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Housing Market Collapse ‘Deepening, Fast’: New Home Sales Crater Again As Experts Worry Downturn Could Spark Recession Forbes.com Jonathan Ponciano, Forbes Staff 26 July 2022 581 words English FBCOM © 2022 Forbes LLC Topline New home sales unexpectedly plunged much more than economists projected in June, according to data released Tuesday, adding to signs that the housing market is abruptly unraveling pandemic-era gains as experts start to worry the downturn could spill over into the broader economy—potentially even triggering a recession. Key Facts About 590,000 new single-family houses were sold last month on a seasonally adjusted annual basis, plunging 8% below the May rate of 642,000 and falling sharply below analyst projections of 660,000, the Census Department reported on Tuesday. Plunging demand has started to hit prices hard: The median sales price of new homes plunged to $402,400 last month from $449,000 in May—the lowest level since June 2021 after a record high $457,000 in April. Meanwhile, the number of new houses for sale jumped by 17,000 to an estimated 457,000—reflecting about eight months of current sales, or the biggest glut since late 2010, notes Pantheon Macro chief economist Ian Shepherdson, blaming the plunging demand for a recent surge in inventories. “The housing slump is deepening, fast,” says Shepherdson, noting new home sales fell at a 61% annualized rate in the second quarter and adding the sustained plunge in mortgage applications over the past few months means the latest reading “will not be the bottom.” Illustrating the housing market’s gloomy outlook, Atlanta home construction company PulteGroup on Tuesday reported new orders in the second quarter fell 23% from last year as higher mortgage rates, reduced affordability and lower consumer confidence contributed to lower demand and resulted in an increased number of previous buyers canceling their contracts. The data comes only a week after the National Association of Home Builders revealed home builder confidence plunged to a two-year low in July as high inflation and supply chain constraints prompted many builders to halt construction on homes. Key Background Home buying demand skyrocketed during the pandemic as interest rates collapsed and an influx of Americans started working from home. However, the Federal Reserve’s interest rate hikes have quickly spurred a reversal since March, and some experts worry about the broader economic implications. In a note to clients last week, Bank of America economist Michael Gapen downgraded his economic forecast as a result of the steeper-than-expected housing market decline, saying gross domestic product likely shrank 1.5% last quarter. Crucial Quote “The sellers’ market of the early spring became a buyers’ market more or less overnight, as large numbers of potential purchasers had their spending power dramatically reduced—or were pushed out of the market altogether—by the surge in mortgage rates,” says Shepherdson. Tangent Mortgage rates, which have risen to about 6% since the Fed started raising rates, were about 2.5 percentage points higher in June than they were one year prior, reducing home-buying power by $123,500 when keeping household income constant, estimates First Financial chief economist Mark Fleming. Chief Critic “For the last seven straight months it has been going down, and this is a huge drop,” NAHB CEO Jerry Howard said on Fox News last week. “I think all it says is, ‘Somebody do something or we’re going to go into a recession.’” Further Reading Housing Market ‘Meltdown’ Intensifies: Home Builders Halt Construction As Confidence Plunges To Two-Year Low (Forbes) Forbes Media LLC Document FBCOM00020220726ei7q0012z

