Wednesday, May 20, 2009
But it's different here!
Bloomberg: UK mortgage delinquencies worse than American suub-prime
As we all know, Britain's economy and housing market was doing just fine until those pesky yanks and their 'sub-prime' mortgage losses dragged the world into recession. We were all told there was no sub-prime in the UK.
Now it turns out UK mortgage arrears are worse than the equivalent in US sub-prime. This is feeding through into repossessions. “Losses are high and going higher,” said Watts. “The numbers are ugly, uglier than I expected.”
Posted by little professor @ 06:30 PM (939 views) Add Comment
8 Comments
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1. drewster said...
It's different here: worse!
Almost 30 percent of non-conforming mortgages made in Britain in 2005 are 90 or more days delinquent...
In the UK the madness didn't peak til mid-2007 and the collapse of Northern Rock; there is worse still to come.
Unemployment in Britain, which rose by 244,000 to 2.2 million in the first quarter and may reach 3.1 million by the end of next year, has coincided with “a sharp rise” in delinquencies
Fancy that. Job loss = can't pay mortgage. Who'd have thunk it?
There are about £30bn of bonds outstanding that are backed by non-conforming home loans
Doesn't sound like much these days. Didn't the bank of England recently print quantatively ease £75bn into the economy? Presumably there are many more non-conforming loans which aren't securitised at all? If so then these must still held on banks' balance sheets, and they will be tearing those balance sheets apart over the next couple of years?
2. stillthinking said...
There is certainly a lot worse coming. I wonder how New Labour voters will react when they discover they have burnt through the available funds of the rich, and now are burning up their own money.
3. tyrellcorporation said...
Worrying that the BoE MPC minutes show they've got a taste for QE now. They've seen the markets haven't reacted too badly to printing money and for me this would seem like a green light to keep going. Queue screaming maniacal laughter from the bowels of Threadneedle St.
4. growler said...
I think the average person looking to buy a house will not be so much concerned about what it in the educated press from non-VI sources - if they even know at all.
They will think that they might lose their job, they will think that they must save, they will think that Johnny might have to leave his school and apply for state education and they think they will have to make better plans with savings and "sit tight" - they certainly won't buy luxuries like big cars, splash out at B&Q or go buy a bigger house. Unless they are really dim, or so wealthy the loss of value does not concern them.
It's this that will stifle the market for Mr Average house.
Press and others still think that meddling the Supply curve is the answer to sorting the HPC. Whilst a lower price might appeal to some, if you are not really interested in buying anymore, you wont figure on anyones Demand curve. Like a reporter has said - there is still a buyers' strike. Also, making predicitons on House prices on May-June to hold for the rest of the year is like trying to tell people the demand for a cold beer will always be as high as it is on a Friday late afternoon on a sweltering day in the City of London. It aint. Simple.
We WILL see another thaw. As long as unemployment makes headlines, it will concern more and more people. And just when unemployment goes off the agenda, taxation and inflation will replace it.
5. drewster said...
growler:
I don't think that's the case. Two of my colleagues are actively trying to buy, they've seen some "great deals" by developers on new-build properties. One of them is too young to know better (parents are co-funding); the other is a relatively recent immigrant and perhaps isn't aware that prices can go down as well as up. I've given up trying to talk people out of making mistakes. Live and learn...
6. Flatbroke said...
Don't forget, the government has underwritten 600 billion pounds of UK bank
s' bad loans, so any defaults on mortgages will be covered by us the taxpayer, not the banks.
7. peter_2008 said...
I always said people who overstretches themselves too much are financial Kamikaze suicide bombers. Now, they are blowing up everywhere in the country, so stay well clear of where they are.
8. Englishoak said...
What about cash buyers?
I'm about to buy a new build cash really I am unsure whether to do so but what about inflation?
Even if you wait longer for the prices to come down their is no guarentee by the time inflation comes along with your money sitting in the bank ready to be destroyed, their will be any properties on the market?
Running to Gold isn't the longterm bet either..., as proclaimed by many.