bubble and Bailout
The BBC released some great background on the US housing bust in Northern California. Two 20-minute audios of BBC reporter Michael Robinson give a very good on-the-ground feel for what is happening in the housing market in the US right now. Will Britain suffer similar damage? The falls may be as extreme, but do t lack of overbuilding I imagine Britain should escape the blight of massive enclaves of foreclosed housing subdivisions that dot the US landscape. Very sobering account.
Back to the 70s
The Independent: Economy 'as bad as the Seventies'
The new Deputy Governor of the Bank of England warned that the financial situation was at least as bad as that of the 1970s. Charles Bean said that the slowdown may "drag on for some considerable time" and that social problems could be caused by the squeeze on household incomes. Vince Cable, the Liberal Democrat Treasury spokesman, said that the economy was in "free fall". A survey published by the price comparison website uSwitch warned that disposable incomes had fallen in cash terms for the first time since 1997, dropping by 15 per cent since last year to an average of £14,520.
Is the buy 2 letter the filofax of the noughties?
Citywire: Is Buy to Let Ethical?
When we look back nostalgically in years to come, what will be the thing that best symbolises the decade of New Labour boom and bust?
Where house prices will go next - set to music!
Alice Cook's UKBubble Blog: A Short History of UK House Prices
Alice Cook gives historic graphs and comment on how three UK house price bubbles have exploded, the reasons for them, and why the current bubble is much, much worse.
US Homes down 15.4% in the April to June quarter
BBC News Website: US house prices 'see record fall'
It seems to be absolute melt down in the US housing market. The good thing is that the market there is adjusting rapidly and ultimately with cheap homes and consequently smaller and cheaper mortgages I can see the US recovering. Without the inflated prices, people will again be able to afford to live. I am not sure what is going to happen in the UK though, somehow I feel we will be in for more of a Japanese experience
The Writing on the Wall?
Bloomberg: Merrill, Wachovia Hit With Record Refinancing Bill (Update1)
My prediction from last week following the IMF's statement about a major investment house and bank going bust is looking good. Some great quotes too: "Banks, securities firms and lenders have a record $871 billion of bonds maturing through 2009, according to JPMorgan Chase & Co". "The gears of capitalism are grinding to a halt", "The credit crunch is only now beginning because bank capital is so constricted by losses to date, that they will have to begin shutting off credit to households and corporations and that's when we get the defaults", "Lending long and borrowing short is the classic mistake that led to all the big bank failures in the past"
Or will they slash house prices in high crime areas?
bbc: Will crime maps work?
Last month the Home Office announced that everyone in England and Wales will have access to crime maps of their local area by the end of this year. But will they help cut crime, or could they have unforeseen consequences?
Monthly data for July show that the broad money growth has almost collapsed
TheSmirkingChimp Economic Policy: CRUNCH TIME: Set the crash-alert flags at half-mast
Sharp contractions in the money supply and recession are two spokes on the same wheel. When the money supply shrinks, there's less economic activity, and the economy slows; it's as simple as that. An article in this week's UK Telegraph by Ambrose Evans-Pritchard shows that the country is sliding inexorably into the jaws of a deep recession. The persistent credit-drain from rising foreclosures and deleveraging financial institutions is shrinking the money supply. Now it's visible in the data. Bernanke's low interest rates haven't stopped the hemorrhaging The whole "stimulus" plan backfired. Americans did the responsible thing and used the money to pay off debts or stash it in savings instead of than wasting it Walmart or Target on more useless knick-knacks.
Couple raffle off their Devon Estate for £25 per ticket
BBC News: Devon estate for sale in raffle
A couple from Devon are hoping to beat the property slump by raffling off their home. Brian and Wendy Wilshaw are selling the tickets for £25, but the winner could become the new owner of a £1m estate.
Why Borrow When You Know The Value Of Property Is Crashing????
yahoo: More lenders slash rates
The survey found that 45% were finding food and utility prices the biggest pain of the credit crunch, followed by 27% who felt petrol prices had hit them the hardest. In contrast, just 11% felt payment shock on mortgage payments was the biggest consequence of the economic downturn.
A quadrillion US dollars? Surely only Zimbabwe has that many dollars
MoneyWeek: Diversionary tactics or simple coincidence?
Bit of a rambling article but then suddenly in para 9 they come up with "these indications of personal pain to come merely scratch the surface of what is now estimated (by whom and how they don't say) to be a $1 quadrillion dollar magma chamber which is steadily rising to the surface". That's ten to the power of fifteen, a thousand trillion, a million billion. Shurely shome mishtake?
Censorship 2008 style
Market Oracle: Market Oracle unavailable following a sustained hacking attack
Not a post as such but thought this was interesting since lots of people read this site. "The Market Oracle website is temporarily unavailable following a sustained hacking attack on the 23rd and 24th of August 2008, which follows a series of articles on the Russia / Georgia Conflict - We hope to resume a normal service as soon as possible."
this is starting to smell a little fishy now... what is the real truth?
cnn: Fannie and Freddie woes spread
The sharp decline in the value of preferred shares of the troubled mortgage finance firms could lead to billions of dollars more in bank writedowns.
Why Spain’s banking sector could be facing a death blow
MoneyWeek: Why Spain’s banking sector could be facing a death blow
The ECB is about to stop bailing out eurozone commercial banks, which could mean another big lender going bust. And with Spanish banks in hock to the ECB to the tune of almost €50bn, it could well be one of them.
Olympic spirit lives on! But for how long?
Telegraph: Beijing swells dollar reserves through stealth
China has resorted to stealth intervention in the currency markets to amass US dollars, using indirect means to hold down the yuan and ease the pain for its struggling exporters as the global slowdown engulfs the economy. Kinda thought that the $ bounce looked unnatural.
Some good stats in this one.
MSN Money: How did we get into this debt black hole and how do we get out?
The British people now owe more money than our entire country generates in a year. Accountants Grant Thornton report that, at the end of June, consumers owed a total of £1.444 trillion through mortgages, loans and credit cards.
The news is a further blow for borrowers struggling to find the extra cash to meet the rising cost of living
Telegraph: Borrowers must apply 'four times' to get mortgage, survey says
A few days old but at least it's on topic, I think. By Myra Butterworth, Personal Finance Correspondent Last Updated: 11:02pm BST 20/08/2008 Nearly half a million mortgage or loan customers are having to apply more than four times in order to successfully secure credit, a survey shows today. While just over 400,000 could not get a mortgage or loan despite repeated attempts, according to GE Money Home Lending. The findings follow hard on warnings from the Bank of England and the Council of Mortgage Lenders that homeowners may find it even more difficult to get a mortgage in the coming months. The survey said that with lenders tightening their lending criteria in the face of the credit crunch, previously credit worthy people being classed as a higher credit risk.
As the US housing market continues to collapse, trillions of dollars in equity and credit are disappearing in a deflationary bonfire.
SOTT various: Signs Economic Commentary for 25 August 2008
As the US housing market continues to collapse, trillions of dollars in equity and credit are disappearing in a deflationary bonfire. When a $400,000 home--with no down payment and negative equity--goes into foreclosure; $400,000 vanishes from the digital-pool of credit and has to be written down as a loss. So far, much of the losses have not yet been accounted for because the banks are using their own internal models for determining the value of their downgraded assets. Two weeks ago, Merrill Lynch sold $30 billion of mortgage-backed junk for 20 cents on the dollar. But they also financed the deal, which means that they really only got 5 cents on the dollar! This reflects the true "market value" of these assets. They are virtually worthless.
Still making money, though
BBC: Bovis profits fall 83%
Profits at house builder Bovis Homes have plunged 84% in the first six months of the year, as the squeeze on mortgages hurt the property market. Bovis, which is cutting 400 jobs, said it had experienced its toughest trading since it became a public company. Profits fell from £58.4m to £9.5m Last week Persimmon announced profits were down 87%.
The Professionals Are Hit Too.
CBI: PRESSURE ON PROFITABILITY SPREADS TO BUSINESS SERVICES - CBI SURVEY
Steep falls in service-sector profitability, which were mainly affecting consumer services, have spread to business and professional services, the latest CBI Services Sector survey shows.
Slowly Americans starting to save, turning around a 20 year trend
Seeking Alpha: The Great Consumer Crash of 2009
A long comprehensive article on the debt situation of the average american. More debt onto credit cards now that home equity withdrawal has dried up. I expect the UK to be looking like this very soon. "According to the Federal Reserve, 40% of American families spend more than they earn. The reversal of this trend will be necessary but traumatic. It has already begun, with the savings rate increasing to 2.6% in early 2008. David Rosenberg, the brilliant economist from Merrill Lynch, describes what has happened and what is to come: "This is an epic event; we're talking about the end of a 20-year secular credit expansion that went absolutely parabolic from 2001-2007. Before the US economy can truly begin to expand again, the savings rate must rise to pre-bubble levels of 8pc."
Monday, August 25, 2008
Are UK corporations paying enough taxes?
Credit Writedowns: Are US corporations feeding at the trough of low taxes?
A lot of UK companies have been whingeing about taxes and some have picked up and left. Are they paying too much? Apparently the UK ranks 11th amongst advanced economies in tax rates. Ireland is way down near the bottom due to its 12.5% corporate tax rate.
Shapeupmom says run your family like a business
Dallas News: Use business techniques to keep your home on track
There's no escape from American management principles, not even in the home if 'life coaches' have anything to do with it. Shapeupmom should have stopped breeding and saved us from this onslaught, we don't want the American Dream we just want a life and retirement free of debt!
Who is responsible for the current crisis?
Channel 4: How The Banks Never Lose
Channel 4 Dispatch. Kind of ironic it is the same channel does Location Location Location.
Bank of England deputy turns Bear now the Summer Holidays are over
Times: Bank Deputy Charles Bean warns on impact of slowdown
OMG, The Holidays are now over and Charles Bean warns that Britain is facing a bout of social trauma as millions of overstretched families are hit by the financial fallout from another year of economic pain. Charley then highlights the danger of stress and social upheavals facing many families as the still deepening economic downturn worsens financial strains. "It's going to be a tricky period. Household real income is very low. That will make it difficult for households and there are difficult social issues that will arise". Now whose fault is that then!
Reality is hitting home in the USA, how long before it hits home in the UK
CNN: U.S. view of economy is getting worse
Americans' opinions on the health of the economy have worsened significantly over the last year, according to the results of a CNN poll released Monday. Seventy-five percent of participants in a national CNN/Opinion Research Corp. poll believe the U.S. economy is in bad shape, compared to just 43% of respondents who shared that view a year ago.
U.S. dollar rallies as Europe, Asia fade
reuters: U.S. dollar rallies as Europe, Asia fade
The U.S. dollar is enjoying its strongest rally in three years largely because of bad news abroad rather than good news at home.
Estate Agent Jargon Busted
fool: Don't Be Swayed By Estate Agent Jargon
So, if you’re currently trying to work out what estate agents say and what they actually mean, an A to Z of popular terms and their true meanings are below:
Happy days are here again!!! errrrrr maybe not
BBC NEWS: Financial slowdown 'to drag on'
The current global financial slowdown could "drag on for some considerable time", the Bank of England's new deputy governor has warned.
Paragoing......
FT: TPG drops move for Paragon
TPG Capital, the US private equity group, has dropped out of the bid process for Paragon, the troubled buy-to-let lender, just weeks after it pulled out of a £179m rescue of Bradford & Bingley, the UK's biggest lender to property landlords.
Another humorous financial article from the Express
Daily Express: Homebuyers shouldn't wait for Darling
Coming on the heels of "House Prices Set to Soar in next 3 Years", the Express has followed up with a plea to prospective FTBs. Buy Now..............pleeeeease. Why? because, wait for it...............“The housing market will get worse if people start holding off buying a property" Perhaps the VIs are hoping to capitalise on the patriotic fervour generated by the Olympics by portraying tumescent house prices as a barometer of national virility. So we're all supposed to rush out to our local Estate Agent in a heroic attempt to save the housing market. Nice try, but no gold medal.
The International Monetary Fund has estimated that financial institutions will suffer a total $945 billion in credit losses.
MarketWatch: Financial crisis enters new, uncertain stage
JACKSON HOLE, Wyo. (MarketWatch) -- The financial crisis has entered a new phase and will likely bring total credit losses above $1 trillion, according to a leading academic who has been studying the turmoil since its beginning a year ago. Princeton University economics professor Hyun Song Shin says the subprime mortgage crisis has already cost financial institutions roughly $500 billion. Now, however, the problem has spread to the real economy, and losses on credit cards, consumer and business debt should match or exceed those from subprime mortgages and the like, he said.
Sunday, August 24, 2008
Draw Your Own Conclusions
FT: ... costs soar
The crisis is deepening because people are very worried about the health of some financial institutions. Will more fail? The fact is if you mark to market some of the illiquid assets the banks hold at prices they could sell them in today’s climate, it could make many of them insolvent.
Bring it on!
Times: NM Rothschild called in to save estate agent Foxtons
"THE private-equity owner of estate agent Foxtons has appointed the investment bank NM Rothschild to review the business just one year after buying the company. Best known for its branded Minis and aggressive sales tactics, Foxtons was bought by the private-equity group BC Partners for £390m in May 2007 at the height of the buyout boom".
Glasgow's riverbank projects in limbo
times: Credit crunch makes Clydeside work flow dry up
A string of regeneration projects on Glasgow's riverbank have been put on hold
Lehman has more than $60 billion of mortgage assets that investors fear will be written down
NewsDaily Reuters: S. Korea's KDB says buying Lehman a possibility
By Kim Yeon-heePosted 2008/08/22 at 1:25 pm EDT SEOUL, Aug. 22, 2008 (Reuters) — State-run Korea Development Bank said on Friday that Lehman Brothers Holdings Inc is one of its options for acquisitions, as the struggling U.S. investment bank considers securing much-needed capital from investors. The Financial Times reported on Thursday that Lehman sought to sell up to a 50 percent stake to either KDB or China's biggest brokerage, CITIC Securities Co Ltd . The two Asian companies walked away in the first week of August after deciding the asking price was too high, the newspaper reported.
Housing market may not recover for a decade.
observer: Savills to cull jobs as house deals slump
The dire state of the British housing market will be underlined this week when Savills, the upmarket estate agency chain, reveals that it is axing scores of jobs as deals dry up and selling prices tumble.
RIP Foxtons
Times: NM Rothschild called in to save Foxtons
Rearrange some Titantic deckchairs?
VIs attempt to defend and redefine BTL
observer: Has Britain's buy-to-let market been rent asunder?
During the property boom it was seen as a sure-fire way to make a profit, but landlords are now on a downward spiral and nobody is sure when the yields will return. VIs talking-up e.g. Fionnuala Earley, still "chief economist" at Nationwide: 'A typical purchaser in 2006, even with the payments shock [of higher mortgage rates] will still have good enough rental cover because of the rise in rents. If there are strong rises in rents to come, why would they sell out?'
How many similarities to the housing market in the United Kingdom?
IMF: The Rise and Fall of Albania's Pyramid Schemes
Fascinating Article. The pyramid scheme phenomenon in Albania is important because its scale relative to the size of the economy was unprecedented, and because the political and social consequences of the collapse of the pyramid schemes were profound. At their peak, the nominal value of the pyramid schemes' liabilities amounted to almost half of the country's GDP.
Times journalist comes out as a BTLer - who would've thunk it?
Times: A landlord's tale of woe
It all seemed so easy. I decided to let out my two-bedroom flat in Edinburgh when two years ago, when I moved to London. I enlisted the help of a letting agent – the one who said it could achieve the highest rental income. I was sanguine: this could put me on the road to riches. Since then, the rent has increased by a meagre £25 per month to £775, from which the agent takes a meaty 15% cut. That is unlikely to improve anytime soon. Supply has surged, as a vast number of sellers decide to let their property instead. Costs have mounted. Maintenance, repairs and factoring fees have set me back something approaching £5,000 in the past two years. Simply breaking even each month is a fortunate occurrence. House prices are plummeting at their fastest rate since the 1990s.
Saturday, August 23, 2008
Jim Rogers tells it like it is
Seeking Alpha: Interview with Jim Rogers, Part I: Bigger Financial Shocks Loom
USA in decline, but it still will take some time.- "The U.K. situation I just explained…that decline was over 40 or 50 years, but they had so much money they could have continued to spiral downward for a long time." "Is there a specific signal that this is “over?” (for the USA) - Sure…when our entire U.S. cabinet has Swiss bank accounts. Linked inside bank accounts. When that happens, we’ll know we’re getting close because they’ll do it even after it’s illegal – after America’s put in the exchange controls."
Mr & Mrs Average will never have it as good again
Times: Recession: boom years are over as economy slows to halt
Article contains some interesting snippets like 'In a symptom of how people are struggling to make ends meet, it has emerged that Asda is now regularly seeing a sharp fall in sales in the third week of the month as people run out of cash before pay day.'
UK mortgage crunch - How did things get so out of hand?
Credit Writedowns: Random Musing: 23 Aug 2008 - UK mortgage crunch
8 times salary, over 100% LTV, forget your bad credit score: those were the boom times. how did we get there? What's your opinion?
Beatrix Potter - Writes about the Credit Crunch.
creditcrunch: Beatrix Potter - Writes about the Credit Crunch.
Did you know the credit crunch phenomena is as old as the hills? Here is an extract from a story written by Beatrix Potter around the time of the last great depression. " Ginger and Pickles gave unlimited credit. Now the meaning of "credit" is this--when a customer buys a bar of soap, instead of the customer pulling out a purse and paying for it--she says she will pay another time. And Pickles makes a low bow and says, "With pleasure, madam," and it is written down in a book. The customers come again and again, and buy quantities, in spite of being afraid of Ginger and Pickles. But there is no money in what is called the "till." "
Some bear food from Reuters
Reuters: Banks face double property crash
Commercial property developers and house buyers both drank deeply at the well when loans were being made freely in past years, using increasing amounts of leverage despite the fact that the income the asset could generate was often not enough to cover the payments. Both markets have now come unstuck spectacularly. British house prices are down about 11 percent from the peak and derivatives markets are pricing in another 20 percent fall from here.
Never before have there been so many squalid, dilapidated homes on the market - and they're helping to exaggerate already-plummeting home prices.
CNN: These homes for sale suck
Mold, maggots and piles of festering trash - no wonder home prices are in freefall.
The increasing madness of Prime Minister Gordon Brown
Daily Telegraph: Gordon Brown's optimism startles experts
Gordon Brown's optimism startles experts Gordon Brown's private belief that the British economy is almost out of the woods has surprised the Treasury and the Bank of England who are growing increasingly pessimistic about the country's prospects.
Landlords complain about being taxed, and react irrationally
FT: Concern grows over 'bombsite Britain' tax
British cities are “beginning to look like broken teeth”, with hundreds of buildings being razed as the result of a damaging tax on empty property, a government regeneration chief said on Friday. The levy on empty shops, offices and warehouses introduced in April this year has been dubbed by private and public sector opponents the “bombsite Britain tax”. Aimed at landlords who left buildings deliberately empty as they waited for rents to rise, it intended to reduce rents, raise property supply and earn the Treasury almost £1bn in tax. But opponents say it is leading to properties being demolished across Britain, with Swindon Council, for example, saying it will crush a factory on a 14-acre site at North Star Avenue in the town to avoid paying £110,000 in tax. The demolition costs £430,000.
Housing becomes a big issue in the US presidential campaigns
Times: Video: The Obama-McCain war of the houses
In a recent interview, John McCain couldn't remember how many houses he owns. The answer is seven. The Obama campaign wasted no time in pouncing on this, releasing the following video ads within hours....
"There is a strong case for letting market forces do their damnedest."
Times: Gordon Brown needs to do a U-turn on Sipps
HBOS’s decision to shut a quarter of its estate agency branches speaks volumes about the housing market. Transactions are rare, lenders are cautious, prices are falling and there’s no sign of respite any time soon. Gordon Brown faces pressure from some quarters to do something about it and his advisers have hinted at a package of measures once he gets back from Beijing. Whether he should intervene in the housing market, however, is a moot point. There is a strong case for letting market forces do their damnedest. At some stage, prices will fall far enough to flush out buyers and financiers and create a new equilibrium. The Government’s supposed goal of affordable housing is getting closer with every passing month.