This Covid fraud: how bounce back loans paid for cars, watches and even porn Jasper Jolly and Kalyeena Makortoff Mon, 6 June 2022, 6:00 am When Keith Hamblett, a fruit and vegetable seller from Tyne and Wear, asked his bank for a government-backed loan in the autumn of 2020, the economy was still in trouble after lockdowns, and coronavirus cases were rising. The Covid bounce back loan scheme was a welcome relief for many smaller companies, and Hamblett received £28,000. But there was a problem: he had ceased trading, meaning he was not eligible for the support. Then, contrary to the terms, he withdrew £10,000, spending £2,400 on a luxury watch and the remainder on his own living costs. He then filed a bankruptcy petition with liabilities of £61,692. These details have emerged via an Insolvency Service register of disqualified directors, which is publicising new cases of fraud, misrepresentation, error or misuse each week. Other cases – flagged by the insolvency firm Real Business Rescue – include directors who spent tens of thousands on a Range Rover, a jetski, buy-to-let property, flying lessons and even pornographic websites. Details from the Insolvency Service register of disqualified directors show loans were spent on Range Rovers and other luxury items. Photograph: Manfred Schmid/Getty Images Britain’s already overloaded courts system is bracing itself. A wave of Covid loan fraud cases is already hitting, as law enforcement agencies start to bring the perpetrators to book. Government accountants estimate nearly £5bn was wrongly claimed. MPs, campaigners and those involved in the law enforcement effort are worried. They have told the Guardian that efforts to recover the money are underfunded. They say government agencies have asked ministers for more cash, but it has been refused. And they worry that even if budgets were increased, years of cost-cutting means there just are not enough officers with the skills and training to pursue white-collar crime. There is evidence ministers have turned down requests by law enforcement for more resources. The National Investigation Service (Natis), a Kent-based body little-known even in anti-corruption circles, was given the massive job of investigating bounce back loan fraud in the summer of 2020. However, buried in a National Audit Office report published in December was the revelation that the government rejected Natis’s request for £39m over three years, instead giving it only £6m. The decision was baffling, said the NAO, given the government’s own statement that for each £1 invested, Natis would recover £8 for the taxpayer. “The Treasury wouldn’t cough up any more money for it,” a person involved in funding conversations said. Launched in April 2020, the bounce back scheme was one of Rishi Sunak’s biggest interventions during the first months of the pandemic, as the chancellor attempted to firewall the economy. During the nearly 11 months it operated, the scheme handed out £47bn. The cash was distributed by 28 high street banks and other lenders, with applicants able to borrow up to £50,000 each. The chancellor, Rishi Sunak, pictured on the day the bounce back loans scheme was launched. Photograph: Dominic Lipinski/PA The loans were underwritten by the taxpayer, which means the Treasury will refund banks if borrowers default. The money was intended to help company owners keep their businesses going, and could only be granted if the borrower was a going concern. But billions were wasted – claimed by businesses that had already gone under, or by criminals who had no legitimate business at all. Natis is thought to be drowning under huge caseloads. It received more than 2,100 intelligence reports by October 2021, but only had capacity to pursue a maximum of 50 cases a year. Synectics Solutions, a fraud data company, was granted access to loan application information for two unnamed major bounce back lending banks. It found 45% of applications were for businesses that showed no evidence of trading at all, before or after March 2020. In 6% of cases there was evidence that raised “concerns the money may be siphoned off to the other companies”. Enforcement also suffers from a hugely fragmented approach, meaning it is often not clear who is responsible for investigating crimes. There are at least 16 agencies across government responsible for countering fraud, not including police forces. Local and regional police, the National Crime Agency, Natis and the Insolvency Service have all been involved in arrests. After the Treasury minister Lord Agnew resigned in protest at the lack of action on fraud, Sunak bowed to pressure in March by creating the Public Sector Fraud Authority – with £25m of new money. The funding has been welcomed, although the body’s “data analytics experts and economic crime investigators” are expected to help existing agencies, rather than launch their own prosecutions. They will not start until July, more than two years after the bounce back scheme started. Meanwhile, the cases keep coming. Deniz Atay, of north-west London, secured a £50,000 loan in October 2020, according to the Insolvency Service, despite his business having ceased to trade. He used some of the money to buy two vehicles that he later sold. Graeme Cameron, of Nottinghamshire, who ran The Milestone pub, used most of a £20,000 bounce back loan for his own purposes, before going back in March 2021 for another “top-up” loan of £25,000 after he had ceased trading. Again, he spent the money on personal expenses. Nathan Hill, of Exeter, obtained £50,000 using turnover figures for his business, Troopa Courier Services, that he could not back up with evidence. He used the majority of the £50,000 loan in June 2020 for personal spending, including on gambling, as well as transferring cash to other people. None of the individuals disqualified responded to requests for comment. Ministers will be watching one case with particular attention: Tarek Namouz, a 42-year-old former pub landlord from London, appeared in court last month accused of sending thousands of pounds in bounce back loans to fund the terrorist group Islamic State in Syria. A case management hearing is scheduled for July. Susan Hawley, the executive director of campaign group Spotlight on Corruption, said: “The same skills you need for tackling corruption and fraud have been decimated through the years. No one’s bleeding, or shouting. You can’t have an immediate response to it. Fraud is always being deprioritised as a low-harm issue.” Spotlight on Corruption is pushing for more transparency, taking the British Business Bank (BBB), the semi-independent body that administered the scheme on behalf of the government, to a tribunal to try to compel it to release the names of all borrowers. The bank has so far refused, saying it would harm commercial interests. Agnew has agreed to appear as a witness at the tribunal, which is expected to issue a ruling later this year. “This mishandling is going to remain in the public domain for years, with anyone associated with it shredded by a thousand humiliations,” he told guests at an anti-fraud event in Westminster last month. “Someone with some courage in government needs to do the right thing and open up the data. It will force the pace and make things happen.” Some blame the banks, saying they were too lax in their checks on borrowers, and are not spending enough on recovering lost funds – simply drawing on the 100% government guarantee instead. Lord Agnew announces his resignation as Treasury minister in the Lords in January. Photograph: PA Agnew recently launched a public attack on Starling Bank, claiming the lender did not run adequate checks and used the scheme as an opportunity to grow its loan book and, in turn, its valuation. By June 2021, it had distributed £1.6bn of bounce back loans. The bank’s chief executive, Anne Boden, said she was “shocked” by Agnew’s comments, and asked him to withdraw his statements. Boden said Starling had been open and transparent about its approach to bounce back loans and was one of the “most active and effective banks fighting fraud”. The exploitation of the bounce back loans comes on top of the estimated £5.5bn of Covid supported funds to have been lost to fraud or error, including furlough, the self-employment income support scheme and Sunak’s eat out to help out package for hospitality. A government spokesman said it had stopped nearly £3bn in potential fraud on Covid schemes, adding: “Our £400bn Covid support schemes were implemented at unprecedented speed and protected millions of jobs and businesses at the height of the pandemic. “We’re cracking down on anyone who sought to defraud our schemes and bringing them to justice.” For Meg Hillier, the Labour MP who heads the Commons public accounts committee, chasing fraud is worth the investment not only in order to claw back money, but also for a “deterrent effect” – making gangs think twice before targeting future government schemes. It is, she said, “a good way of spending taxpayer money”.