Buffett declares the mortgage giants dead
Telegraph: Fannie Mae and Freddie Mac game over
Billionaire investor Warren Buffett declared that the "game is over" for Fannie Mae and Freddie Mac, as shares in the American mortgage finance houses came under renewed pressure. Mr Buffett, the celebrated "Sage of Omaha," believes that shareholders in the two mortgage companies look set to be wiped out as the pair attempt to raise more capital. "They're looking for help, obviously. And the scale of help is such that I don't think it can come from the private sector," he said during an interview on business television channel CNBC. He went on to claim that the pair "don't have any net worth" and told market-watchers to expect some form of government action soon. A few insurers holding equity in US mortgage giants could also see big losses if the Government takes over Freddie & Fannie.
Friday, August 22, 2008
Recession = rapid house price fall
BBC News: UK economy comes to a standstill
The Office for National Statistics said the economy stalled, showing no growth from the first quarter of 2008. It ends a run of more than 15 years of consecutive growth in the UK. "For years Gordon Brown boasted about consecutive quarters of economic growth," Shadow Chancellor George Osborne said. "Now economic growth has ground to a halt and Brown's bubble has burst."
Webcast about American banks' vulnerability to failure (very end-user orientated)
moneyandmarkets.com: The Great American Nightmare
The webcast starts off with a list of US based banks (large & small/owned by foreign banks or US domestic) that are likelier to fail than peers. The emphasis is on probability of failure rather than on forecast failure (which I felt was quite balanced). They then move on to discussing various deposit/investment safety aspects for bank depositors as well as shareholders (again, quite a balanced view to take). If you have an hours' time to listen/view this audio and if you are interested in the current banking crisis this will provide you with a good half hour's infotainment. I get the feeling this was somewhat sponsored by thestreet.com because their safety ratings was used and the presenters made quite a few reference to this website.
Ulster Bank desperate to lure first time buyers
Ulster Banking Group: Ulster Bank and leading NI property developers open doors for first time buyers
"A new initiative will allow first time homebuyers access to the local housing market without the need to fund a deposit, and including added protection against house price volatility. The scheme which is being rolled out in conjunction with a number of leading residential property developers from across Northern Ireland will be available to first time buyers from early September. A key feature of the new mortgage product includes a five per cent deposit on the property contributed by the developer, repayable by the buyer only in the event of the property price rising by 5% or more after 5 years. The buyer will also be safeguarded up to an additional 10% against any fall in property value over that 5 year period." Spot any problems?
Kurtis and Cindy Squyres, Fa
FOX Business: House Flippers
7 minute video "Kurtis and Cindy Squyres, Farbelowmarket.com, discuss how they make money from buying repo homes and flip them to investors." - Bottom fishing in a crashed Californian housing market.
Bank gives up on estate agents
guardian.co.uk: HBOS shuts 53 Halifax estate agency branches
HBOS today took a knife to its Halifax estate agency chain, cutting 53 branches and at least 100 jobs. The bank, which saw its profits plunge by 70% in the first half of this year, will also relocate around 450 staff affected by the move to other posts. Analysts said the cuts would be the first of many after a year in which Halifax has become one of the British banks worst affected by the credit crunch. Chief executive Andy Hornby has already said he is considering "selective asset disposals" after he predicted a gloomy outlook for the next 18 months, when he expects house prices to fall by 18%.
US inflation just won't go away
BBC 'News': Bernanke warning on US inflation
Despite the the Fed talking about 'downside risks' and deflation, inflation still seems to carry on going up in the US despite their recession. Sound familiar?
"Frustrated landlords can't get funding - they want to keep buying but are hindered by the dwindling buy-to-let lending market"
moneymarketing: Landlords, landlords everywhere, but not a mortgage in sight
This week the Royal Institute of Chartered Surveyors revealed there has been a record rise in the number of properties available for rent. Some 43 per cent of surveyors polled by RICS reported a rise in new landlords - a 10-year high. RICS attributed this statistic to the fact that more people are unable, or unwilling to sell their properties right now, choosing instead to let. Many new landlords are taking a ‘wait and see’ approach, preferring to hold on to their assets rather than selling for a potential loss.The study also found rents continued to rise while house prices fell, pushing yields up. Basically RICS reported perfect landlord conditions up and down the country.
Wonder why she has been quite
Mail: Celebration, Celebration, Celebration! Kirstie Allsopp welcomes new baby boy
TV property queen Kirstie Allsopp is welcoming the latest arrival to her family - a 9lb 3oz son. The new baby, born yesterday by caesarean section at St John's & St Elizabeth's Hospital in St John's Wood, joins Kirstie's first child, two-year-old Bay. 9lb 3oz? That's huge!!
when will the rest shut...lol
yahoo: Quarter of Halifax estate agents to shut
The gloomy housing market has forced the Halifax to close 53 of its estate agency branches, the bank confirmed Friday.
Social Time-Bomb
MSN Money: No Summer Lovin' as Divorce Rate Soars
This summer Britain's divorce rate increased 150 per cent from last year and experts are blaming the surge on the credit crunch and the annual family summer holiday. This has been discussed previously on this site as part of the potential fall-out. But the social implications for the future with so many broken homes may be huge and far reaching.
Recession recession recession recession recession
yahoo: Sterling slumps as UK recession fears bite
this is what we have all been predicting on housepricecrash.......
Good Bye to Bad Rubbish
BBC News: Halifax to close 53 estate agents
The Halifax has said it is to close 53 of its estate agency branches in a move that will lead to the loss of 100 jobs.
Second only to London, But not in a Good Way.
Salisbury Journal: Financial Crisis Hits Home
SALISBURY residents are struggling amid mounting debts and rising numbers of repossessions. The city has topped two national tables - for the highest level of personal debt outside the capital, and the biggest increase in actions launched to repossess homes.
Two Decades Worth Of Bad News For House Prices
BBC News: Children outnumbered by over-60s
Take the figures quoted in this article and the back of an envelope and a 35% reduction in house prices seems a very conservative estimate and the chances of a recovery beginning in 2012 is pretty remote. In fact the property market is likely to remain dire as the 'grey bulgle' works its way out of the system.
One for all the gold bugs here...
FT Alphaville: The American Eagle flies Away
Of note, but maybe not of great significance, the US Mint stopped selling American Eagle gold coins yesterday due to high demand.
Brilliant programme: Thousands of empty houses exposed
BBC3: Cheap Homes for Sale ?
Well worth a watch. I especially like the bit where he phones the association of EAs to ask about qualifications. As usual, we can trace the source of another UK disaster back the Maggie. "Documentary in which newly-married presenter Alex Riley finds out what it takes to climb on to the property ladder. Alex has a dream of buying a home for himself, his wife and possible future children, but as he embarks on a jaw-dropping journey he discovers nearly a million properties lying empty and soon realises that Britain's property ladder is more than just broken."
Another Straw for the Camel's Back
Times Online: E.ON and Scottish & Southern rise power prices by 30%
"More than ten million British households were dealt a fresh blow to their finances yesterday as E.ON and Scottish and Southern Energy (SSE) became the latest power companies to raise gas and electricity bills by as much as 29 per cent." How much of this will appear on credit card balances?
China and Korea to Lehmans
Yahoo: FT: Lehman’s secret talks fail to offload 50% stake 20-Aug-08 06:37 pm
Lehman Brothers, the beleaguered US investment bank, held secret talks to sell up to 50 per cent of its shares to South Korean or Chinese parties in the first week of August but failed to reach agreement with either.
The supertanker is turning
BBC: UK economy comes to a standstill
UK economic growth ground to a halt between April and June, according to the latest official data
Mortgages are back to 2007 levels .... so where are the BUYERS?
BBC News: Mortgage rates 'at 2007 levels'
Mortgage rates are back to where they were in August 2007 at the onset of the credit crunch, according to research by price comparison website Moneyfacts. Seeing how things are back to normal .... why isn't everybody running out to buy one of the many "property bargains"? Roll up ..... small pokey flat (executive suite) for ONLY £275,000 .... last few remaining :-)
Vince hits the nail on the head
The Independent: Retailers cry foul as economists question official data
Renewed doubts about the quality of official data surfaced yesterday as the Government postponed publication of figures on the housing market. A spokesman for HM Revenue & Customs (HMRC), responsible for the property market data, explained that statisticians and economists at HMRC thought that "something didn't sit right" in the data when they compared them with previous months' results, hence the decision to withhold the information. The Liberal Democrats' Treasury spokesman, Vince Cable, said: "It seems strange that when figures are bad, they are also often late. If we are to have any confidence in government figures, we must know that they are fully independent. Late or inaccurate statistics only go to further undermine this Government's credibility."
Another great headline, alliteration fans!
BusinessWeek: The Final Fate of Fannie and Freddie
Fannie and Freddie make up about half of the U.S. mortgage market, and with them on the ropes, there's little chance for a housing recovery. Without a housing recovery, the credit markets will continue to be jammed up. And things promise to get worse before they get better. Fannie and Freddie have about $250 billion in debt to refinance in September, and everyone will be watching to see if they're successful. As long as their futures are uncertain, much of the credit market will remain in the doldrums. "They're the pivot point of the whole credit market," says Samson Capital Advisors' Benjamin Thompson.
Australia's foreign debt has ballooned since the 1980s, topping more than A$600 billion. Our current account deficit continues to exceed the "Banana Republic" levels experienced during the Hawke-Keating era.
candobetter: Immigration and Australia's current account deficit
By the early 1990s, Australia - with a population of only 17 million - had accumulated a foreign debt of over A$140 billion, equal to 40 percent of GDP and exceeding other major 'debtor' countries such as the former Soviet Union. A key cause of this debt 'blowout' was the high and unsustainable levels of immigration during the late 1980s.
Half the world economy, including the UK, is in recession or on the brink, according to research from Goldman Sachs.
telegraph: Recession fear for half the globe, says Goldman Sachs
t also raised fears that the slump could have a profound knock-on effect for China, whose thirst for raw materials and consumer products has been propping up many economies.
Still debt junkies ... and it's getting worse not better
Yahoo: Personal Debt exceeds Britain's GDP (again)
Stephen Gifford, Grant Thornton's chief economist, said: "[..]there is no cause for panic as personal debt is well covered by the UK housing stock'. Great, so nothing to worry about there then.
The ECB has to stop propping up banks
Credit Writedowns: The ECB has to stop propping up banks
This is not good for weaker global players like RBS or HBOS in particular. It also could affect Barclays. This is more of a Eurozone problem but it is a bad omen regarding liquidity for all European banks. Is the ECB actually going to let banks fail?
Falling house prices mean that lots of them prefer letting to selling
Times: Why everyone wants to be a landlord
[Note: same RICS figures as Monday, this time with an upbeat spin by the relentless optimists of the Times' Property section. All is happy in BTL land if you believe these guys!] As house prices fall and the mortgage drought prevents people from buying, frustrated homeowners are choosing to let their properties rather than sell them at a discount, and are renting other homes elsewhere. Michael has played the buy-to-let market very well. He bought his first property four years ago, he now owns 21 buy-to-let properties and is in the process of buying three more. Stephanie, pictured, entered the buy-to-let market six years ago. She is not looking to expand her portfolio, however. “I'm happy with the three I have got,” she says.
Official government figures losing all credibility
Guardian: Retail spending rises. It's unbelievable, say experts
Retail experts reacted with incredulity yesterday to shopping sales figures that showed a rise in spending, despite all other evidence pointing to a downturn for the sector amid a squeeze on household budgets. Although official government figures showed yesterday that retail sales were up 0.8% last month, the numbers were greeted with scepticism by the British Retail Consortium, the main trade body for shops and stores in the UK. It said that the report did not "seem to reflect the current retail reality" and that "few retailers will recognise this positive picture". It's hard to see what could produce the sales-growth boost the ONS are reporting.
Mortgages are harder to obtain - July's mortgage lending is lowest since 2002
Telegraph: Borrowers must apply 'four times' to get mortgage, survey says
NEARLY HALF A MILLION mortgage or loan customers are having to apply more than four times in order to successfully secure credit, a survey shows today. Just over 400,000 people could not get a mortgage or loan despite repeated attempts, according to GE Money Home Lending. The findings follow hard on warnings from the Bank of England and the Council of Mortgage Lenders that homeowners may find it even more difficult to get a mortgage in the coming months. The survey said that with lenders tightening their lending criteria in the face of the credit crunch, previously creditworthy people are being classed as a higher credit risk.
Thursday, August 21, 2008
In America, local taxes are based on the [plummeting] value of your property....
Mish's: Tax Assessors Nightmare
FOR LESS THAN the price of a decent used car, you can buy a home in Atlanta today. Real estate agents list hundreds of choices for $20,000 or less. Sadly tax assessors have not figured this out. Even worse, cities are counting on that tax revenue, spending like there's no tomorrow. One agent said when tax values and true values are way apart, it can keep properties from selling and further depress values. He said he'd had a $95,000 deal on a duplex fall through recently because it was being taxed at $300,000. The buyer didn't want to be saddled with taxes at that level. "The government are going to have to take a look at this," said the real estate agent. "Taxes are so high they drive down value." A taxpayer revolt and city budget crises are coming in mass. Is any city prepared for it?
BBC 3 property documentary (well worth watching)
BBC: Cheap homes for sale?
Documentary in which newly-married presenter Alex Riley finds out what it takes to climb on to the property ladder. Alex has a dream of buying a home for himself, his wife and possible future children, but as he embarks on a jaw-dropping journey he discovers nearly a million properties lying empty and soon realises that Britain's property ladder is more than just broken. Broadcasts 21 Aug 2008 23:50, 26 Aug 2008 01:10, 27 Aug 2008 03:10 & 28 Aug 2008 01:35
Lies, dam lies and....
International Business Times: Housing statistics
Statistics. Just for any permabulls out there clinging to the government's postive stats. It seems they have found a little problem
The bottom line is that one has to look not only at what M3 is doing, but why it is doing it. Nearly everyone got this wrong.
Global Economic Trend Analysis: M3 Contraction - The Future Is Now
The Telegraph is reporting Sharp US money supply contraction points to Wall Street crunch ahead. The US money supply has experienced the sharpest contraction in modern history, heightening the risk of a Wall Street crunch and a severe economic slowdown in coming months. On a three-month basis, the M3 growth rate has fallen from almost 19pc earlier this year to just 2.1pc (annualised) for the period from May to July. This is below the rate of inflation, implying a shrinkage in real terms. The growth in bank loans has turned negative to a halt since March. "It's obviously worrying. People either can't borrow, or don't want to borrow even if they can," said Mr Stein.
It has been a fun ride, but the ride is over. We can’t get steroids from our dealer (banks) anymore.
PrudentBear: The Great Consumer Crash of 2009
I hate to tell you, but the storm has reached your location and it is a Category 5 hurricane. The levees are leaking. Ignore it at your own peril. The 6,000 sq ft McMansion buying, BMW leasing, $5 Starbucks latte drinking, granite countertop upgrading, home equity borrowing days are coming to an end. The American consumer will not go without a fight. For the last seven years the American consumer has carried the weight of the world on its shoulders. This has been a heavy burden, but when you take steroids it doesn’t seem so heavy. The steroid of choice for the American consumer has been debt. We have utilized home equity loans, cash out refinancing, credit card debt, and auto loans to live above our means.
One ECB source told The Daily Telegraph that over-reliance on the ECB funds has become an increasingly bitter issue at the bank because the policy amounts to a covert bail-out of lenders in southern Europe.
telegraph: "Nobody dares pinpoint the country involved because as soon as we do it will cause a market reaction and lead to a meltdown for the banks," said the source.
The latest data from the Bank of Spain shows that the country's banks have increased their ECB borrowing to a record €49.6bn (£39bn). A number have been issuing mortgage securities for the sole purpose of drawing funds from Frankfurt.
More bad news for BTL
FT.Com: UK Homes For Rent Exceed Demand
Supply of rental accommodation rose at its quickest pace on record in the three months to July, outstripping the increase in demand from tenants, according to the latest data from the Royal Institution of Chartered Surveyors..........
The latest market bottom call
Times: Persimmon says housing market will not worsen
"We still have visitors coming to our sites who want to buy, but sales are worse simply because of the difficulty in getting a mortgage, ...". In other words house prices are still too high.
The Misery Index is set to make a comeback
MoneyWeek: The Misery Index is set to make a comeback
When the Misery Index goes up, we all feel it hurting. And in Britain right now, with consumer prices rising at 4.4% year-on-year and unemployment up to 5.4%, the index has just hit 9.8, its highest point for almost 12 years…
Everything is fine because we say so
guardian.co.uk: City sceptical on retail sales figures
Office for Notional Statistics doing a great job for the Ministry of Truth again. In a similar way I wonder if the Land Registry numbers will show that property is achieveing that soft landing/levelling out after all.
Oil Partly to Blame for 'New Age of Authoritarianism,' says FT Editor
FT: The new age of authoritarianism
Off topic post, sorry. "In 1989, the Berlin Wall fell, democracy was on the march and we declared the End of History. Nearly two decades later, a neo-imperialist Russia is at war with Georgia, Communist China is proudly hosting the Olympics, and we find that, instead, we have entered the Age of Authoritarianism. Remember Francis Fukuyama’s ringing assertion: “The triumph of the west, of the western idea, is evident first of all in the total exhaustion of viable systematic alternatives to western liberalism.” " All the investment money pouring into undemocratic countries like Russia and China has not made them embrace western values, simply made them stronger adversaries. As we get weaker under our debt burden they get stronger. The "western idea" not serving us too well is it?
Cashless Society.
Daily Mail: Every petrol pump 'will be prepay by 2011'
A little bit of topic for this site but very very important all the same. Here are some of the readers comments on the article in question. "Another reason why people pay in cash is that they work in the 'cash economy'. A side benefit of this proposal will be to make the payments more traceable as the transactions will appear in a bank account." "This is the New World Order ,In cashless society you can be controlled competely. If you step out of line, your money is switched off. Would you really trust anyone in the "Government" to have that kind of power over you." As with the Housing Crash and the Global Economic Crisis(WHICH HAS BEEN ENGINEERED)you can see where we are heading
Tesco concludes property deals
yahoo: Tesco concludes property deals
can anyone expand on why Tescos would do this?
Is Your Bank Safe from Collapse?
old article from 2007, not sure if anyone has seen it, but interesting stuff..
agorafinancialpublications.com: Selling Dollars, Buying Stuff
Both countries blamed the dollar-peg for promoting inflation within their borders. The Syrian inflation rate topped 10% last year, up from 7.2% in 2005. "The weaker dollar is fueling inflation," says an analyst at ING Bank in London. "We see the United Arab Emirates as the next possible shifter." Syria's announcement merely formalizes a well-established trend, both inside its own central bank and throughout the rest of the world. Let's call that trend, "dollar aversion." In Syria, the central bank had already been purging dollars from its foreign currency reserves, replacing them with gold and euros. But with only a few billion dollars of reserves, Syria's monetary machinations will hardly dent the dollar's stature. The same cannot be said of Syria's neighbors…
The proverbial "rats" are leaving the sinking ship
BBC: Migration to the UK falls sharply
The number of Eastern European migrants coming to work in the UK has fallen to its lowest level since EU expansion in 2004, Home Office figures show.
No wage price spiral here.
The Telegraph: Relief for Bank of England as wage rises slide to five-year low
Wages are increasing at the weakest rate in five years as the economic downturn takes its toll on families' incomes, official figures have shown.
Predictions
Sky: Droves Of Estate Agents Go Bust
"Some 4,000 estate agents could be out of business by the end of the year, if industry estimates are correct". "According to figures from business monitor company Debtwire, the country's 12,000 businesses are closing down at a rate of 150 a month".
Persimmons profits Plung on UK mortgages
telegraph.co.uk: Persimmons profits Plung on UK mortgages
Troubled housebuilder Persimmon has seen profits crash in the first six months of the year and warned it sees no immediate end to the mortgage drought that has brought the UK housing market to a virtual standstill.
Fun online poll
Pollcode.com: How much will house prices drop from 2007 peak?
This is just a straw poll, which we can run again in a few months time.
There nearly there
Times: Top ten tips on how to sell your property
What more can I say, DROP THE PRICE
This should not be happening
Times: Council leaders call for power to offer mortgages
Council chiefs have called for extra powers to allow them to offer mortgages in an attempt to rescue the housing market. In a letter published in today's Times, they argue that the public sector should be able to help first-time buyers and those unable to secure a home loan. Caroline Flint, the Housing Minister, is said to be sympathetic to it but Treasury ministers are less so.
A much grimmer view of the construction industry than even just a month ago
Sky news: House Sales Drought Hits Firms
Another building firm gets further in the doo-doo as it appears there isn't a shortage of housing after all (nobody seems to want to buy theirs). Having already pulled out of it's partnership with the guv'mint to build an 'Eco town' they look set to start actually losing money soon as profits are already down 70% and we've only just fallen into the chasm!
Wednesday, August 20, 2008
EA lets go
Timesonline: Salmond claim that housing market is beating credit crunch is 'nonsense'
The head of Scotland's largest estate agents has broken ranks to launch an extraordinary attack on politicians, including Alex Salmond, and property experts who have claimed repeatedly that house prices in Scotland are still rising despite the credit crunch.
North Sea Gas Field Shutdown until 2009 due to gas leak - Gas prices to soar again.
TimesOnline: Winter gas supply fears grow on North Sea leak
UK wholesale gas prices soared by nearly 14 per cent today after a leak on a North Sea pipeline fuelled fresh concerns about a supply crunch this winter. Norway’s Statoil Hydro said it had discovered the leak on a gas pipeline linking its Kvitebjoern field in the North Sea to the Kollsnes processing plant onshore. It warned the pipeline, which pumps an estimated 5 per cent of Norway’s total gas output, could remain closed until 2009.
..But where are the Chinese banks?
Bloomberg: Banks' Subprime Market-Related Losses, Capital Raised: Table
"The following table shows the $503.8 billion in asset writedowns and credit losses at more than 100 of the world's biggest banks and securities firms as well as the $352.5 billion capital raised to cope with them. Those with a star next to their name have figures that were updated since the table was last published. You can see quarterly breakdowns for each bank and different regions by typing WDCI".
The future looks bright..NOT.
CNN Money.com: The Next Credit Crunch
Well this isn't much of a surprise,just by the queue at the petrol station and the supermarket this was always on the cards! Get it ..THE CARDS!
Four Horsemen of the Apocalypse on Front Cover!
Brixton plc: Half year report 2008
Ye gods, there they are - War, Famine, Death and Conquest in glorious technicolour on the front page of a UK plc official report!
The Doors - The End ( www.lyricsmode.com/lyrics/d/doors/the_end.html )
Telegraph: Apocalyptic times for Britain's economy
...As debt increases the pressure for higher interest rates to kill off inflationary pressures may become impossible for the MPC to resist.
Thursday's HMRC sales data pulled
BBC: Revenue withdraws house sale data
The government's official statistics on property sales in the UK have been withdrawn from publication because they appear to be wrong. The figures are published each month by HM Revenue & Customs (HMRC) for sales worth more than £40,000. HMRC said that revisions to the previous months' figures, going back to March this year, had cast doubt on their accuracy. Figures for July were due to come out on Thursday, but have been postponed.
The future looks bleak, according to Datamonitor’s latest forecast into the mortgage and consumer credit markets
mortgagestrategy: New lending to fall by almost 20% this year
Datamonitor predicts that new lending will contract in 2008 falling by 19.3% and 3.2%, to a total of £492.5bn, compared with £569.3bn in 2007. Karina Purang, financial services senior analyst at Datamonitor and author of the report warns: “In current uncertain market conditions, it’s neither good to be a lender nor a borrower.” Its reports shows after stagnating in 2005, the UK mortgage market increased by a staggering 26.1% to reach a new peak of £363.8bn in new business in 2007. However, 2008 saw the credit crunch taking its toll on the market. At the end of June 2008, gross lending amounted to just £149.5bn for the first six months of the year, a reduction of 18.9% over the £177.8bn realized in H1 2007.
Giants shrinking into oblivion
CNNMoney.com: Fannie, Freddie plunge after the open
NEW YORK (CNNMoney.com) -- Battered mortgage giants Fannie Mae and Freddie Mac took yet another hit at the start of trading Wednesday as concerns grew about a possible government bailout. The stock for Fannie (FNM, Fortune 500) dropped 16% and Freddie (FRE, Fortune 500) tumbled 18% as the markets opened. This was in addition to steep declines of more than 20% so far this week. So far this year, Fannie and Freddie shares have each plunged more than 80%.
But if you are desperate to find decent accommodation this may be your lowest priority.
GAAPweb: Students told to check on deposits
Students have been urged to check that their landlords are correctly protecting their deposits that are charged on their accommodation.
Times guide to London property
Credit Writedowns: Times guide to London property
This site has a link to the Times' breakdown of property prices by borough in London and their 12-month return. The biggest price decline? Sutton. The attached document from the Times is a PDF.
Fun Online Poll
Pollcode.com: Which property pornstar will go bankrupt first
This is just a follow up to the thread about the experts' predictions in last November's Daily Mirror.
B2L is one hell of a tax dodge
BBC: Save tax when moving and letting
If they rent out their home, rather than trying to sell it in a depressed market, they have some opportunities to save tax while waiting for the housing market and the availability of mortgages to improve. That is because there are a number of tax breaks available to the home owner who moves away and lets his home, and either buys another property elsewhere in the UK or rents.
More bear porn
BBC: Mortgage lending slump continues
"House sales have dropped by 50% this year and will probably fall further.. The bulk of mortgage lending this year has been to people who are not, in fact, moving house. only 29% of mortgage lending has been to house buyers... The rest has been to people staying put but moving to new mortgage deals, such as former customers of the Northern Rock, or to people borrowing extra sums against the value of their homes"
Heart warming storeis from Rightmove
Kernow: Your Stories of "Brickor Mortis"
"Sold in March with a June completion date… I quit my job at the end of May to get sorted. The buyer wanted to move 27th June but as my son was getting married that day I asked to move anytime after that. Then they pulled out. So I’ve no job, no money and a property which is difficult to sell. It’s worth £270k but no one will pay that because of this stamp duty, so I’ll never get an offer above £250k." WTF, she quit her job when selling her house? Plenty of other jems. "I bought my house 2 years ago for £120k. It’s been on the market for 9 months with 15 viewings but no offers. I've dropped the price by £18k but still no interest, it’s now on the market for £110k. I feel I'm being robbed and still can't even sell."
and it starts over from a new angle
CNN: The Next Credit Crunch
But a big crunch is coming - and here's why. Credit card debt, like mortgage debt, gets bundled, securitized, and sold off by banks. Citigroup (C, Fortune 500), one of America's largest credit card lenders, just reported that it lost $176 million in the second quarter through securitizing such debt. That happens when the buyers of those securities observe rising delinquency rates and rising interest rates, and decide the debt is worth less than Citi thought.
Good ol Danny voted for a cut again
Telegraph: Bank of Enlgand split 3 ways over interest rate decision
Minutes of the MPC meeting this month reveal another three way split over the decision to keep rates on hold at 5%. Timothy Besley voted for a rise by 0.25%, while David Blanchflower voted for a cut of 0.25%
NAEA notes market is stabilising (should read "stagnant"
mortgagesolutions: NAEA notes market is stabilising
Members of the National Association of Estate Agents (NAEA) have reported that the current market is levelling out, with a stability noted in the number of sales agreed, number of viewings before a sale is secured, and the percentage of agreed sales that have fallen through. However there are still signs of uncertainty, with July's figures demonstrating that there is a lack of consumer confidence, with less people entering the market. Chris Brown, president of the NAEA, commented: "The figures reported by agents in July show that there is still an indication of stability in the market, however consumers continue to adopt a ‘wait and see' approach in the hope that there will be an improvement in the market. "Consumers are feeling anxious and have every right to be .........
Hot off the press - July 2008 mortgage stats
CML: Gross mortgage lending subdued in July
Gross mortgage lending totalled an estimated £24.8 billion in July, up 5% from June and down 27% from July a year ago, according to the Council of Mortgage Lenders. Bob Pannell, CML head of research, said: “While there was a small month-on-month increase in activity, it represented a notable decline from a year ago. This continues the weaker picture seen in June and points towards the more subdued levels of lending we are likely to see in the second half of 2008.”
Central banks' sentiment will be more important than USA Treasury manipulations
Reuters: Fannie and Freddie face overseas confidence crisis
An extraordinary Treasury capital infusion may be needed to restore faltering foreign demand for debt issued by Fannie Mae and Freddie Mac, the two top home funding sources that the government is willing to rescue to save the housing market.
Trickle before the flood
South Yorkshire - The Star: Three a day lose homes
THE number of homeowners facing eviction for failing to meet mortgage payments in Sheffield has jumped by more than half to almost three a day, shock statistics today reveal. Sheffield County Court judges made 247 possession orders between April and June - up by 51 per cent on the second quarter of last year.
'There is confusion - and an element of denial - over direct property pricing due to lack of transactions,' Mr Wheeler declared.
Daily Mail: Property market is so apocalyptic the bosses have started quoting Bob Dylan
Here's another Bob Dylan quote: "People seldom do what they believe in. They do what is convenient, then repent. "
Great summary of the BTL demise
Firstrung: Why buy to let landlords won't profit from the so called 'rental boom'
"Rental demand is rising, but so is the supply of rental properties. So it seems that buy-to-let landlords aren't in for the bonanza the pundits had promised. The number of landlords selling out of the market remains low - it fell to 2.1% according to Rics, in the past quarter. But that's probably got more to do with the collapse in the market"
When the casino gets bearish
The Times: Hedge funds at a loss to cope with mood swing
The hedge fund group that took a huge bet on Northern Rock as it was imploding last autumn has reportedly lost 85 per cent of its investors' money, amid evidence of a terrible spell this summer for many hedge funds. SRM, the Monaco-based group that raised $3billion from investors in September 2006, is down by 85 per cent, according to The Wall Street Journal, including a minus 77 per cent performance in the past year. Tight lock-up terms prevent investors from withdrawing their money.
London flat discounted 66% and still doesn't sell
Andrews Robertson Auctioneers: Unsold Lots
Just browsed the unsold list at Andrews Robertson and if you check lot 149 you will see that a flat in Greenwich which was purchased at 325,000 in 2005 (according to land registry data) didn't even sell at the reserve price of 110,000. This is prime new build London BLT in the zone which apparently will benefit from the "Olympic Effect" http://www.abacusestates.co.uk/Maritime-House-Greenwich-AbacusEstates.pdf.
Tuesday, August 19, 2008
Flashback - November 2007
Daily Mirror: Are house prices set to crash?
Makes hilarious reading - honestly, you've got to read this assortment of property pundits stating that there is no way prices will crash. Only Sarah Beeney is even remotely bearish, forecasting upto 6% falls for 2008. Melissa Porter, (Britain's Dream Homes): "I don’t believe there will be a crash because interest rates are still low, the economy is strong and employment is high. And the market will remain robust in areas where people are moving for work, such as London" Kristian Digby (To Buy or Not To Buy): "We will see rises of 1-2% next year. Manchester and Birmingham will do well." Louisa Fletcher (London Tonight): "I will stake my property on the fact that there will not be a crash like the 1990s." Rosie Millard: "The market will continue to rise in London."
Home repossessions up 48% “It’s rarely too late to get advice.”
Payplan: Repossession - “Get Advice As Early As Possible”
“I think the most important thing that people can do is to get advice as early as possible. In about 80% of mortgage repossession cases it’s possible to avoid repossession simply by getting the right advice at the right time.” He added: “It’s rarely too late to get advice.” The Royal Bank of Scotland is the latest bank to record substantial profit losses, and questions are being asked about what the future now holds for the economy, lending and people’s personal finances.
We’re not just going to see mid-sized banks go under in the next few months, we’re going to see a whopper,
Timesonline: Credit crunch may take out large US bank warns former IMF chief
The deepening toll from the global financial crisis could trigger the failure of a large US bank within months, a respected former chief economist of the International Monetary Fund claimed today, fuelling another battering for banking shares. Professor Kenneth Rogoff, a leading academic economist, said there was yet worse news to come from the worldwide credit crunch and financial turmoil, particularly in the United States, and that a high-profile casualty among American banks was highly likely. Among the biggest fallers in London trade were HBOS, down 6 per cent, Royal Bank of Scotland, whose shares plunged by 5 per cent, while HSBC fell 3.6 per cent. Rising anxieties over “worse to come” in the credit crisis sent shares tumbling in Europe and Asia.
Imagine how Anthea feels!
Evening Standard: Bovey is in a spot of bother
Hankies out for Grant Bovey's troubled buy-to-let partnership. Imagine Homes, as it is touchingly called, has made 15 out of its 61 employees redundant. Unusually for a confirmed publicity addict, Bovey (aka "Mr Anthea Turner") is declining to comment. But the Hampshire-based company is implementing a "change in focus". The most recent accounts reveal that Imagine lost £6.4 million in the year to the end of 31 March 2007. Since then a further £20 million loan has come from HBOS - which owns 20 per cent of the group - and the entire stock has been transferred to a new holding company.
Mortgage famine to continue
Times: Datamonitor claims mortgage market to shrink by a fifth
"with fewer lenders and loans, higher prices and stricter rules, the group predicts that mortgage lending will continue to fall, by a total of 19.3 per cent in 2008 and by a further 3 per cent in 2009" "criteria are not easing"
Dont Panic its all going to be fine :)
The Telegraph: Worst of financial crisis is still to come, ex-IMF chief Ken Rogoff warns
Kenneth Rogoff, chief economist to the International Monetary Fund between 2001 and 2004, told an audience in Singapore that "the financial crisis is at the halfway point, perhaps."
“There must be some way out of here, said the joker to the thief. There’s too much confusion, I can’t get no relief”
Times: Brixton quotes Dylan to explain dire results
"Brixton Estates today unveiled a £237 million loss and resorted to the lyrics of Bob Dylan to describe the “apocalyptic” mindset of the UK commercial property market. Picture of the four horsemen of the apocalypse. Tim Wheeler, chief executive of Brixton, adopted the metaphor to compare equity-based opportunist buyers with "thieves" and owners who would not sell to "jokers", claiming there is no solution until distressed properties appear on the market"
Canadians slow to realise their party is over too
Globe and Mail: Household debt rises as economy slows
"Canadians haven't stopped borrowing, however - and that's a divergence that just can't last. The mortgage market has expanded 13.4 per cent over the past year, and consumer credit has grown more than 10 per cent. Both growth rates are far above recent averages, even though Canadian economic growth has ground to a halt. If consumer behaviour were to continue on that kind of track, Canada would no doubt be in store for a dangerous credit bubble, Mr. Tal said. Ottawa has decided to essentially ban 40-year mortgages as of mid-October - a decision that some financial institutions have already implemented on their own, said Craig Alexander, deputy chief economist at Toronto-Dominion Bank."
Down down deeper and down
Rightmove: The Rightmove, house price index - August
· London worst hit as new sellers knock off £21,000 in a month; · Monthly falls accelerate as summer sellers drop average national prices by 2.3% (£5,403); · Number of new sellers hits historical August low, though buyers still have widest choice for years as unsold stock levels rise to record levels; · Danger of short-term incentives to boost the market doing more harm than good
Courts getting clogged up with repossessions
Time Online: How the courts are coping with the mortgage crisis
"It comes as no surprise to the courts that mortgage possessions are up 48 per cent for the first half of this year. They have been steadily increasing for at least the past two years and are now accelerating at an alarming rate. At my court alone we have had to allow for extra days to deal with mortgage possessions which, by rule, have to be heard within eight weeks of the issue of proceedings."
A&L warns its future may be in doubt if the takeover is not supported
BBC: Warning from Alliance & Leicester
The Alliance & Leicester (A&L) bank has warned of "significant external risks" to itself if Banco Santander's planned takeover is rejected by shareholders. More than 560,000 A&L shareholders are being urged in a letter to support the £1.3bn takeover, announced in July. Roy Brown, the bank's acting chairman, said if the deal did not go through then the bank would be exposed to the worsening economic slowdown.
MoneyWeek predicts 18-24 months til bottom, then flat for a long time
MoneyWeek: Why house prices could fall by 50%
"The average estate agent now has a record 78 unsold properties on its books. That represents a seventh consecutive monthly increase in the amount of unsold stock. If sellers can't sell they are going to have to cut those asking prices a lot further. Buyers know this perfectly well and that's why they aren't buying: why buy now what you know you can buy cheaper next year? House prices are likely to drop by 50% but even that will only bring them back to fair value. How long will all this take? Give it 18 months to two years and you'll find some serious bargains about. However that doesn't mean you're going to make a killing on it in a hurry. By all means look for a bargain in a year or two but don't expect to be able to sell it on at a profit for a good five years."
The housing industry cannot sustain current levels of trade
Wolsey Securities: Activity levels down over 60% from last housing market crash
Wolsey calls for Government action or face the consequences. While the Government continues to flounder on the sidelines, activity in the housing market has sunk to an unprecedented low level. Wolsey Securities is calling on the Government to take urgent action, as activity falls to a low level that even surpasses the slump during the last housing market crash. With the Bank of England figures showing that only 36,000* mortgage approvals were made in June, the number of housing transactions is currently set to total just over 400,000 this year. This low level represents over a 60% drop in activity on the worst year of the 1990s housing market crash, when transactions ran at around one million.
Now This Is What I Call a Property Crash!
World Socialist Web Site: Bank seizures of US homes reach record high
Staggering figures for how bad it's currently in the US, and how much worse it's going to get: Bank repossessions grew significantly as a percentage of all foreclosure activity, “posting a 184 percent year-over-year increase." Some 6.5 million US properties are set to fall into foreclosure by the end of 2012.... Home values in Sacramento, the state’s capital, fell by 36 %in the past year, Riverside/San Bernadino fell by 32.7 %, Los Angeles fell 30 %.
"Fasten your seatbelts. It's going to be a bumpy night."
BBC: US bank 'to fail within months'
The global financial crisis is set to get worse, with a large US bank likely to collapse in the next few months, a former IMF chief economist has warned. Kenneth Rogoff's comments came as shares in Fannie Mae and Freddie Mac sank on a report that the home lenders would, in effect, be nationalised. Despite hopes that the US economy had turned the corner, Mr Rogoff claimed it was "not out of the woods". "I would even go further to say 'the worst is to come'," he said. "We're not just going to see mid-sized banks go under in the next few months," said Mr Rogoff, who held the IMF role between 2001 and 2004. "We're going to see a whopper, we're going to see a big one, one of the big investment banks or big banks."
Interesting disucssion of headwinds facing B2L
Citywire: Morning Line: Could buy-to-let be the UK's subprime?
Rental supply is increasing, while more amateur landlords are coming under pressure to sell. All is not rosy in the buy-to-let garden.
They Can See The Big 'R' Coming
TimesOnline: Marks & Spencer proposal to cut redundancy benefits sparks fear of job losses
Marks & Spencer plans to slash the redundancy benefits for its 60,000 staff by up to 25 per cent in a move that has infuriated employees and triggered fears of a middle management cull.
The long term investment pillar falls!
The Telegraph: Investors may pull £18bn out of buy-to-let properties
Residential investors will sell around two thirds of their properties in the face of falling prices, according to a new study by Skandia. It comes amid growing consternation about the state of the residential investment market, which some have likened to the sub-prime sector in the US.
Rents following house prices down
Guardian: The 'forced landlords' may become forced sellers
Assorted views of the future of rents here. It seems that those who think rents will continue to rise still think there is an infinite supply of money.
Why landlords won't profit from the rental boom
MoneyWeek: Why landlords won't profit from the rental boom
Demand for rental property might be rising, but the supply side is rocketing too: home-owners who can't sell their own properties are putting them up for rent instead. Buy-to-let landlords should be selling up while they can.