Story relates to US but it will follow over here -always does. 20% of home sellers slashed list price in last 4 weeks: Redfin Spencer Lee, National Mortgage News Online Spencer Lee, 27 May 2022, 495 words, English, NMNWO, © 2022 Arizent. All rights reserved. 495 words, English, NMNWO, © 2022 Arizent. All rights reserved. Print Listen Translate A growing number of home sellers are lowering prices, a potential signal of easing housing costs after record-setting growth, according to Redfin. Some of the hottest markets over the past year are now seeing the greatest shares of reductions. Nearly one in five, or 19.1%, of sellers across the U.S. dropped prices over the four-week period ending May 22, the highest percentage since October 2019, according to the real estate brokerage. Other metrics tracking buyer demand, including time on the market and the share of properties sold above list price, have also leveled off, Redfin reported. “The picture of a softening housing market is becoming more clear, especially to home sellers who are increasingly turning to price drops as buyers become more cost-conscious under higher mortgage rates,” said Redfin Chief Economist Daryl Fairweather in a press release. Metropolitan areas that saw a surge of new incoming residents who drove up housing demand over the past two years are among the markets with the highest percentage of price drops in the last month. Boise, Idaho, which saw a 62% surge in housing costs over two years, led the U.S. in share of price reductions in April, with 41% of its sellers lowering asking prices. Several other popular cities for relocation, including Atlanta, Phoenix, San Antonio and Tampa, Florida, also saw more than 20% of sellers adjust prices downward. “When mortgage rates were at or below 3%, both local and out-of-town homebuyers were more willing and able to tolerate high prices, but at 5%, many are now priced out,” Fairweather said. Freddie Mac’s benchmark 30-year interest rate has jumped almost 2 percentage points since the end of 2021 and currently averages 5.1%. In second place behind Boise was Cape Coral, Florida, where 33% of property sellers dropped prices. Rounding out the top five were New Orleans at 32%, Baton Rouge, Louisiana with 31% and Sacramento, California at 30%. Despite indications that the housing market looks to be approaching the end of its prolonged upswing, costs still remained elevated in the four-week period from mid April to mid May compared to a year ago, Redfin said. The median home sale price came in at $400,000, 16% higher on a year-over-year basis, while the median asking price also climbed 17.8% to a record of $418,000. Along with Redfin’s research, data from several other organizations also suggests the combined forces of high costs and rising interest rates have left a clear dent in home buying demand. Purchase originations are down by over 16% year over year, not far off its level in early 2020, according to the Mortgage Bankers Association. The MBA also recently revised its forecast for 2022 purchase originations downward. Pending sales fell in April for a sixth straight month, according to the National Association of Realtors. Arizent Document NMNWO00020220527ei5r0008d

Breaking News - Sue Gray found dead in the woods with a noose around her neck.

Yeah, funny how the press don't put it like that. Mind you the quote was from Landlordworks so what do you expect.