More bear porn - rental properties flood market
BBC: Supply of rental properties rises
Oh dear, oh dear. Not.
When the Government nationalise properties in the UK, it is for the betterment of society & future generations.
BBC: Seized properties shame Poland
Trust the BBC to come up with a bias towards "the crime" of not compensating property nationalised by the state. A VI story if ever saw one!. I'm so glad I don't have to pay my TV Licence (as I don't have a TV). The BBC are pure hypocrits!!! Since communism ended in Poland almost 20 years ago, the country has come a long way, embracing the future as a member of both the EU and Nato. This grand Warsaw building belonged to Piotr's family. But in the eyes of many Poles the historical legacy of property claims blights its onward march.
Welcome back to reality!!! Doesn't matter how many dollars central banks purchase, you can't make your property market rebound!
FT.com: Financials suffer, FTSE down, Fannie & Freddie bailout looks more likely
Fears of further fall out from credit markets put pressure on London’s financial sector in early trade, following sharp losses overnight for the US sector on Wall Street. By mid morning, the FTSE 100 was down 66 points, or 1.2 per cent at 5383.5, just back into bear market territory. The mid-cap FTSE 250 was down 1.7 per cent to 8,968.4.
Any diamonds amongst the turds?
National Post (Canada): Liquidity key to picking U.S. homebuilder stocks: Citi
New and existing home prices in the United States will likely deteriorate by up to 15% over the coming months, says Citi Investment Research analyst Josh Levin, and near-term liquidity will continue to drive valuations of homebuilder stocks.
Darling dithers while EA's burn
Housefund: Stamp duty indecision causing sales to drop
A survey of members conducted by the National Association of Estate Agents (NAEA), has produced one of the largest responses from estate agents with over 1350 replies demonstrating what a contentious issue the recent stamp duty ‘announcement’ is and the effect it has had on the property market.
Don't sell - become a landlord!
Property Week: Rental market booms as July housing sales diminish
This article says more and more people re choosing not to try and sell their house at the moment - achoosing instead to rent it out until prices recover. Interesting what it says about the demand for homes.
They live and they die by the square root of pi
MSN: Now Greenspan doesn't like bailouts?
Greenspan is utterly clueless and unable to learn from his mistakes. Delusions of infallibility bring me to another subject: quantitative trading. Quantitative analysts have pursued a strategy based on the notion that the money to be made in stocks comes via mathematics rather than from company fundamentals. I believe that this strategy is responsible for much of the pandemonium we see on a regular basis. No market seems to be safe from these maniacal, algorithm-wielding computer beasts. In a way, their systems have made it possible (in the short run) for almost anything to trade at any price, whether foreign exchange, stocks or commodities in general.
There nothing like kicking someone when there down
Times: Rightmove shares tumble with free rival set to launch
I wonder if the free one will let property snake track their listings
Repossession is a zero sum game
financial times: headline letter
So much for economic fundamentals....the Government is now proposing distorting the housing market for short term ends, rewarding speculators and the profligate to try and avoid politically disastrous scenes of price falls and repossession. The housing market is best served, however by being allowed to fall to a sustainable level. Whilst repossession may seem a tragedy - it is a zero sum game - for every family forced to relinquish a property they cannot afford, another has the chance of buying at a price they can.
M3 southbound, flowing freely
Telegraph: Sharp money supply contraction points to Wall Street crunch ahead
The US money supply has experienced the sharpest contraction in modern history, heightening the risk of a Wall Street crunch and a severe economic slowdown in coming months. Data compiled by Lombard Street Research shows that the M3 ''broad money" aggregates fell by almost $50bn in July, the biggest one-month fall since modern records began in 1959. Monetarists say it is the sharpness of the drop that is most disturbing, rather than the absolute level. Shifts in M3 are a lead indicator of asset prices moves, typically six months or so ahead. The latest collapse points to a grim autumn for Wall Street and for the American property market. As a rule of thumb, the data gives a one-year advance signal on economic growth, and a two-year signal on future inflation.
Supply of rental accommodation rose at its quickest pace on record in the three months to July,
FT: UK homes for rent exceed demand
Estate agents in London and the south-east have already started to see rents come under pressure as competition between new landlords becomes fierce. Agents such as Savills and Knight Frank have reported sharp price falls for some rental accommodation, particularly in prime areas of London. “We feel rents have come down as supply has come through from the sales market,” said Jane Ingram, head of lettings at Savills. “It has been much more of a tenants’ market.” She said the reduction in rents – which had been as much as 10 per cent in some areas of London and the south-east – had meant landlords were not obtaining the high yields they might have been hoping for.
Off-topic, another bubble linked to the super-bubble of finance
Flying Magazine: Was There an Airplane Bubble?
"THE value of anything, whether it be real estate, stocks or airplanes, is set by supply and demand. In the 1990s we clearly had a larger group of pilots with demand than there was supply at popular price points. ... Supply was constrained and prices went up. Now, without enough pilots to replace those who are timing out, demand for airplanes at all price points is shrinking slowly. Used airplane values haven't burst as much as the price of houses have in some locales, or some investments have after their bubbles ended, but we are returning to normal. Current airplane owners probably won't see appreciation, but then shoppers may now be able to qualify for ownership as prices come down."
But Paragon says rents are going up?
Guardian: Rental market flooded by frustrated sellers
Record numbers of homeowners are letting out properties after failing to sell them in the worst housing market downturn for more than a decade, the Royal Institution of Chartered Surveyors (Rics) says today. The flood of properties is expected to depress rental levels, which Rics warned may fall this year. A fall in rents, combined with higher mortgage costs, will place recent buy-to-let landlords under intense financial pressure and could accelerate the housing downturn as they dump properties on to the market.
Monday, August 18, 2008
"But the rate at which tenants are seeking property is being outstripped by the number of rental properties coming on to the market, leading some to speculate that rents, which have been rising, may flatten out"
Times: Families forced to let homes they can't sell
...just as we predicted on this site! However, I am missing the rationality of this situation :))
Estate agents club together to oust Rightmove
Bloomberg: Rightmove Declines on Prospect of Rival Free Web Site
The NAEA are starting their own free (to their members) alternative to Rightmove. After all, every competitor on the internet is but a click away.
New Zealand property scam roasts English immigrants
New Zealand Herald: immigrant banker put 1.7million into blue chip
Never mind the Land of the Long White Cloud, New Zealand has almost become the Land of the Long Devious Property Scam as this example richly illustrates. As the property bubble deflates many of the sharp practices around New Zealand property have been revealed. Immigrants should be keenly aware that property 'professionals' in N.Zealand see you as easy pickings.
London house prices fell 14% if considered in USD
Seeking Alpha: London House Price Datapoint of the Day
"The average asking price in Wandsworth fell from £522,000 to £481,000 in a single month - or 7.9%. In dollar terms, of course, it's much worse: £522,000 on July 15 was $1,045,000, while £481,000 on August 15 was $896,000. That's a drop of $149,000, or 14.3%, in one month."
And I thought London was immune to this old HPC nonsense
This is money: London asking prices fall £21k in a month
House sellers in London are finally coming to terms with the credit crunch and have slashed the asking price of their homes by more than £20,000 in a single month.A new survey shows the price for a London home dropped by more than 5% between July and August - the equivalent of £21,096. It now stands at just under £379,162.
I'm sure all of those BTLer's will enjoy the competition
FT: UK homes for rent exceed demand
Supply of rental accommodation rose at its quickest pace on record in the three months to July, outstripping the increase in demand from tenants, according to the latest data from the Royal Institution of Chartered Surveyors.
Brickor Mortis
M&G Investments: London house prices 'being slashed'
Homeowners entering London's property market have responded to the price falls seen elsewhere in the country by drastically slashing prices, figures have shown. According to Rightmove's price index report, sellers in the capital have "recognised the need to price aggressively" to make London homes more affordable for potential buyers. The change, Rightmove suggests, is so that sellers can avoid 'Brickor Mortis' - a recent term added to the property lexicon to describe houses that will not shift from the housing market. Small article. Big impact!
Just for fun
thisismoney.co.uk: Four reasons to be optimistic on house prices
A little more than a year ago, I published a tongue-in-cheek blog post about my new property price predictor that suggested the market was about to tumble: My 'dismal' house price predictor. Published in June 2007, it now appears to have been oddly prescient coming two months before credit began to be crunched and the beginning of the fastest annual slide in house prices since records began.
Running scared from BTL 'investments'
Times: Landlords to withdraw billions from buy-to-let
Around £18 billion of cash will be pulled out of the buy-to-let market in the next few years, further destabilising the housing market, according to a new study. The research, by the financial services firm Skandia, suggests that landlords will be driven from property investment by falling house prices, higher mortgage rates and sluggish rental growth. It forecasts that the stock of buy-to-let mortgages will collapse to £44 billion from £120 billion at the end of 2007. Assuming the average loan-to-value ratio of 80 per cent that would be sufficient to release £18 billion of cash tied up in property investments.
Not all Sunny in Spain!
Bloomberg: Spanish Loan Delinquencies Increased by EU3.2 Billion in June
"Spanish loans in arrears climbed by 3.2 billion euros ($4.7 billion) in June as the country's economic slump deepened after the collapse of a 14-year real estate boom"
How long will the Dollar rally last?
Bloomberg: Fannie, Freddie Fall as Barron's Says Bailout Likely
Fannie Mae and Freddie Mac fell to almost 18-year lows in New York trading on concern the government will be forced to bail out the mortgage-finance companies, wiping out common stockholders.
Thamesmead development - new build flats sold at inflated prices (Surely not)
FT: Six to face court over Thamesmead mortgage fraud investigation
people are to appear on bail at the City of Westminster Magistrates Court on Friday (22 August) on charges relating to a mortgage fraud investigation in Thamesmead. The fraud came to light last year following reports from banks and building societies when the properties came to be either sold or re-possessed and the true property value was realised by the lender. Eleven arrests were made as part of an investigation by the Metropolitan Police's money laundering team between May and November last year. It is alleged a company bought 84 off-plan new build flats in Thamesmead, south-east London, and resold them at inflated prices.
Eeny Meeny Miny Mo
Bloomberg: Bernanke Tries to Define What Institutions Fed Could Let Fail
Ben S. Bernanke is still trying to define which financial institutions it's safe to let fail. The longer it takes him to decide, the tougher the decision becomes
Skandia predicts that the mortgage-backed BTL market will shrink to its average size over the past decade
FT: £18bn to be released from BTL property: Skandia
An estimated £18bn of equity tied-up in property is expected to be released as the mortgage-backed buy-to-let (BTL) market shrinks. Skandia forecasts sliding residential property prices, higher mortgage servicing costs and sluggish rental growth will drive many aspiring landlords from BTL property, releasing much private investment capital that has gone into property speculation in recent years.As a result, Skandia predicts that the mortgage-backed BTL market will shrink to its average size over the past decade. In recent years stock of BTL mortgages rose from £2bn in 1998 to £120bn by the end of 2007. The BTL share of the total UK mortgage stock also increased, from less than 1 per cent to 10 per cent over the same period.
Housing prices are falling, and first-time buyers can't get credit. Sound familiar?
SOTT Assoc Press: U.S. subprime collapse reaches Welsh town
The problem in Wrexham is the sudden cutoff of mortgage credit to first-time buyers, who would normally benefit from lower prices. Britain's housing market is based on a chain system, meaning sellers must wait for their purchasers to complete the sale of their own property. It's a house of cards that collapses if one deal falls through, making first-time buyers the key because they don't rely on the completion of another deal. The loss of those first-time buyers has had a secondary effect on mid-range sales and will eventually permeate the higher end of the market, Jones added. "It's a huge problem," Jones said. "Unless you have got the key to start the engine, it isn't going to go, is it?" Those troubles are increasingly seen as a microcosm of the situation around Britain.
Neither is a good bet!
City Wire: Buy to Let vs saving in a pension
The fall in property prices is not good news for those who are relying on property for their pensions. According to IFA Hargreaves Lansdown 18% of all outstanding buy to let debt was taken out in 2007 when property prices peaked and some of these investors could now be in negative equity.
Hiding Inflation
Evening Standard: Shoppers 'cheated' as supermarket brands downsize - so you pay the same for less
Shoppers are paying more for their goods without realising - as manufacturers shrink the pack sizes. In the face of rising costs, firms try to protect their profits. But many brands are reluctant to put up prices for fear of a consumer backlash - particularly when household budgets are squeezed. One solution is to charge customers the same - but make packs smaller.
But prices don't fall in London.
Evening Standard (This is London): Asking prices fall £20,000 as house sellers cave in to the credit crunch
This looks like a rehash of the earlier articles on the 5.7% Rightmove asking price drop, but I guess the good thing is that the Standard has penetration right where it hurts. Lots of commuters will be left feeling bruised by this.
UK house prices could easily decline 50pc from the peak
The Telegraph: Dollar surge will not stop America feeling the effects of a global crunch
"The UK housing event is probably second only to the Japanese 1990 land bubble in the Real Estate Bubble Hall of Fame. UK house prices could easily decline 50pc from the peak, and at that lower level they would still be higher than they were in 1997 as a multiple of income," he said. "If prices go all the way back to trend, and history says that is extremely likely, then the UK financial system will need some serious bail-outs and the global ripples will be substantial."
Simple maths lesson, history repeating itself
The Times: Savills: Residential building land value drops 20pc
House prices = bricks/mortar plus land value. Bricks/mortar value is fairly constant. At last year's peak, about half the cost of a house related to land value, and half to bricks/mortar. Therefore, if house prices fall 10% and bricks/mortar element is constant, land values will have fallen by ... er... 20%. As I explained in more detail on my blog, land values have gone up five- or tenfold since the early 1990s, so look set to fal by 80%-plus over the new few years..
The Permabear
The New York Times: Dr Doom
On Sept. 7, 2006, Nouriel Roubini, an economics professor at New York University, stood before an audience of economists at the International Monetary Fund and announced that a crisis was brewing. In the coming months and years, he warned, the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence and, ultimately, a deep recession. The audience seemed skeptical, even dismissive. As Roubini stepped down from the lectern after his talk, the moderator of the event quipped, “I think perhaps we will need a stiff drink after that.”
and the theft continues as the bank is clearly failing
Yahoo: B&B cash call gets 28% take up; new CEO announced
Pym’s basic salary will be £750,0000 per annum, plus he will also participate in the company’s Executive Incentive Plan. For the remainder of 2008 and the first six months of 2009 Pym will be guaranteed a minimum cash award equal to at least half of his salary for both of these periods. Additionally Pym will receive deferred shares equal to the value of his cash bonus and a one-off grant of options to buy up to £1.5m of Bradford & Bingley shares at the current share price.
Another correction.....
Times online: Rightmove shares plunge on new housing blow
''...Shares of Rightmove, the UK's largest online housing website, plunged more than 8 per cent today after it said that prices were shrinking further. Sellers are asking £5,403 less for their homes than they were only a month ago, with the average asking price for a property down, on average, by 2.3 per cent to £229,816, according to Rightmove....''
Northern Ireland’s housing market in trouble
University of Ulster: Northern Ireland Quarterly House Price Index (Q2 2008)
The price correction in Northern Ireland’s housing market is now one year old although few will find cause for celebration. Last summer, as the boom reached its final frothy stage, average prices peaked at close to the £250,000 level but as this latest and most comprehensive barometer of the local market reveals, the average price has declined to c£227,000.
BCC plead for interest rate cuts
BBC News: Recession in UK 'is months away'
"Recession looms in the UK in the next six to nine months as firms face "a difficult and risky climate", the British Chambers of Commerce warns. UK growth will be slightly negative or zero in the next two or three quarters, but a major recession is unlikely, the BCC says in its latest forecast. But prospects will be worse if interest rates are not cut soon, it adds." More short-termism from the BCC.
Who Would Take on a Mortgage in the Current Economic Climate?
The Times: Economic slump puts 300,000 jobs on the line
Up to 300,000 workers will lose their jobs by 2011, pushing the number of people out of work close to 2 million, a leading business group says today. In the same way house price forecasts have been wrong, then maybe 2 million unemployed is far short of the reality to come.
Can't sell, reverse-mortgage instead
FT: More retirees look to equity release
Older homeowners are stepping up their interest in unlocking equity built up in their homes as the credit crunch and falling property prices reduce their potential income in retirement. Hodge Equity Release – a provider of schemes that can unlock the value of a home while letting the owners continue to live there – has reported a 75 per cent increase in inquiries to independent financial advisers in the past three months. Prudential said it had seen a similar increase in the sales of its lifetime mortgage products in the first half of 2008 compared with a year ago. Norwich Union has revealed it has “more than doubled” the number of quotations it gives for equity release plans since the beginning of the year.
But London's different, innit!
The Guardian: London house prices fall 5.3% in a month
Londoners selling their homes have cut thousands of pounds off their asking prices as the downturn finally arrived in the capital. Asking prices in London fell 5.3% in August, according to the Rightmove house price survey - equivalent to a £21,000 drop in a single month. Prices in some of the most sought-after suburbs are falling much lower. The average asking price in Wandsworth fell from £522,000 to £481,000 in a single month - or 7.9%. Homes in Brent, Kingston-upon-Thames, Richmond-upon-Thames and Greenwich were down more than 6.5%.
House prices fall as buyers fail to take up a bargain (Rightmove)
Times: House prices fall as buyers fail to take up a bargain
In London, where the market has deteriorated sharply, asking prices have dropped by £21,096, or 5.3 per cent, to an average £379,162 in a month. Prices are down 3.8 per cent in the capital over the past year, compared with 4.8 per cent across the UK.
Sunday, August 17, 2008
Its not my fault - its yours (honest)!
Times: Cross me at your peril, Brown warns plotters
Brown plans to relaunch his premiership by telling his enemies that they should not be playing politics at a time of economic troubles.
And Now for Something Completely Different..
BBC: Minister calls for 'tax on rich'
Ivan Lewis "has called on the government to consider a tax on high earners to help the middle classes through the economic slowdown". "Other suggestions include a windfall tax or a temporary freeze on stamp duty payments". "Earlier this month, Chancellor Alistair Darling said that a stamp duty holiday was one option the government was considering to boost the stagnant housing market"...That's sooo original Ivan!
Sunday Prayers - Maybe it could work for the house market?
BBC: Petrol pump pilgrims keep faith
A prayer group in Washington DC is claiming the credit for the recent sharp drop in the US price of petrol. Rocky Twyman, 59, a veteran community campaigner, started Pray At The Pump meetings at petrol stations in April. Since then, the average price of what the US calls gasoline has fallen from more than $4 a gallon to $3.80.
Another nail in the Buy to Plummet market ?
Times online: Rent out your home and move abroad
With the UK economy heading for the duldrums or worse and the property market in freefall with the buy-to-let market feeling the influence of huge amounts of people trying to let and sell their property simulatneously what the market really needs now are a chunk of middle England trying to let their homes on the open market because the want to escape the gloomy weather and doom laden economic climate ! "Fed up with the inclement weather and the gloomy economic climate, they are heading abroad not merely for the summer, but for a year or two. Call it a grown-up gap year, if you will."
I just love the word 'glut'- only four letters, ideal for subs
Observer: Property glut drives down rents
'This downward trend in average rents may well start to spread as the rental market becomes saturated with new properties,' said Daniel Lee of Globrix. 'There is a strong probability that for a significant number of new landlords the rental returns will not cover the mortgage payments.'
Time to tear up Gordon's little book of clichés and have an honest conversation
The Observer: Chancellor doesn't seem overly unsettled by the chill in the air
The Bank of England governor tells us he detects a 'feeling of chill in the economic air', but Alistair Darling is still eagerly seeking patches of blue sky between the clouds, while repeating the faintly desperate-sounding mantra that 'the economic fundamentals remain strong'. House prices are plunging faster than during the early 1990s crash, and unemployment has increased for six months in a row, with last month's 20,100 increase in the number of people claiming jobless benefits the largest in 16 years. King seems irritated at the impression created by hints and rumours from ministers that a clever little measure or two could unlock the mortgage markets, or restore the housing market instantly to health. 'Pretending there's a magic solution is not the answer,' he said.
New(est) Labour: from "right to ownership" to "right to doube holidays"
Times: Minister wants supertax on Britain’s top earners
"Lewis points to families who take two holidays a year, belong to private gyms and eat in restaurants, but struggle to pay soaring bills, as the group in need of help" what arent these clowns prepared to say in order to get votes!!??
Quick, cut rates again! yes that's the answer (again)
telegraph: Economists warn inflation could fall below 1 per cent
"Although there is bad inflation news around, there isn't much [the Bank of England] can do - it is too late"
Don't worry, be happy
Scotsman: Council of Mortgage Lenders plays down fears of negative equity
THE problem of negative equity for home owners is being overblown and is not an issue as long as borrowers can meet their mortgage repayments, according to the Council of Mortgage Lenders (CML). The trade body is trying to play down claims from ratings firms, investment banks, researchers and politicians that negative equity places homeowners at risk of repossession.
the unprecedented propping up of the dollar and bombing of gold and oil the week before the curtain opened
Information Clearing House: How To Conceal Massive Economic Collapse
“On July 16, 2008 . . . , the Federal Reserve reported holding $2,349 billion of US government paper in custody for central banks. In its report released today, this amount had grown over the past three weeks to $2,401 billion, a 38.4% annual rate of growth. . . . So central banks were accumulating dollars over the past three weeks at a rate far above what one would expect as a result of the US trade deficit. The logical conclusion is that they were intervening in currency markets. They were buying dollars for the purpose of propping it up, to keep the dollar from falling off the edge of the cliff and doing so ignited a short covering rally, which is not too difficult to do given the leverage employed in the markets these days by hedge funds and others.”2 Gold and oil had to be pushed down
Cheaper Mortgages? Check the article's comments
Times Online: Ban compound interest to save the planet
Don't know how this one slipped through first time, but valid article it is. Compound interest has been with us so long that we take it for granted. We borrow money and accept that we must pay interest to compensate the lender. But look what happens. If we pay 3% on £100 then at the end of the first year we should pay back £103. If we fail to repay that then we must also pay 3% on the £103. This seems innocuous but the debt increases exponentially. A debt left unpaid, at 3%, doubles every 24 years. At 6% it doubles in 12 years. And doing without money that was lent at interest didn't stop our predecessors trading, or building incredible monuments, from Westminster Abbey to the colleges of Oxford and Cambridge.
"Russian armies can't march into other countries while Russian shoppers carry on marching into Selfridges"
Standard: Slap shopping ban on Russians: Tory
I think it is time the Western governments wake up under the burden of $110 a barrel oil, in order to protect our standard of living, not to improve the Russian and Middle Eastern-cum-Chavez finances
Judith is way out of touch
Times: Apartment prices in Belfast continue to boom
"City apartments are a blight in the market in many UK cities, but in Belfast they are still booming - with the average price for a flat in the city up 25.1 per cent, helping to push up prices for all types of homes in the city by 3.3 per cent"... anyone able to confirm?
Buy-to-Regret risk management
Fool: 22 Buy To Let Mortgage Bargains
Most buy-to-let deals now require at least a 25% deposit and the most competitive deals are reserved for those with 40% or 50% upfront. TMW offers a two-year tracker rate from 5.49%, but you will need a massive 50% deposit to get it. If you have 35% a rate of 5.59% is available, and both deals come with a large fee of 2.5%.
No More Spin
Guardian: Things will get worse: you can bet the house on it
...the property boom which began to gather pace in the mid-1990s, and more than tripled house prices in a decade, turns to bust.... part of the reason house prices have turned so quickly since last autumn is that, deep down, we all half knew the market had gone mad. Now, analysts are scrambling over each other to increase their predictions of how far prices could fall from their peak.
How long can they hold?
Independent: Buy-to-let landlords in mortgage arrears
An estimated 10,000 buy-to-let landlords are more than three months behind with their mortgage, according to research from independent financial adviser Hargreaves Lansdown. More may follow and start struggling to meet their repayments as large numbers of landlords are due to come off cheap two- and three- year fixed-rate mortgage deals in 2009 and 2010.
Saturday, August 16, 2008
Service economy blues
BBC News: Sterling: Pound slumps against dollar as analysts predict UK rate cuts and recession
Fears that the UK economy is heading into recession sent sterling tumbling against the dollar for the eleventh day in a row yesterday - its longest losing streak since the break-up of the Bretton Woods fixed exchange system in 1971.
Want to catch a "falling knife"?
TIMES: Lehman Brothers in talks over sale of $40bn real estate assets
"Lehman Brothers, the Wall Street investment bank, is understood to be in talks to sell its entire $40 billion (£21.5 billion) real estate portfolio in a move to stem losses incurred during one of the worst property slumps since the Great Depression. The bank – whose stock has fallen 69 per cent since the credit crisis erupted just over a year ago – is believed to be prepared to take a $5 billion hit on the sale of the assets and securities".
Guess weve reached the Tipping Point then?
BBC News: Jobless total up as economy slows
The number of people out of work rose by 60,000 in the three months to June, taking the official unemployment rate to 5.4%, official figures showed. The Office for National Statistics (ONS) said unemployment increased to 1.67 million between April and June.
Builder incentives that helped to overheat the market probed by the feds.
The Wall Street Journal: FBI Probes Unusual Incentives for Home Buyers
When home sales began to slow at the start of the downturn, home builders offered buyers incentives -- instead of reducing prices -- to stimulate demand. The incentives included cars, tuition and credit-card payments, and even cash. Now, federal investigators are questioning whether some of those incentives misled lenders and caused them to write mortgages that were artificially inflated, contributing to today's home-price crash.
Hundreds of families potentially losing their homes.
Express and Star: Stafford town is UK hotspot for repossessions
Stafford has emerged as one of the fastest-growing areas in the country for home repossessions, according to the latest statistics.The affluent town might have been expected by most people to weather the credit crunch better than its less well-off neighbours. But new statistics show that over the past few months, repossessions have exploded by more than 70 per cent, prompting fears of an increase in homelessness in the area. In July, Stafford councillors anticipated a big increase in the number of people needing help with re-housing.
And sterling is dropping because the BoE is snoozing on inflation ...
Independent: Cost of overseas travel soars as sterling drops 11 days in a row
BoE has stopped worrying about inflation, so sterling plummets, making overseas travel more expensive, raising inflation! The BoE is bringing about the recession.
A Short History of UK House Prices
Alice Cook's UKBubble Blog: Blog article
Alice' Cook's commentated graphs put everything very succinctly about what has happened, and may happen, as the housing Market goes down - a severe downward overshoot.
Just when would you like to start World War 4 ?
Times Online: A catastrophe in the making
"The Russians believe that the interceptors have nothing to do with Iran but are part of a Western defensive shield that could one day make the Kremlin’s huge stockpile of ballistic missiles obsolete." ... "the Polish move, and the Russian threat, provide the clearest evidence yet that the six-day Georgian war has spread to Eastern Europe’s ancient fault-lines." WW3 was the cold war. WW4 will be the economic war, - but defined by national intervention.
my bricks are my pension
Metro: Buy-to-let pensions facing trouble
Tens of thousands of buy-to-let investors who opted for property as their pension and bought at the top of the market could now be seriously out of pocket, according to new research. Almost 10,000 buy-to-let mortgages are now more than three months in arrears, but the real test of affordability is yet to come in 2009/10, when those who borrowed large sums at relatively cheap rates in 2007 come off their two and three year fixed deals. uh uh uh
"In some of the country's most prosperous areas, home repossession cases have increased up to 95 per cent"
Mail: Middle-class homes crisis: 39,000 facing repossession as spectre of the Nineties returns
Why should the middle class and even the rich be immune: the higher the income the more massive the debt burden naive house buyers have saddled themselves with! waiting to see blood and tears on the streets here in London
But I thought house prices were going to go up!!
Daily Express - The World's Greatest etc: NUMBER OF PEOPLE LOSING HOMES SOARS
''...REPOSSESSION demands are soaring as home owners fail to pay their loans, figures show. The number at risk of losing their homes has risen by nearly a quarter in the past year. A total of 28,658 mortgage possession orders were made in England and Wales from April to June, up four per cent on the previous quarter – and 24 per cent more than for the second quarter of last year, said the Ministry of Justice...''
Conway talking cr@p
Telegraph: Property market: Word on the street
The FTB can't afford to enter the marketplace. [agreed]. This is not because prices are too high but because it is prohibitively expensive for a young, less well-off person to borrow money. [darling, where are my pills?]. Unless the Government helps, it is difficult to see this improving for at least two years. [yes, by leaving it alone]. This would be disastrous for the market.[?] I have even heard one expert predicting a 40 per cent fall in prices. [sensible bloke, then].
Vince knows the score!
Metro: Recession threat 'could last ten years'
'When I talk about recession, I'm talking about it not in the economic sense – two consecutive quarters of negative growth – but as most people see it, with job losses, house repossessions and a lack of consumer spending. The doomsday scenario would be that we finish up like Japan did, with ten years of stagnation.' With unprecedented levels of debt, at best, preventing people from spending, at worst, not being paid back at all, this prediction is most likely. Problem being we are not Japan, home of Sony , Honda, Toyota, etc. etc. We have nothing to fall back to.
Friday, August 15, 2008
Forget house prices
The Times: Russian general says Poland open to nuclear strike
A senior Russian general warned Poland today that it was leaving itself open to retaliation - and possibly even a nuclear strike - by agreeing to host a US missile base...............Sorry guys I know im off topic by a mile and some but this is scary
Money is king as far as the law is concerned
Times: Surge in repossession orders clogging up the courts
Courts are having to delay adoption hearings, contract disputes and personal injury claims to deal with a surge in mortgage repossessions which must legally be dealt with within eight weeks of being filed. Just goes to prove that as far as the legal system is concerned money really does talk loudest.
Hope for a sale,,,
Telegraph: Buy-to-let landlords: how to avoid repossession
"It is worrying that 183,000 buy-to-let mortgages were taken out close to the top of the market," says Hargreaves Lansdown. "The real test of affordability is yet to come, in 2009 to 2010, when those who borrowed large sums at cheap rates in 2007 come off their fixed-rate deals."We are getting an increasing number of inquiries from professional buy-to-let landlords who are no longer able to churn their property portfolios to ensure they stay afloat."
Genius graph explaining the thoughts of Buy-to-regret landlords
Patrick.net: HPC Buyer Mentality
No summary. Just a great graph!
Still think your house is your pension?
This is money: Buy-to-let pensions facing trouble
Borrowing to invest can be a hazardous strategy, just as much with property as with any other form of investment, because you magnify losses as well as gains. - Brutally true
London Flagship EAs CLOSE. So, holding up well ?
London Evening Standard: Estate agents shut as housing market slumps
Flagship branches of major estate agents in central London are being closed as house sales nosedive. Offices in prime locations including Chelsea, Knightsbridge and Fulham have shut and some industry figures are admitting the market is now worse than ever.
Off to hell in a handcart
ThisIsMoney: Britannia pays as mortgage arrears soar
Arrears were rising most sharply on mortgages with high loan-to-value advances made to first-time buyers. New city-centre flats that have plummeted in value in the housing downturn are also proving to be a big source of arrears, it said.
expect lines of people cashing out of B&B soon...lol
Yahoo: Nervous wait for B&B underwriters
All could be left with millions of unwanted shares in a possible re-run of the £4bn right issue launched by HBOS a few months ago. Just 8.3% of shareholders backed that deal, leaving Morgan Stanley (SPU - news) and Dresdner Kleinwort with a massive 1.4bn share to sell.
House prices double in 6 months!
Guardian.co.uk: Basra: It's absolutely booming!
House prices have doubled in a matter of months. Restaurants are opening alongside the waterside corniche by the Shatt al-Arab waterway. Oil-rich Kuwaitis are beginning to move in, and trade at the port is booming. This is the rosy picture painted by the British. Could Basra see the next BTL boom?
But the man from BOE says NO
Yahoo: Gatwick braced for bank holiday misery
Workers voted overwhelmingly to take industrial action after rejecting a 3% pay increase, way short of the 5% they're after.
Time to Lower the Rents?
Grauniad: Tenants sitting pretty as rents fall
Quite simply the most hilarious thing I have read for some considerable time. Utter bear porn, but one won't feel quite so shameful after indulging. Enjoy!
Will we beat the 1991 record for repossessions?
Guardian: Repossession orders up by a quarter
The number of homeowners in England and Wales threatened with repossession rose by a quarter in the year to the end of June, official figures showed today. The Ministry of Justice said lenders made 28,658 possession orders against borrowers in the second quarter of the year, 24% more than in the same period of 2007.
Was this the REAL reason for our invasion of Iraq?
Guardian: Oh for a Basra buy-to-let
According to Major General Barney White-Spunner, just back in the UK from his post commanding British forces in southern Iraq, the market in Basra is hot.
How Does This Affect House Prices?
Associated press: Russia: Poland risks attack because of US missiles
MOSCOW (AP) — An agreement that will allow the United States to install a missile defense battery in Poland exposes the ex-communist nation to an attack, a Russian general said Friday. Poland and the U.S. struck a deal on Thursday to deepen military ties and place a missile interceptor base in Poland. Gen. Anatoly Nogovitsyn, deputy chief of the Russian general staff told reporters Friday that the agreement exacerbates U.S.-Russian relations that are already tense because of fighting between Georgian and Russian forces. He said the deal "cannot go unpunished." Worth a little consideration.
Desperate times in the housing market call for desperate measures
FT: Councils push to become mortgage lenders
The New Local Government Network (NLGN) is lobbying support from local councils in a bid to persuade the government to allow councils to offer mortgages to those struggling under the credit crunch. NLGN has been campaigning for local authorities to be able to offer financial support to those affected by the credit crunch. It hopes this would stave off repossessions and evictions, prop up the housing market to prevent remortgage difficulties and support first-time buyers to buy locally. Currently, the NLGN is gathering signatures to a letter from council leaders calling for the government to support local authority mortgages. (See letter attached.)
Mortgage possession claims grew by 17% in the first three months of 2008
BBC: Repossession orders climb by 24%
The number of homeowners in England and Wales facing repossession after falling behind on their mortgages has risen. The Ministry of Justice said 28,658 orders were made by the courts in England and Wales in the second quarter of 2008. That was up 24% on the same period in 2007 and 4% higher than the first quarter of 2008. The figures come a week after lenders' data for actual repossessions across the UK also showed a leap in numbers.
Another Nail in the GBP Coffin
FT: Merrill set to avoid UK tax after $29bn loss
Merrill Lynch is unlikely to pay corporation tax in the UK for several decades after $29bn (£16bn) of losses suffered by the US investment bank were charged to its London-based subsidiary. "After the latest sale, Merrill has a UK operating loss of about $29bn that it can carry forward indefinitely for tax purposes" - What the Hell?
$ is no safe haven with this news
FT: Higher rungs of housing ladder feel mortgage pain
"US Prime borrowers are falling behind on their mortgages at more than three times the rate they were in 2007, a pace far exceeding the rate at which Alt-A and subprime borrowers are becoming newly delinquent on their home loans, according to data from Credit Suisse and Loan Performance." Even prime borrowers will fall behind in their mortgages when they go into negative equity even though they can afford to pay. When you realise you have made the mistake of your life buying that $3.5 million home that is now worth $2 million, you walk away.
A black hole forming (not in outer space)
Financial Times: Merrill leaves hole in London’s finances
"But following the credit crunch it is likely to be many years before Merrill needs to worry about paying British corporate taxes again. As a result of a quirk of the investment bank’s internal structure, the majority of huge losses it has suffered as a result of the global credit crisis have been booked through its London-based subsidiary."
I'll buy that for a dollar!
The Daily Telegraph: House sold for $1 in sign of US property crisis
In a sign of how desperate the property crisis has become in parts of the US, a foreclosed house in Detroit has sold for just one dollar – around 50 pence. But even at that bargain price, the two-storey, lawn-fringed house on the city's impoverished east side took 19 days to sell.
The U.S. multiyear downtrend is over. The process we described as "carving out a bottom" has been completed.
fxstreet: The Dollar Finally Escapes the Bear Den
Recent days have been a watershed, but it has been a long time in the making. The dollar bottomed against the British pound and Canadian dollar (half of the G7 currencies) last November, as the Federal Reserve expanded its lending facilities and these countries prepared to cut rates. The dollar bottomed against the Japanese yen and the Swiss franc in late March, around the time that the Fed made a stand to protect what it perceived to be a potential systemic risk in the demise of Bears Stearns. The dollar recorded its low against the euro in early July, as the U.S. Treasury and Fed made it clear that a failure of government-sponsored agencies
Thursday, August 14, 2008
Today's Article - an Interview....
Wall St Journal: Greenspan Sees Bottom In Housing, Criticizes Bailout
"Alan Greenspan usually surrounds his opinions with caveats and convoluted clauses. But ask his view of the government's response to problems confronting mortgage giants Fannie Mae and Freddie Mac, and he offers one word: "Bad"."
12,571 companies where the administration or liquidation process began more than 15 years ago are not finalised.
Guardian: Insolvency: a licence to print money
David Cameron wants to reform insolvency procedures. Insolvency is a licence to print money. Practitioners are paid before any creditor and can charge more than £600 for an hour's work. They do not owe a "duty of care" to all stakeholders affected by their practices, and that provides plenty of incentives to prolong insolvencies. Both Maxwell Communication Corporation plc (looted by Robert Maxwell) and the Bank of Credit and Commerce International (BCCI) began liquidation proceedings in 1991. Neither has been finalised, but MCC plc has generated £88m in fees for the insolvency practitioners and BCCI's liquidators have collected over £400m. Nor are these cases unusual. Is the Tory leader willing to take on big accounting firms and open a new chapter in saving jobs?
Better out than in, better late than never. Prem Sikka never said this
Guardian: We must break the prism of corporate interests
It is difficult to see how the corporate elites can offer us a fresh way of thinking about regulation, especially as they have a financial interest in the outcomes. At best, they may make marginal changes consistent with their financial interests. Their values are the source of crisis. They have shown little interest in openness, responsibility, accountability, honesty or ethical conduct. Daily headlines about off balance-sheet accounting, consumer rip-offs, tax avoidance and conflict of interests provide abundant evidence of the bankruptcy of their values and ideas. Huge amounts of wealth have been transferred from normal people to corporate elites and wheeler-dealers through the pensions mis-selling, mortgage endowment, split trusts, protection payment insurance and other scandals.
David Bloom, the head of currency strategy at HSBC, warned that sterling was "going to hell in a handbag", and expects it to end the year at $1.75.
telegraph: Sterling's slide set to deepen, UK banks warn
Paul Robson of Royal Bank of Scotland: "I expect sterling to weaken against the euro over the next few weeks, perhaps to 80p as the Bank of England is set to lower interest rates before the ECB.
Stabilizing U.S. economic growth, falling oil prices and a deteriorating outlook outside the United States have led Goldman Sachs to abandon its ten-year bearish stance on the U.S. dollar.
reuters: Goldman says U.S. dollar has bottomed, euro to fall
In a research note on Thursday, the largest U.S. investment bank said the dollar's long-term downtrend has ended and its undervaluation could lead to a substantial improvement in the U.S. balance of payments position.
If everyone stopped borrowing today, the economy would gradually collapse because the money supply would contract as past loans and interest were paid off
Times online: Is interest-free lending inevitable?
from comments - Wow. It's amazing to see this subject pop up in a mainstream environment. As a former investment banker and trader I can only affirm what Richard is saying. The banking system is on the verge of total collapse not just due to a complete binge in the creation of new credit by banks but in the way the system is actually structured. Did you know that there has been an Early Day Motion in Parliament calling for public interest free money for the last 6 years? "we will have to start putting money into circulation in an entirely different, interest-free way if a serious depression is to be averted." RD "Do you really think banks will allow anybody to deprive them of that right? " JPF (interview) sorry it's a bit late (days) but it's still news to HPC ie valid article
It looks to me like Bear Stearns got riddled with bullets The buyers were confident the stock would crash.
bloomberg: Bringing Down Bear Began as $1.7 Million of Options (Update2)
On March 11, the day the Federal Reserve attempted to shore up confidence in the credit markets with a $200 billion lending program that for the first time monetized Wall Street's devalued collateral, somebody else decided Bear Stearns Cos. was going to collapse. In a gambit with such low odds of success that traders question its legitimacy, someone wagered $1.7 million that Bear Stearns shares would suffer an unprecedented decline within days. Options specialists are convinced that the buyer, or buyers, made a concerted effort to drive the fifth-biggest U.S. securities firm out of business and, in the process, reap a profit of more than $270 million.