Story in the Independent today 44% of landlords ‘have supported tenants financially in past year’ More than two in five (44%) landlords say they have supported tenants financially in the past year, such as by reducing or pausing rent, a survey has found. Nearly three-quarters (74%) of landlords said they feel a responsibility to help their tenants during times of financial hardship, according to the research from The Landlord Works, which helps landlords to manage their property portfolios. Nearly half (45%) of landlords said any rent reduction would harm them financially. Around four in 10 (38%) said they intend to keep rents the same for the next year despite the financial challenges, but more than half (55%) said they will need to increase rents over the next 12 months. One in four (25%) landlords plan to increase rents on all their properties. While we will see rents rise over the coming months in many cases, we can also expect landlords to offer continued support Paul Wootton, The Landlord Works Landlords using their rental properties to offset their mortgage costs are particularly likely to be planning to raise rents, with nearly two-thirds (63%) planning an increase. More than half (57%) of landlords are concerned about whether their tenants can maintain their rental payments, with more than one in 10 (13%) saying they are very concerned, the survey of more than 700 landlords across the UK found. Paul Wootton, director of The Landlord Works, which is partner brand to The Mortgage Works, Nationwide Building Society’s buy-to-let lender, said: “Landlords are facing a real dilemma at the moment in dealing with the continued rising cost of living. “On the one hand, there is a need to ensure they can cover the increasing costs associated with their properties and ensure they are following the market. However, as our research demonstrates, they are also acutely aware of the financial challenges facing their tenants. “It’s great to see such a high proportion of landlords feel a sense of responsibility towards supporting these tenants during these challenging times. “And in a lot of cases, this sentiment has been met by financial support for their tenants over the last 12 months. “While we will see rents rise over the coming months in many cases, we can also expect landlords to offer continued support at what is a tough time for many.”

Same around Dunstable, I think it's where all the £50k Pandemic business support cash went to.

It's the next financial scandal that the FCA didn't see coming. In a couple of years time all the daytime TV ads will be for solicitors trying get back your money for 'mis-selling' these products.

My wife's uncle had an old farmhouse in Italy that was derelict and he renovated it. He got told which builders merchants he had to buy materials from in no uncertain terms. If he used any others the farmhouse would be burned down. Seems fair enough to me.

Less cash left after paying mortgage and bills = less discretionary spending.

We can chop them down to burn to keep warm next winter, as we can't afford gas anymore.

It sure is.

To me, it's a very Bearish signal, seems like the house builders are struggling to shift enough houses so are lobbying to get the lending restrictions relaxed. Is the BOE going to go ahead with this or just floating the idea? Are they then going to raise interest rates on top of that? seems that raising rates is against this plan so none of it makes sense to me.

US based news, but that's what happened last time Many delinquent borrowers in loss mitigation aren’t paying Andrew Martinez, National Mortgage News Online Andrew Martinez, 28 February 2022, 453 words, English, NMNWO, © 2022 Arizent. All rights reserved. 453 words, English, NMNWO, © 2022 Arizent. All rights reserved. Print Listen Translate Hundreds of thousands of borrowers more than 90 days delinquent and in loss mitigation plans aren’t paying, a new study reveals. Across all investors, 964,464 mortgages remain seriously delinquent and not in forbearance, with 49% in loss mitigation plans as of Feb. 7, the Federal Reserve Bank of Philadelphia’s Consumer Finance Institute said. Of those 474,071 borrowers in loss mitigation, 72% aren’t paying, according to data compiled from Black Knight and the RADAR Group. The figures come as foreclosure activity begins to rise, with an estimated 56,000 foreclosure starts in January, the report said. (January filings related to foreclosure were up 29% from the month before according to a separate report by Attom Data.) Of the 53 million active loans held by investors, 707,104 remain in forbearance, with a combined $136 billion in unpaid balances. The report comes after the Consumer Financial Protection Bureau’s COVID-related borrower protections for preventing immediate foreclosure proceedings ended Dec. 31. “Since most of these [forbearance] plans will expire in the next five months and protections against foreclosure expired on January 1, we are at a critical phase in this last stage of the housing market recovery from the pandemic,” the report stated. Minority and low-income borrowers were most in distress, with 7.9% of Black borrowers in some past-due state, the highest share of any demographic, according to the Fed, which used still-confidential data from the Home Mortgage Disclosure Act. The figure underscores the fact that Black borrowers are repeatedly disadvantaged in the homeownership process. Non-Hispanic non-whites (5.5%) were the next highest group in some past-due state, followed by Hispanics of any race (5.4%) and non-Hispanic white borrowers (3.4%). Mortgages originated with borrowers in the lowest quartile of income had the highest rate in some past due state with 5.4%. Private label MBS loans also had an 11.7% share of mortgages in some past due state, the most among investor types. The Federal Housing Administration and Veterans Affairs held the most loans that were 90 days or more past due and not in forbearance (400,264) among investors, according to the Fed. Of their 248,756 borrowers seriously delinquent, not in forbearance and in loss mitigation, 79% aren’t paying, the highest rate among investor portfolios. Fannie Mae and Freddie Mac had the lowest share of borrowers in loss mitigation not paying, accounting for 53% of its 148,165 seriously delinquent mortgages not in forbearance. Borrowers with private label MBS and portfolio mortgages in the same status had non-paying rates of 76% and 71%, respectively. Arizent Document NMNWO00020220228ei2s0002t

That's pretty good advice on any day, not just today.