House bought for £30,000....Sold for 50p !!
Daily Mail: US Property Market Hits All Time Low
Forclosed house, stripped by thieves and lived in by squatters. Extreme case of the housing crash.
Needs Landlord Licensing as well as regulations for tenants to be protected.
BBC: Rental sector 'needs a shake-up'
Too much property in the private rented sector is in a poor condition, is badly managed and requires better regulation, according to a Law Commission report. It wants a central regulator to oversee landlord associations and professional bodies in England and Wales. The proposal is for this to replace the courts or tribunals as the first port of call for disputes between landlords and tenants. The report says the private rented sector has a "poor reputation".
Simply no buyers!
BBC: Slump delays 'Cheesegrater' plans
"British Land will delay the development of the Leadenhall Tower in London's financial district, nicknamed the Cheesegrater, by at least a year. The firm blamed weak demand for office space and rising construction costs".
Latest Report from the National Association of Realtors (US)
CNN Money: Home prices have fallen 7.6% over the past 12 months
Real estate prices continued to post steep year-over-year declines during the three months ended June 30, according to a new report from the National Association of Realtors (NAR). Nationwide, the median single family, existing home price plunged 7.6% to $206,500 from $223,500 in the second quarter. The median price is one in which half of all homes sold for more and half sold for less.
So the UK are looking at early 2010 and beyond?
Wal Street Journal: Greenspan Sees Bottom - In Housing, Criticizes Bailout
"Home prices in the U.S. are likely to start to stabilize or touch bottom sometime in the first half of 2009," he said in an interview. Tracing a jagged curve with his finger on a tabletop to underscore the difficulty in pinpointing the precise trough, he cautioned that even at a bottom, "prices could continue to drift lower through 2009 and beyond." His quarrel is with the approach the Bush administration sold to Congress. "They should have wiped out the shareholders, nationalized the institutions with legislation that they are to be reconstituted -- with necessary taxpayer support to make them financially viable -- as five or 10 individual privately held units," which the government would eventually auction off to private investors, he said.
up for sale for $1.
Detroit News via SOTT: Foreclosure fallout: Houses go for a $1 And it still took 19 days to find a buyer.
This house at 8111 Traverse in Detroit has been stripped of its siding, plumbing, copper wiring, hot water tank and furnace. Desperate to sell, the bank that owns it has put it up for sale for $1. One dollar can get you a large soda at McDonald's, a used VHS movie at 7-Eleven or a house in Detroit. The fact that a home on the city's east side was listed for $1 recently shows how depressed the real estate market has become in one of America's poorest big cities. And it still took 19 days to find a buyer.
lines for dinner parties
creditcrunch.co.uk: Down trodden first time buyers get social revenge.
Now the sensible people who were not suckered in by programs such as location location location, have been vindicated by todays (and the past few months) haliwide statistics. Up to half a decade of pent up emotions being on the receiving end of stick from the unquestioning herd, they have finally snapped and are preparing their own lines for dinner parties. - 'You bought a BTL last November? You f***ing dimwit!' - 'You paid £200K for a 2 bedder in central Manchester? You daft c**t!' - 'Seen these Haliwide monthly figures - I bet you're well gutted!'
Coming to a UK near you today.... Don't miss "inflation" starring Gordon Brown, showing first in the USA with guest star Bush
CNN: Inflation surges by 5.6%
Consumers feel the sting as prices jump again to highest point since 1991 - monthly increase twice what was expected.
If even the autocratic Chinese can't prevent their bubble bursting, what hope does Mervyn have?
Economist: Boom to bust: China's property bubble is about to burst
The sizzle is off China's property markets, and that's potentially bad news for the country's social stability. In the past two years China's property market has enjoyed a spectacular rise, with average prices in some cities doubling. But that raised a red flag with Chinese economic policymakers, and in late 2007 the central government made controlling the rise of asset prices a policy priority. Since then, the State Council has rolled out a series of regulations—from credit ceilings to a 40% down-payment requirement for second mortgages—in order to combat property speculation. The effect was immediate. In early 2008 previously soaring housing markets in southern China began to go into a tailspin.
Missile talks with Poles gain urgency
FT.com: Missile talks with Poles gain urgency
I thought this was to do with defending against missiles from Iran, so why is it gaining urgency? surely it has the same level of urgency.
King argues against irresponsible lending
Independent: Bank is powerless to rescue housing, King warns
After six months of falling prices, a rising tide of repossessions and the prospect of millions of families slipping into negative equity, the Governor of the Bank of England, Mervyn King, said yesterday that there was little the authorities could do to prevent a housing crash, if that is what the market demanded.
OMG - A show on how to be an estate agent!
BBC iPlayer: Double Agents: Lettings
Kristian Digby and Dominic Littlewood put their property knowledge to the test in the real world of estate agency. The guys sample the fast-paced world of the Birmingham rental market. Will the boys resort to dirty tricks in order to net the most potential tenants? Does anyone really care about the trials and tribulations of an estate agent? Do the BBC have any other programming ideas other than those which are property related? How sad.
Euro under pressure
guardian.co.uk: Euro pinned down as euro area growth contracts
LONDON, Aug 14 (Reuters) - The euro came under pressure on Thursday, as figures showing contraction in the euro zone's economy backed an increasingly gloomy view of global growth, giving a further boost to the U.S. dollar. German and French growth shrank in the second quarter, culminating in a 0.2 percent contraction in overall euro area growth that raised the spectre of recession in Europe.
cebr's latest consumer and housing prospects report
Professional Adviser: Cebr: house price boom in 2010
The impact of the credit crunch has already sown the seeds for a renewed house price boom from 2010, according to the cebr. The economics analysts said there will be a 20pc dip in new home completions this year. And, with completions tipped to remain below government targets for the next five years, this will fuel a medium term supply shortfall and consequent upwards price pressures. The conclusions were reached in the cebr's latest consumer and housing prospects report, which sees average prices falling by 14pc, peak to trough, from end-2007 to mid-2009.
Bellway - Cancellations up whilst Sales, prices, reservations and margins are all down
Citywire: Housebuilder Bellway's sales fall 14% as cancellations rise
British housebuilder Bellway has seen sales fall substantially in the last year as the impact of flagging consumer confidence and an 'unprecedented' number of cancellations impacted the business.The group, which sells homes across the country and employs around 2,000 staff, revealed sales had fallen by 14.2% in the last year to the end of July, down to 6,556.It has also seen the price of its deals decline to £169,000, from £173,000, with the group attributing some of the decline to the fact that 20% of the completions were to housing associations.
Will Herbert Asquith’s radical People’s Budget of 1909 be re-visited?
Citywire: A fresh approach to house price boom and bust
While the current financial crisis is yet to run its full course, it is right that some thought is now being given to how to avoid similar problems in the future. The most widely touted measure is tighter regulation, particularly of banks and the finance sector more generally. And that is surely right, as the events of the past twelve months have proven beyond doubt that banks cannot be left to their own devices. An essential problem we in the UK need to address is that our political and tax system encourages speculation in property.
In 6 month time, it will be a Million
Guardian: Fastest rise in jobless since 1992 as King predicts bad year ahead
The claimant count level for July rose for the sixth month in a row by 20,100 to reach 864,700. This is far worse than even the USA. Why? Historical the number of claimant has been about 50% of unemployment. This means the increase in unemployment is probably about 40,000. The USA has a population of about 300 million and they are “only” losing about 50,000 - 60,000 job a month. The UK only has a population of 60 million. You do the math.
No she doesn't......and I've just put my fist through my monitor!
Youtube (7th Aug): Credit crunch? Kirstie Allsopp explains the housing market
'people are trapped in their homes' because of a stagnated market, according to the property p@rnstar.....spouts on as usual.
Another Builder in Trouble
Guardian: Housebuilder: reservations down 45%
British housebuilder Bellway said today reservations for its homes slumped by 45% in the last six months compared with a year ago as the housing market experiences one of its worst downturns since the early 1990s.
Money£acts research "Mortgages will never again become as easily and widely available as they were a year ago"
FT: Damage to mortgages is irreversible: Moneyfacts
Research into the market by financial advice website Moneyfacts, published on Monday, shows the full extent of the credit crunch, with the number of available products down about 70 per cent to fewer than 4000 this August. Average rates and fees are up across fixed and tracker mortgages while average maximum LTVs have dropped to 80 per cent. And lenders have stopped offering 100 per cent plus products altogether, while only two offer 100 per cent mortgages, compared with 33 last August. SEE TABLE
Buyers are taking a wait and see attitude,uncomfortable with buying a home which may be worth less in six month's time
FT: Third of homebuyers waiting for prices and rates to fall
More than a third of homebuyers are putting off purchasing because they believe rates will be cheaper in six months time, according to HSBC.Research from the lender found that despite 98 per cent of people being able to secure mortgage finance, people are not confident to fund a new property due to further rises expected in the cost of living. The study found that while one in 10 people were keen to get on the housing ladder, 37 per cent said they were waiting for prices to fall further while 36 per cent said they were concerned over the rising cost of living.
Better odds on a lotto jackpot than your endowments will break even!
Mortgage Introducer: Most endowments mis-sold
Fairinvestment.co.uk has discovered that 87 per cent of Brits with an endowment policy believe that it was sold under false pretences. * One of Thatcher's many legacies!
Where is this all going to end?
BBC: US home foreclosures increase 55%
More than 272,000 people in the US received a foreclosure notice in July, a rise of 55% on a year earlier, according to analysts Realtytrac. Florida and California had the highest rate of foreclosures, figures showed. In a further indication of the severe problems affecting the US housing market, more than 77,000 homes were repossessed in July. As a result of this increase, 17% of all homes for sale in the US are repossessed properties.
So near but yet so far...
Yahoo - Tech Ticker: China's Economic Miracle Comes Down to Earth
Old China hands have maintained for years that the country's economy would stay strong through the Olympics. Well, now the Olympics are almost done, the stock market has crashed, and inflation is out of control. So is this the end?
Action needed
Times: We need stamp duty reforms, not rumours
Many investors are said to be insanely anxious not “to miss the floor”, the point at which prices stop sliding; they could see the stamp duty holiday as that moment.
King squares up to Darling
Times online: King opposes Treasury's liquidity plans
Mr King dismissed the idea of public backing for new mortgage securities. He said: “It would be a very dangerous move to [have a] situation where the Government saw its major role as guaranteeing lending. Why should the taxpayer take on the risk of borrowing by individual borrowers, some of whom are risky? It’s the lenders who should take the risk . . .
but growing fears about the fragile state of the UK economy and the global flight to the US dollar have hit hard.
telegraph: The pound is in freefall. Only a few weeks ago sterling was trading above $2,
Yesterday sterling touched $1.86.51.
The euro is now the skunk at the garden party: a net 71pc say it is overvalued and most think it will fall next year.
telegraph: A net 58pc of fund managers think the greenback is undervalued, the highest level since the survey began
David Bloom, HSBC's currency chief, said the greenback's moment of schadenfreude had come, ending a seven-year slide that has called into question its viability as the world's reserve currency. "It has become apparent that other economies are deteriorating fast, and the whole decoupling thesis has started to come apart at the seams. Canada is frozen over. We have Arctic conditions in Sweden, a landslide in Germany, and the UK is falling off the white cliffs of Dover," he said
Wednesday, August 13, 2008
A sign of Mortgage Market Recovery?
BBC: HBOS to cut mortgage sector jobs
HBOS is to cut 325 jobs by the end of March next year as it closes one of its specialist mortgage brands.
Oh Dear I realy do not want to know this.
The press association: Bush sends US troops to Georgia
The US is sending troops to embattled Georgia in the form of a humanitarian aid exercise, President George Bush said. Mr Bush said military planes would deliver supplies in a move which would put American forces in the heart of the region. The president said he was concerned that Russia might be violating the ceasefire in Georgia and he expected all Russian forces to withdraw. He is also sending Secretary of State Condoleezza Rice to Paris for talks with EU peacemakers and then to Georgia to express solidarity with the democratically elected government there. Mr Bush said he strongly supported France's efforts to broker an end to the fighting. He said the massive US humanitarian effort was already in progress and would involve US Naval forces as well as aircraft.
The economy is in safe hands
wall street journal: U.K. Inflation Rate Jumps to a 16-Year High
LONDON -- Consumer inflation hit a 16-year high last month in the U.K., rising to more than double the Bank of England's target. Consumer prices rose 4.4% from a year earlier, after rising 3.8% in June, the Office for National Statistics said. Last month was the third in a row in which inflation was more than a percentage point above the central bank's 2% target
Hummer production line for sale?
Bloomberg: GM Debt Rating Lowered Further Into Junk by Moody's
"General Motors Corp. had its credit rating on $29 billion in debt lowered one step further into junk status by Moody's Investors Service on concern that falling U.S. sales will hurt efforts to boost cash flow". Without cash from the Fed, an industrial train wreck is almost upon us.
Future import of inflation.
BBC: Venezuela lifts basic food prices
Something we don't talk about on HPC which is equalling important. Importing inflation. China producer price inflation ( PPI) 10%, India's PPI 12% Vietnam 25%. Why is this important. we import most of our good and services from these companies, hence we will have to pay more in future. Respite for inflation downturn. I don't think so. Also remember that Oil, Petrol, diesel is still subsidised in these countries and price pressures are slowly being released into the economy.
Japan in 1/2 a recession
BBC: Contraction in Japanese economy
First quarter of negative growth.
Sterling hits 22-month low vs $ at $1.8650
Telegraph: Sterling slumps on BoE's gloomy Inflation Report
The Bank of England's Inflation Report took currency markets by surprise with the pound slumping as expectations of a rate rise vanished and traders began to bet on a fresh round of cuts in coming months.
No staff, no sale....no fee?
Cambridge Times: EA: Harrison Murray cuts back its working hours at its March office but business as usual
Picture taken from outside says a thousand words....The company this week refused to confirm how many staff have lost their jobs and said the Broad Street office will be open when other staff are not out on appointments. However, the spokesman could not say what those times would be.
Och aye - it's different buyin hooses in Scotland
mortgagesolutions: House purchases fall but prices ease upwards
Scottish house prices continue to increase at a modest rate but the volume of transactions has fallen by 27%, according to the latest Scottish House Price Monitor from Lloyds TSB Scotland. In the three months to 31 July 2008, the quarterly price index for the average domestic property in Scotland rose by 1.6% to give an average mix adjusted Scottish house price of £172,185. On an annual basis, Scottish house prices have risen by 9.3%. Conversely, the number of house purchase transactions within the Scottish House Price Monitor has fallen by 27% since the same period last year. Professor Donald MacRae, chief economist at Lloyds TSB Scotland, said.....
and it starts......20% CPI here we come..lol
Yahoo: Strike Set To Cause Disruption
Tube travellers are facing "massive" disruption after London Underground maintenance workers voted to stage two 72-hour strikes. Members of the Rail Maritime and Transport union at Tube Lines will walk out at noon next Wednesday and again from noon on Wednesday, September 3.
and inflation is going to peak at 5% my Ar*e
CNN: China's cost spike
As China makes big moves to break into the first world, U.S. companies that manufacture there face soaring costs in a region that used to be the home of cheap, outsourced production. Here's why prices have jumped - and how 4 small companies are being crunched. -------------------------------- If the cost of Chinese made goods goes up we are all heading for a huge inflation increase.
Roubini says world economy is ****ed - full text
RGE Monitor: Roubini: The Perfect Storm of a Global Recession
"Still all G7 central banks are now worried about the temporary rise in headline inflation. So for now they are all on hold or threatening to hike policy rates to fight potential inflation risks. But over time severe recession risks and the risk of a severe banking and financial crisis - with credit losses now estimated to be at least $1 trillion and possibly as high as $2 trillions and hundreds of banks going bust - will force all G7 central banks to cut further policy rates. But this policy easing will be too slow and delayed, especially outside the US, and will occur only when the G7 and global recession will become entrenched. Thus, the policy response to this upcoming perfect storm will be too little too late to prevent it."
Small losses add up
This is Money: Britannia pays as mortgage arrears soar
Britain's second-biggest building society today admitted that profits had plummeted due to the rising numbers of people falling into arrears with their mortgage repayments.
NEW ACTION FILM There are no car chases and nothing blows up. Except, possibly, for the entire economic future of the United States.
Washington Post: Indebted Ever After
The movie, "I.O.U.S.A.," debuting Aug. 21, is an 87-minute alarum A private-equity billionaire, a former federal government official and a Baltimore newsletter editor have made a documentary film that they hope can do what an endless parade of policy papers has not: Persuade Americans that debt has created a looming economic crisis that would make the Great Depression look like a market correction. What you don't know is how bad things really are. If you include all the unfunded entitlement obligations -- Social Security, Medicare, Medicaid and so forth -- we are actually in a $53 trillion hole. A debt that high, even super-investor Warren E. Buffett says in the film, "could create real political instability."
August 08 Inflation Report - including webcast
Bank of England: Inflation Report - August 2008 (direct link)
+ CPI Projections + GDP Projections + Q & A section in webcast
They May Be Looking ... But Are They Stupid Enough To Buy??
Mortgage Introducer: First timers re-emerge
First time buyers are showing signs of returning to the property market as house price reductions begin to take effect and lenders look to reduce mortgage rates.
Fed
BBC: US central bank in $25bn auction
The US Federal Reserve has auctioned $25bn (£13.1bn) in loans to banks in its latest bid to boost credit markets. The results of Monday's auction were revealed on Tuesday and showed the auction was oversubscribed with 64 bidders seeking $54.8bn from the bank. This latest auction involved lending firms money for 84 days - rather than the 25 days of previous auctions.
BoE Inflation Report
BBC: Bank to signal inflation pick-up
The Bank of England is likely to provide evidence of tougher times ahead for the economy when it publishes its latest quarterly report on inflation. The report comes after the UK's annual rate of inflation rose to 4.4% in July, its highest level since 1997. Analysts said the Bank is likely to predict that inflation could touch 5% before falling back, leaving no scope for an early cut in interest rates.
Unemployment
BBC: Jobless total up as economy slows
The number of people out of work rose by 60,000 in the three months to June, taking the official unemployment rate to 5.4%, official figures showed. The Office for National Statistics (ONS) said unemployment increased to 1.67 million between April and June.
Video on how and why inflation numbers are messed with
the crash course chrismartenson.com: Fuzzy Numbers
15 min video on how inflation is fiddled, definitely worth a look. The same 3 techniques used to suppress inflation numbers are used to boost GDP numbers. Why do governments go to all this trouble? It's called "anchoring". Anchoring refers to peoples expectations of inflation. So the tricks and lies are all meant to convince us that everything is ok and keep us acting like good consumers.
Better late than never
Citywire: How bad is the 'liar loan' problem?
Liar loans are causing havoc in the US housing market, and the FSA is in the midst of a major crackdown here in the UK. But how big is the problem, who is to blame, and why was nothing done sooner?
the early impression that the worst of the subprime crisis was over turned out to be illusory.
SOTT Washington Post: UBS Takes More Hits in Subprime Crisis
UBS, one of the hardest-hit banks in the subprime mortgage crisis, said Tuesday that it lost $331 million in the second quarter as it took another $5.1 billion hit in write-downs on bad assets. The net loss for Switzerland's largest bank in the April to June period compared with a profit of $5 billion a year earlier, while the write-offs on dwindled holdings brought the total for the past year to $42.5 billion.
No supprises there then!
BBC news: Flats 'lead' the housing slowdown
A 3.6% drop in the price of flats in the UK between May and June contributed to the price of the average home falling from £216,625 to £215,029.
New world currency disorder.
Telegraph: Stage two of the gold bull market is just beginning
A war breaks out in the Caucasus, pitting Russia against a close ally of the United States. Inflation reaches a new peak in the euro-zone. The CPI reaches the highest in Britain since Bank of England independence. Rampant inflation sweeps the developing world. Yet gold crashes. It has failed to deliver on its core promises as a safe-haven and inflation hedge, at least for now. Why?
First it was mortgages, now credit cards take the hit
FT: Rise in credit card debt charge-offs
UK consumers are walking away from their credit card debts in rising numbers, according to a report to be issued on Wednesday by Standard & Poor’s, the credit agency. Average charge-offs – defined as repayments of principal and interest which credit card companies no longer expect to receive – rose to 6.9 per cent by the end of June, up from 6.62 per cent at the end of March. Meanwhile, the data also suggest that British consumers are becoming increasingly dependent on their credit cards. .....
Think tank calls for massive internal migration from north to south
Politics.co.uk: 'Make London bigger' to tackle inequality
"London must be massively increased in size to tackle national inequalities, a centre-right think tank has suggested. Policy Exchange is saying a substantial increase in London's size will allow people from poorer parts of the UK – mostly in the north – to move down to where there are better job prospects." ––– HOW ABOUT MOVING THE JOBS UP NORTH INSTEAD?? No mention of how the creaking transport infrastructure in London would cope with another half million people commuting to work each day. No mention of how the water and sewerage systems, already overloaded, would cope. I'm all for growth but let's get the infrastructure in place first!
Changes to tax on empty commercial property has interesting side-effects
Independent: Buildings destroyed after rate relief is abolished
Landlords of retail and office property now have to pay full business rates after a three month grace period – whereas previously they received 50 per cent tax relief. A Treasury spokesman said: "Reforms to empty property relief are aimed at ensuring a fair balance between incentives to re-let property, and giving property owners a period of relief while they manage vacancies." Needless to say, the landlords aren't happy about what is effectively a Land Value Tax, even though economists agree that LVT is one of the best and fairest possible taxes.
What do estate agents do all day?
Guardian: What do estate agents do all day?
Why doesn't an estate agent look out of the window in the morning? Because it would give them nothing to do in the afternoon.
Banks' Writedowns Top $500 Billion
Bloomberg News: Banks' Subprime Losses Top $500 Billion on Writedowns
To see the news stories associated with these writedowns go to this weblink: http://www.creditwritedowns.com/2008/05/credit-crisis-timeline.html
Larry Elliot: rate cuts not for a few months yet
The Guardian: Threadneedle Street blues
So what should Threadneedle Street do? ... If wage inflation does remain muted, the Bank should be looking to cut rates by the end of this year or – at the latest – early next.
Tuesday, August 12, 2008
Darling wants FTBers to start borrowing right now
The Times: Alistair Darling scrambles to end mortgage drought
"Measures to revive the dormant housing market by increasing the supply of mortgage lending are being planned by ministers, The Times has learnt. Alistair Darling is poised to intervene to help banks and building societies to secure more finance to grant new mortgages. The likely move comes after the virtual drying-up last year of the mortgage-backed securities market, which had become a crucial source of mortgage lending."
Second guessing our betters
Times: Inflation: keeping the target
This article is one of many recently about abandoning inflation targeting. As usual, there is no mention of the consequences of not using inflation as a means of controlling monetary policy. Given that we are born in a system completely dependant on an anticipated rate of inflation, this article is meaningless supposition in my view. The problems we face require a transfer of wealth. Simply that. From the pensioners, taxpayers, people who lose bank deposits, basically one or another group is losing some real wealth.
Auntie Educates us on the Black Art of Statistics
BBC: The myth of counting
The economy is big news at the moment, but it isn't always easy to see whether a particular statistic is good or bad so Auntie Beeb is publishing a series of short articles to explain the mysteries of economics, statistics and basic maths to the un-enlightened.
The slow learners club are recruiting
Independent: Physics boffin who worked for LTCM sets up London hedge fund
"A City trader who formerly worked at Long-Term Capital Management, the hedge fund that spectacularly blew up a decade ago forcing the Federal Reserve to step in with a rescue package, has teamed up with a former colleague to launch a new fund in London" ... "John Godden, managing partner at the hedge fund services group Igs Group, said: "There's a huge amount of forgiveness in the hedge fund industry. Ko wasn't the one pulling the levers, and a lot of the people who worked there are regarded as very clever."
More stressed household budgets on the way
thisislondon.co.uk: Redundancies could soar with a quarter of firms planning to cut jobs
"Redundancies are set to soar over the coming months as the economic downturn continues, a survey reveals. More than a quarter of employers are planning to axe jobs to cut their wage bills, according to the Chartered Institute of Personnel and Development. " This is the dark side of the house price crash: prices will be cheaper but will I have a job?
"How can I profit from this"? says George
Bloomberg: Soros Recommends `Danish Way' to Clear Up U.S. Mortgage Mess
"U.S. house prices plunged and will fall further unless mortgages are made available on more favorable terms to a wider range of people, so the recent accord on Fannie Mae and Freddie Mac between the Treasury and Congress Democrats is worse than useless", George Soros said.
The bear clutches at straws?
Asia times on line: Oil in troubled mountains
MONTREAL - The armed conflict between Russian and Georgia has further exposed the fragile position of the energy links running through the smaller country from the Caspian Sea to developed market economies. Russian forces are placed to disrupt oil flows through the Baku-Tbilisi-Ceyhan (BTC) pipeline, which has carried Caspian Sea oil from Azerbaijan across Georgia to Turkey since 2006, and the Baku-Tbilisi-Erzerum pipeline, which opened last year and exports gas to Turkey, as well as the older Baku-Supsa "early oil" line that runs to the Georgian Black Sea coast
Pain across the pond.
Bloomberg: A third of new U.S. homeowners in negative equity
Almost one-third of U.S. homeowners who bought in the last five years now owe more on their mortgages than their properties are worth, according to Zillow.com Second-quarter home prices fell 9.9 percent from a year earlier, giving 29 percent of owners negative equity, said Zillow, the Seattle-based service that offers values for more than 80 million homes. For those who bought at the 2006 peak of the housing market, 45 percent are now underwater, Zillow said.
When they accomplished something it was a shot in the foot
bbc news: Ministers have 'frozen' housing
David Cameron has attacked the government for a "completely reckless" briefing that stamp duty could be axed temporarily to boost house sales. "Far from freeing up the housing market, they have actually frozen it," the Conservative leader told reporters.
It was a dramatic week in the markets last week
SOTT: Signs Economic Commentary for 11 August 2008
Summary: It was a dramatic week in the markets last week, with gold falling 6% against the dollar, oil falling almost 9%, and the dollar gaining 4% against the euro. The dollar's strength was attributed to the realization that the whole world will share in whatever downturn is facing the United States.
How the cheap money era led to the war in Georgia
MoneyWeek: How the cheap money era led to the war in Georgia
Russia has built its recent might on high fuel prices. But as the credit bubble pops and the economy slows down, oil prices are falling. Russia is flexing its muscles while it can...
this article compares the worst with the UK...
Yahoo: The Worst Place In Europe To Invest
The causes were basically the same as they were in the UK market: over-inflated house prices, over-borrowed consumers, and spiraling energy costs. A couple of factors, though, have accentuated the problems in...................
The frailest of Detroit's automakers has been in private hands for a year. CEO Bob Nardelli badly needs a hit if the company is to endure.
CNN: Can Chrysler survive?
Knowing this would you buy a Jeep or 300C in the UK? What about backup, warranty etc, if Chrysler goes bust what happens to UK dealerships? Layoffs? Empty premises etc
Prime mortgages get hit, dashing recovery prospects
CNN: Prime mortgages get hit, dashing recovery prospects
More borrowers with good credit are defaulting on their home loans, and that's going to make it even harder for the staggering housing market to recover.
According to the government - house prices have risen over the year
Reuters: House prices rise year on year
..by a whopping 0.6%! shame inflation is 4.4% (and the rest!)
CML "Mortgage lending activity remains weak and will likely decline further in the coming months"
BBC: Mortgage market 'remains subdued'
The number of loans approved for house purchases in the UK in June fell to fewer than half the number of the same month a year ago, new figures show. Some 47,000 home loans were approved compared with 98,000 in June 2007, and also down from 52,000 in May this year. The figures from the Council of Mortgage Lenders (CML) show that the mortgage squeeze, caused by the credit crunch, is continuing. The CML added that the slowdown in mortgage lending was likely to go on.
RPI 5pc - CPI 4.4pc
The Telegraph: CPI Inflation surges to 4.4pc as squeeze on consumers grows
CPI Inflation hit 4.4pc in July, more than double the Bank of England's target, as the rising price of food and fuel continued to eat away at Britons' consumers. CPI inflation now expected to hit 5pc before the end of the year
Ouch!
BBC: UK inflation up to 4.4% in July
The UK inflation rate rose to 4.4% in July, up from 3.8% in June and more than twice the government's target of 2%. The increase in the Consumer Prices Index (CPI) was higher than expected. The Retail Prices Index (RPI) inflation measure - often used as a benchmark in pay negotiations - rose to 5% in July from 4.6% in June.
Would-be buyers now negotiating from a position of strength to find bargains in a weak market
BBC: 'More realism' over house prices
More "realism" has entered the UK housing market, with sellers dropping their asking prices for properties last month, surveyors have reported. But the number of people moving house still fell to its lowest level since the Royal Institution of Chartered Surveyors' (Rics) survey began in 1978. Rics said that the squeeze on mortgage availability continued to dampen the UK housing market. And it added that "confused messages" over stamp duty could hit confidence.
Fixed rates with 25%+ deposits get cheaper by 0.0001%
Daily Express: HOME LOANS GET CHEAPER AT LAST
Property experts also expect there to be increasing choice as the mortgage drought which has frozen the housing market since the onset of the credit-crunch starts to ease. Ray Boulger, of mortgage broker Charcol, said: “We’ve now got lenders competing with each other on rates to get more business.” ......back to the good old days again - supply/ demand/ affordable housing, only way is up!!!! blah, blah, blah!!!!
Decrease in House Prices Shows No Sign of Abating
Home.co,uk: Asking Price Index
"A bottom for the housing market is still not visible". All nine English regions record asking price falls, with only Wales bucking the trend. (For pity's sake - WHY?)
More from RICS
Telegraph: House sales drop to lowest level on record
Estate agents are selling just one property a week, as figures show the worse drop in sales for 30 years.
The Royal Institution of Chartered Surveyors (RICS) said the number of properties sold had dropped to its lowest level since records began in 1978.
Monday, August 11, 2008
Captain Bank of England abandons the wheel, taking all the liferafts and a bottle of ships rum with them
Times Online: Inflation set to hit 5 per cent as goods prices surge
If most people truly understood what inflation really is, they would take to the streets and raze Threadneedle Street to the ground. Inflation is a knife in the back of the prudent, and a generous bounty for the reckless. Inflation is not an act of god, it is an economic effect arising from a set of deliberate policy decisions. Inflation is moving money from those that have managed their finances to those who have ignored advice and bought whatever they wanted. Inflation will create more inflation as the pound sinks in value (which is what created this round of inflation too!). Inflation is what happens when the Bank of England fails in its duty. Inflation is the sound of policymakers' indifference. Inflation is the sound of the UK economy writhing.
The prospect of 5% inflation loomed closer today.
Guardian.co.uk: 5% inflation is a dead cert.
The Office for National Statistics said that producer price inflation jumped to a higher-than-expected 10.2% on the year to July - the sharpest annual rise since the series began in 1986. The yearly rise in core output prices, which strips out erratic elements like raw materials and oil, also signalled further inflation pressures in coming months, with this rate hitting its highest point since 1981. Alan Clarke, economist at BNP, warned that today's rise in output prices posed a "significant risk" to consumer prices inflation over the coming year "even if energy prices begin to come down". Separate trade figures from the ONS today added to the gloom. The UK's trade deficit in goods with the rest of the world widened more than expected to £7.7bn in June compared with £7.4bn in May.
RICS report out today
Times: Property market grinds to a halt amid mortgage drought
The housing market ground to a virtual standstill last month as the drought in the mortgage market helped to drive down the number of homes changing hands to levels not seen for four decades, a key survey shows today. In the latest symptom of dire housing market conditions, the average number of property sales handled by surveyors across the country tumbled to fewer than five a month, according to the Royal Institution of Chartered Surveyors. In a rare dose of more positive news, the RICS survey shows that the proportion of surveyors reporting falling house prices was lower last month, for a third month in a row. Some 83.9 per cent more surveyors still said that prices had fallen in July than said they had increased, compared to 94.7% in April.
Swept Under the Carpet?
The Cutting Edge: The Balance Sheet Lies of Merrill Lynch and Wall Street's Failing Cabal
"The Fed, Treasury, FASB, major banks and investment firms are colluding to delay the recording of losses as long as possible. The Fed is allowing toxic waste investments to be exchanged for Treasury notes. The Treasury Department will step in and buy the stock of Fannie & Freddie. The FASB will delay implementing rules that would actually let investors know the risk of these financial institutions. The banks will shift as many assets to Level 3 (management evaluated) as possible, to falsely value them, in order to delay the inevitable write-offs". Everyone will speak optimistically about the future in order to pump their stock prices up. Then they will try to lure more unsuspecting foreign Sovereign Wealth Funds to pour more money down this never ending hole.
Only a year ago RBS was riding high, leading a consortium takeover worth 100 billion dollars for Dutch bank ABN Amro
AFP: RBS to sell £4bln of loans: report
LONDON (AFP) - The Royal Bank of Scotland is selling loans worth up to 4.0 billion pounds to private equity firms after it suffered huge write-downs linked to the global credit crunch, a report said on Monday. RBS is selling to Apollo, GSO Capital, Blackstone's debt investing arm, and TPG, said people familiar with the deal according to the Financial Times. RBS was unavailable for comment on Monday. On Friday, the bank had revealed an 6-billion-pound hit from the US subprime crisis and credit squeeze, and a resulting half-year loss among the biggest in British banking history. RBS, the second-biggest British bank, admitted being humbled by exposure to the subprime crisis and reported a first-half net loss of 802 million pounds.
In these tough financial times employers are facing a difficult challenge to keep their staff motivated
reuters via yahoo: Top bosses feel chill of credit crunch
LONDON (Reuters) - Over a third of leading businessmen expect their companies to suffer redundancies due to the economic downturn, according to a survey released on Monday. (Advertisement) Commissioned by the Leaders in London International Leadership Summit 2008, the poll of over 1,000 business leaders found 36 percent of them believe jobs will be lost, with 10 percent suggesting senior management could be made redundant. The gloomy economic outlook has left 51 percent of bosses finding it tough to keep staff motivated, with a third reluctant to employ people who have high expectations of rewards or rapid promotion. Over a half of those polled plan to keep their staff motivated by offering flexible working hours rather than increasing their salary, with nearly a quarter having t
The bank is increasingly concerned that the world economy is caught in a vicious cycle that could bring an end to the commodities boom.
australian: Rates for cut as growth slows
Any further deterioration in the outlook for global growth would represent a significant downside risk to the domestic activity profile, particularly if it led to a marked slowing in growth in China and India," the bank said in its quarterly review of the economy.
THE Reserve Bank is predicting an economic slowdown so severe that 100,000 people will be thrown out of work in the next 12 months, pushing the unemployment rate to 5 per cent and possibly higher if the financial crisis worsens
australian: RBA warns 100,000 jobs at risk from economic slowdown
The bank has slashed its forecast for economic growth over the coming year, and expects job creation to slip to its lowest level in seven years.
Mortgage-Market Trouble Reaches US Credit Unions
Wall Street Journal: Mortgage-Market Trouble Reaches Big Credit Unions
This is a front page story at the Wall Street Journal in the US. The long and short of it is that huge losses are lurking in credit unions in the US. These are supposedly safe building society-like institutions which are quite conservative. But, they have lost so much, they may be wiped out. I'm not sure if the article has free access, so please see my blog entry for further commentary on the article: http://www.creditwritedowns.com/2008/08/credit-unions-in-trouble.html
Not strictly news - but thought it interesting that you can get 30% discount
Polaris World: Off Plan resales
Fantastic opportunities to purchase existing off plan contracts and resale properties within Polaris World Resorts. Maybe not today......well never, actually!
Good News for HPC readers!!
AP - Yahoo: Stocks extend gains as oil prices fall below $113
Wall Street extended its advance Monday as the price of crude oil fell briefly below $113 a barrel, easing investors' concerns about the impact of inflation on the economy. The Dow Jones industrial average rose about 100 points and the price of government bonds fell as investors shifted to stocks.
And it's worse in Spain
Motley Fool: House prices have crashed by 35% in Spain
If you think the British property market is in a mess, then a quick trip to Spain will put things in perspective. Property prices have fallen by a crushing 35% in the last year, four times faster than in the UK, and haven't stopped plunging yet. This spells disaster for an economy where investment in housing is worth 10% of GDP. And it's going to get worse. We were awestruck by the scale of construction along the coast, massed ranks of half-built villas and apartments squeezed into every dusty hollow and ditch. Who is going to shell out for all this whitewashed concrete, even at today's knock-down prices? The Spanish property market bubble has been well and truly pricked, but sadly too late to save the beauty of the country's coastline.
More pwnage across the Irish Sea
Bloomberg: Irish June House Prices Fall 0.6% as Slump Deepens
Irish house prices fell for the sixteenth month in a row, dropping 0.6% in June, according to the latest TSB/ESRI price index. Prices have fallen by 5% over the last 6 months, the worst half-year results for over a decade. Year on year, prices were down 9.7% from June 2007. The average price for a house in Ireland in June stood at €273,392, compared to €287,887 in December 2007 and €302,605 in June last year.
Repayments outstripped new loans by almost £700m in June
FT: Dramatic cut seen in mortgage lending
"According to data from the Bank of England, the net withdrawal of mortgage lending by building societies is unprecedented; not even in the darkest days of the last property recession did net lending become negative."
Yawn - please tell me something I didn't know!
Citywire: Years of stagflation ahead, warns AAA-rated veteran manager
'Stagflation is a real possibility for the next few years,' he says. However, he says that if this situation does arise, it should not go on for as long as it did during the 1970s." Unfortunately, he made a good start - but failed when he turned over the question paper - saw the intricacy of the initial question - panicked - then totally lost the plot. Oh, well, what is new also, as far as, recent glubbermint decisions are concerned. No, let me substitute “recent” with “complete.”
First in a rather long line - hopefully!! :)
City wire: Broker fined £100k over false mortgage applications
The Financial Services Authority (FSA) has fined a mortgage broker £100,000 for submitting false mortgage applications.
Mounting pressure on the BTL brigade
FT: Buy-to-let borrowers hit by scarcity of products
Mortgage products available for buy to let borrowers have fallen by 93 per cent in the past year, as the credit crisis continues to limit the number of deals in the market. In the last 12 months, the total number of mortgage products available has fallen from 4,384 to 307.On top of the scarcity of products, those in possession of buy to let mortgages are also facing steeper interest rates on those mortgages that are still available, according to figures from price comparison site moneysupermarket.com. The average rate for 75 per cent loan-to-value BTL products has increased by 0.35 per cent to 7.33 per cent in the past year, and by 0.63 per cent to 7.46 per cent for 85 per cent LTV products. The increase in interest rates may mean landlords will have to increase rents or find the sh
Absolutely love this guy
Patrick Dixon aka a mr motivator: UK house prices? July 2007 comment on longer term outlook and warning of potential short term 10-15% house price fall.
CDs are costing nothing, Cars are going down to zero. So you can manage 8 times your salary. Brilliant- where do i sign? Please tell me he still believes it.
Hmmm not so sure about this.
Guardian.co.uk: Student rents increasing 'due to credit crunch'
Towards the end of the article: Malcolm Harrison, a spokesman for the Association of Residential Lettings Agents, a professional and regulatory body, said he expects rents to continue to rise. "Rent will not go down as long as we have the credit crunch. When house prices fall, rental goes up," he said.
Private Rented Sector is forecast to continue outstripping other types of investment property
Telegraph Property Club: Private rented sector outstrips all other investment property
In a report on the housing market for ARLA, Michael Ball, Professor of Urban and Property Economics at the University of Reading, comments: “the modern private rented sector is helping to stabilise the housing market because it is housing people who, if they had become owner occupiers in the past few years, would at this stage of the housing market cycle be over-stretched borrowers with rising negative equity. Landlords are generally more financially able to withstand housing market shocks and, as tenants rather than holders of negative equity, younger households will be in a better position to purchase properties as the market begins to pick up again. Housing investors are also likely to be some of the most active purchasers over the next few years, as they search out bargains.”
Very interesting - Banks to pay more.
Bloomberg: FDIC Fund Strained by Bank Failures May Have to Raise Premiums
The failure of IndyMac Bancorp Inc. and seven other banks this year may erase as much as 17 percent of a government insurance fund and raise premiums for all banks, from Franklin National of Minneapolis to Bank of America Corp. ``It's going to be a bloody, expensive mess for the banking industry,'' said Bert Ely, president of Ely & Co. Inc., a bank consulting firm based in Alexandria, Virginia. ``Healthy banks are paying for the mistakes made by failed banks.''
"An Inconvenient Truth" for the economy
seattle times: "I.O.U.S.A." a big-screen look at the U.S.' monster debt
"A private-equity billionaire, a former federal government official and a Baltimore newsletter editor have made a documentary film that they hope can do what an endless parade of policy papers has not: Convince Americans that debt has created a looming economic crisis that would make the Great Depression look like a market correction. The movie, "I.O.U.S.A.," debuting Aug. 21, is an 87-minute alarum on what it calls the tsunami of debt bearing down on the United States' future, caused by the rising national deficit, the trade imbalance and the pending costs of baby boomers cashing in on entitlements."
The slump in oil prices is a bad sign
MoneyWeek: The slump in oil prices is a bad sign
The recent fall in oil prices can't save us from recession, says John Stepek. The rising price was a symptom, not a cause, of the unchecked global boom and its fall is a sign that we're in a huge downturn.
Still pushing the high risk debt drug "investment"
Sunday Times: Bag a bargain in bricks and mortar
"As prices fall investors see opportunity knocking on the home front. PROFESSIONAL investors are starting to see buying opportunities in that most bombed-out of areas – property. UK house prices have tumbled more than 11% to an average £177,351 since last August’s peak, based on the Halifax index, after a decade of booming prices that added 145% to the average home’s value. However, moves are afoot to reignite the market: the Treasury is working on a package of measures, including the suspension of stamp duty, to help hard-pressed families. And lenders are cutting rates."
Sound Employment Fundamentals?
BBC: More bosses 'planning job cuts'
Employers expect a gloomy time ahead in the jobs market, with a rise in redundancies accompanied by a downturn in recruitment, a survey suggests.
Problems stem from deeply embedded beliefs
RGE Monitor: Snake Oil and Deflation
"investment in unproductive works is so widespread as to form part of the popular culture." This article makes the point that our problems are caused very popular false beliefs enjoyed by the whole population (politicians, dolers, bankers, workers), such as delayed payment for consumption etc. The author advocates a change in attitudes, but we are unlikely to rebalance the economy as both politicians and the population have no real desire to do so, and so on to disaster. Begging the question, is this the real crunch ? Or can yet another delay be obtained at the price of a bigger collapse in the future?
FSA points finger at bonus culture encouraging excessive risk
Mirroe .co.yk.news: Fat cat bankers blamed for economic mess
Britain's banking watchdog has launched a devastating attack on City pay. Hector Sants, head of the Financial Services Authority, used the first anniversary of the credit crunch to call for a crackdown on the bonus culture which encourages bankers to take huge risks with investors' cash. He said the economic mess was partly caused by bankers being rewarded for taking "foolish" risks.
UK loses £600bn in credit crunch
The Guardian: UK loses £600bn in credit crunch
The credit crunch, which has dragged the UK economy to the brink of recession, has wiped £600bn from the wealth of the UK - more than £1m a minute - since the crisis began a year ago, accountants said today. A study by PricewaterhouseCoopers showed that housing wealth has plummeted by £400bn while sharp falls in the share prices ofbanks and financial institutions have wiped out another £200bn.
Plunging house prices, down 9pc year-on-year, are forcing consumers to cut back on discretionary spending on goods and services.
Telegraph: Britons cut back on spending as their assets sink £600bn
Britons are £600bn worse off than a year ago as the economy veers perilously close to recession, leading accountants have warned. According to PricewaterhouseCoopers, the year-long global credit crisis has slashed housing wealth by £400bn, while the value of other assets has plummeted by £200bn due to share price falls. Plunging house prices, down 9pc year-on-year, are forcing consumers to cut back on discretionary spending on goods and services.........
There's a new land grab starting in America.
NYpost: LOST SOVEREIGNITY
Foreign money, which up to now has focused its attention on investing in iconic commercial real estate - like Barneys New York and the Chrysler Building - is now moving to scoop up tens of thousands of discounted foreclosed homes across the country. One sovereign fund, said to have earmarked $29 billion to purchase foreclosed residential real estate, recently hired a West Coast mortgage broker and is starting to search for bargains, The Post has learned.
Buy to fret as rent arrears grow
FT: BTL owners face rising number of renters in arrears
Increasing numbers of people are unable to afford their rent, as rental costs continue to rise. As home-owners face the prospect of mortgage arrears and repossessions in the dipping housing market, private renters are also slipping into arrears. According to research from Axa, 13 per cent of renters have gone into arrears in the past 12 months because they can’t afford the rent and 7 per cent have done so in the past three months............
The current crisis is the natural result of the mammoth housing bubble.
Telegraph: This credit crisis is like the plague and nobody is safe yet
''...With house prices falling, banks face further writedowns that will restrict their ability to lend. This problem cannot be cured by injections of liquidity. The nature of the problem has changed from one essentially about liquidity to one about bank capital, and now also about aggregate demand...''
Going Down Going Down Going Down
BBC: Arsenal builds financial foundations
...there are fears that the credit crunch and falling property prices could now hit Arsenal's financial plans, both on and off the playing field. Football business guru Alex Fynn is the latest commentator who feels the club may be regretting the decision to rely strongly for future income streams through the property market.
Strangely coincidental: Have the Russians come to spoil the party or join the pantomime?
AP - Yahoo: Oil near $117 in Asia on Russia-Georgia conflict
Oil prices rebounded Monday in Asia to near $117 a barrel on concerns a widening conflict between Russia and Georgia over a breakaway province could disrupt supplies in the region. Light, sweet crude for September delivery rose $1.64 to $116.84 a barrel in electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. The contract fell $4.82 on Friday to settle at $115.20 a barrel.
Mmmm.. Buy your toys now for Christmas! The leaded ones I mean!
AP - Yahoo: China's July wholesale prices up 10 percent
China's wholesale inflation in July accelerated to its highest rate in 12 years, adding to the government's headaches as it tries to rein in surging consumer prices, according to data reported Monday.
You couldn't make it up - or could you!
Times: Treasury fury at No 10 as estate agents demand talks on stamp duty
National Association of Estate Agents spit their dummies out and the glubberment i.e. Mr Brown is also considering a one-off windfall payment, of up to £150, for seven million families in receipt of child benefit struggling to pay fuel bills this winter. Info leaked courtesy of Sir Brian Bender (real name) , Permanent Secretary to the Department for Business, Enterprise and Regulatory Reform, who was overheard discussing the plans in front of fellow passengers on a GNER train between Leeds and London.
Sunday, August 10, 2008
Oz staring into the housing abyss too - The government there is getting worried .
Bloomberg: Australia's Deputy Prime Minister Pressures Banks to Cut Rates
``If official interest rates were to fall, then we expect banks to pass that on to mortgage holders,'' Gillard told the ABC Television's Insiders program today. Her comments echo those of Prime Minister Kevin Rudd, who said in Beijing on Aug. 8 that lenders ``have a responsibility'' to pass on central bank rate cuts to mortgage holders. Reserve Bank Governor Glenn Stevens signaled this week he may lower the overnight cash rate target from a 12-year high of 7.25 percent for the first time in seven years.
US Bailout Ahead
Bloomberg: Paulson Says No Plans to Add Cash to Fannie, Freddie
"Paulson and Congress last month brokered a plan to bolster the two government-sponsored enterprises that includes giving Treasury the right to buy their shares. Fannie and Freddie, which account for almost half of the $12 trillion mortgage market, reported losses three times worse than estimated, prompting some analysts to predict that Paulson will have to act". "Shares in Fannie and Freddie have plummeted more than 80 percent this year on concern they don't have sufficient capital to withstand record foreclosures on the $5.2 trillion of mortgages they own or guarantee. Bill Gross, manager of the world's biggest bond fund at Pacific Investment, last week said the Treasury will probably be forced to buy as much as $30 billion of preferred shares in the two".
It is not just houses causing a wee headache
telegraph.co.uk: Have we reached the end of the road for oil? (By David Strahan
The rise and fall? of the price of oil -demand destruction-peak oil-consumption outstripping discoveries for the last four decades-political instability jiggling the price-declining oilfields...etc.
1990s style recession for 2009.
The Times: Inflation heading for 5%, say forecasters
"Hector Sants, chief executive of the Financial Services Authority, meanwhile, has warned Britain’s banks to prepare for a recession on the scale of the early 1990s." I remember the early 90's, I graduated then. I was the last recruit into my company for a good few years...
Fairness from BTL landlords
Prime Minister e-Petition: ...private housing landlords must accept housing benefit
Please support this petition. If BTL landlords are to keep people out of the housing market, we should at least have fair tenancy rights.
Get your teeeth into this
BBC 'News': Desperately hoping for a new home
David and Nicole Redman are in danger of joining the thousands of Britons who have lost their homes amid spiralling repossessions. They are due in court later this month, unable to meet increased payments set by their lender after they fell into arrears. The couple, who live with Mr Redman's mother and their two-year-old son, have another baby due in November. They find they are unable to sell their home to clear their debts. "We were stitched up with the original mortage deal. We took out the mortage in August last year because my mum went bankrupt, and we had to buy the house - otherwise we would all be homeless. "Even if we manage to pay off the arrears, we can't afford the mortgage once it comes off the fixed-term in January"
For Newbies Discussion of the property cycle
You Tube: Property Bust after 14 year Boom- Fred Harrison, part 1
Property cycle - you mean boom and bust? What ya talking about. Also see the 2nd part.
Didn't HBOS profits plummet, and the rights issue bomb?
Times: HBOS to prop up builder
If HBOS, which owns 50% of Crest Nicholson, decides that it is unwilling to support the builder, its investment could be wiped out and the lending banks could step in and take control.
There is no plan for the housing market
Guardian: So what's the big idea, Chancellor?
Starts off talking about how bad the economy is but then quickly equates "economy" with "housing market". She throws around some rather fanciful ideas on what to do about the housing market (because something really "needs to be done") and then moves on.
Stamp duty holiday is called off.
The Observer: Darling backs away from stamp duty cut
Alistair Darling, is prepared to disappoint millions of would-be home buyers by ruling out proposals to revive the housing market, Treasury insiders warned last night. After a chaotic week of claim and counter-claim about Treasury plans to suspend stamp duty for first-time buyers, Darling has hardened his stance against the move, which he believes could cost billions to little positive effect.Vince Cable, the Liberal Democrat Treasury spokesman, said the stamp duty idea was ridiculous. 'What sort of a signal does it send when the government has to offer a bribe to get people to enter a declining market?' he asked.
Applegarth's BTL on the side
News of the world: Northern Rock chief's mistress, the 5 mortgages and the secret £1m property empire
THE secret mistress of ex-Northern Rock boss Adam Applegarth bought FIVE homes in THREE years using loans from the bank to build a property empire now worth more than £1 MILLION. Slim brunette Amanda Smithson was granted a succession of mortgages to fund the deals between May 2003 and July 2006—while she was a Rock employee on just £30,000 a year and Mr Applegarth was chief executive.
No safety net for mortgage payers
Firstrung: Struggling homeowners have less protection than in the 90s, but most people don't even realise it - Shelter
The housing minister Caroline Flint MP visited a Shelter Housing Aid Centre in Leeds to find out how staff on the frontline are coping with the repossessions crisis. The minister met with Shelter advisers and county court desk workers, who use their legal expertise to fight for a fairer deal from mortgage lenders. They help people keep their homes by persuading the court to allow a longer period for debts to be paid off. The visit came after new figures from the Council of Mortgage Lenders (CML) show the number of homes repossessed in the first half of 2008 now stands at 18,900, a 48 per cent increase since the same time last year.
The new math of lending
CNN: The new math of lending
With banks tightening their credit standards, many have to walk a fine line when it comes to lending to consumers.
Happy anniversary darling, I'm writing to tell you that the economic outlook is poo.
The Observer: It's worse than we thought, admits CBI. Letter warns of 'darkening mood' in the economy.
Leading employers' organisation the CBI will this week perform a significant U-turn and warn its members that the economy is deteriorating at a faster rate than it had predicted. As recently as June, Richard Lambert, the CBI's director-general, took a relatively optimistic view, saying we should avoid talking ourselves into recession. But in a letter to mark the first anniversary of the credit crunch, he writes: 'There is no doubt that the mood has darkened in the last two or three months,' and warns that growth prospects for next year and 2010 'look no better than anaemic'.
Owners of a place in the sun will feel the chill as carriers axe budget European routes in face of economic slowdown
timesonline: Airline squeeze hits holiday homes
So now the Airlines are to blame for their greed for two homes (one empty for 90%) of the year! Let the good times roll.
Negative equity comes to New Zealand
New Zealand Herald: Coolapsing values hit tome
Local commentator said it could never happen - it has.
Bank of England to try scare tactics on Joe Public
Times: Bank needs to keep pay demands in check
Article in the Times theorises that we should not be surprised if the Bank’s official pronouncements on the economy in coming weeks are gloomy. What King and Co really want is to avoid the inflation felt by consumers being transferred into aggressive wage demands that launch the economy into an inflation spiral. The article concludes that if the simple people of this country think the economy really is in trouble, they are less likely to ask for higher wages.
Saturday, August 9, 2008
Stamp duty rumours 'hits sales
BBC News: Stamp duty rumours 'hits sales
"Housing Minister Caroline Flint said lack of affordable credit was a bigger issue keeping house sales low". As usual she ducks the fact that it's a lack of affordable housing that's keeping house sales low.
What now gas prices?
BBC: Peace bid as Ossetia crisis rages
"A delegation including envoys from the US, EU and OSCE is heading to Georgia as its conflict with Russia over the breakaway South Ossetia region deepens." Will this increase pressure on the hard pressed family finances and mortgage payments?
It's Not That Bad, Things Could Be Worse
International Heral Tribune: Britain's housing bust is bringing down the economy
Repossessions, bankruptcies and unemployment are still at relative lows however many economists are predicting that the situation will sharply deteriorate over the next six months, leaving Britain to face a longer, more painful downturn than the United States.
And what are they going to do about it?
Reuter: FSA warns of economic downturn
The Financial Services Authority has warned the industry to brace itself for the possibility of a downturn similar to the 1990s recession, chief executive Hector Sants said on Saturday.
The banks are only interested in saving themselves. People who borrowed too heavily or who lose their job are thrown out onto the streets.
Telegraph: Mortgage lenders lose patience as repossessions jump
Figures from the Council of Mortgage Lenders show that not only has the number of repossessions in the first half of the year risen by 50pc compared with last year, but the speed with which lenders are seizing properties is at the highest level since comparable records began in 1982. The rise in this "intolerance threshold" indicates the pressure felt by banks to shore up their balance sheets in the face of the sharpest housing slump since the early 1990s.
Unemployment looks set to increase further
The Times: Managers walk fine line on redundancies
"But with every passing day, this has the makings of a nastier slowdown. Yesterday's repossession figures were grim. Faced with flat or falling sales and rising input costs (notwithstanding the welcome plunge in the crude oil price in the past month), company bosses will be returning from their summer holidays under growing pressure to winkle out big savings. At most companies, these are to be located in the wages bill. Human resources directors are set for a busy, uncomfortable autumn".
Whao...even the EAs are finally talking sense now.
FT: Stamp duty talk hits sales
Estate agents say any plans from the government to help first-time buyers onto the property ladder will have no impact on wider house prices - and are jeopardising existing house-sale chains.
Another nail for BTL?
Yahoo: More tenants said falling behind on rent
Hope those 'professional' BTL investors have factored rising bad debts into their business plans.
Of course that camel can take another straw!
Independent: Estate agents & Home buyers getting cold feet over stamp duty
....Graham Robinson of Bryan Davies and Associates, which covers Llandudno and Colwyn Bay, said buyers and sellers had been phoning all week expressing concerns over stamp duty. "We currently have one chain which has £53,000 of stamp duty in it," he said. "We've had a huge response for a very worried public – people can't wait indefinitely for an answer. Over the last few days, the number of inquiries we have had about properties has just died."....
How long will it last?
SKY: One Year On: Will Crunch Get Worse?
David Bulk says" It took three years to take the UK out of recession back in the seventies" .
A reversal indeed, but as pronounced as others would have us believe?
FT.com: Regional house prices suffer falls
The contrast between the FT House Price Index and those of Halifax and Nationwide, two of the UK’s biggest mortgage lenders, in part reflects the fact that each measures somewhat different things. The FT Index ... tracks actual transactions adjusted to reflect the mix of housing nationwide ... and includes properties purchased without a mortgage. Nearly 40 per cent of UK homes are owned outright without a loan and these sellers are able to bypass mortgage lenders.
Confirmation - The worst is yet to come
BBC News: Banks warned of economic worries
Better late than never, the FSA is finally getting round to stating the obvious. That the current financial troubles may well be down to U.S sub prime, but when the UK sub prime hits, the banks had better have a big war chest, because the current situation is nothing more than a bit of pre-amble compared to the titanic UK sub prime turd that is fast approaching a high revving fan. Who knows it my prompt them to put up savings rates, now theres a nice thought.
You know where the door is
Times: Credit crunch and the mortgage market: a vicious circle
“This time last year, competition was rife with loss-leading deals. Banks thought their money was safe because of property price inflation. Now, greater margins have been allocated to cover the increased probability of defaults....“We are not expecting that better mortgage availability will be enough to resume pre-crunch activity levels, but time is a great healer.”
What a change in a year, or where has my money gone.
Guardian.co.uk (august 2007): City bonuses hit record high with £14bn payout
The Guardian, Tuesday August 28 2007 City bonuses have increased by 30% to a record £14bn this year. The rise is twice as big as in 2006 and likely to exacerbate the widening gap between executive and shop-floor pay. The bonuses come against a background of record debt, rising bankruptcies and home repossessions. Analysis by the Guardian of preliminary data from the Office for National Statistics (ONS) shows that bonuses across the economy rose 24% this spring to £26.4bn, comfortably exceeding the country's entire transport budget. More than half, £14.1bn, was earned by the 1 million people in the financial services sector. The figure for 2006 bonuses was £10.9bn
And 8 Who Didn't see the Credit Crisis Coming
Fortune - CNN Money: 8 Who Saw the Credit Crisis Coming
One year after the credit crunch began, Fortune looks back at who saw trouble ahead, and who just ended up in trouble.
The International Monetary Fund says the dollar has fallen 25pc to 30pc on a global basis, just as it did in the late 1980s. There was no shortage of dollar doomsters at that time, warning that America was finished - left behind by Japan and Germany. Even
telegraph: US dollar rallies as extent of worldwide recession becomes clearer
the Habsburgs used to say, "the situation is desperate, but not serious".
BTL novices in trouble
Telegraph: Buy-to-let mortgages plummet 93pc in a year
"The number of buy-to-let mortgages has plummeted by 93 per cent in the past year leaving tens of thousands of novice landlords struggling to find affordable deals." Game over for the alternative pension.