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Sonic the Hedge Fund

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Everything posted by Sonic the Hedge Fund

  1. NW don't like brand new customers But 'members' can borrow up to 4.5X income 90% LTV They were quite disapointed when I told them I don't have a mortgage
  2. Yes this is realy quite simple, the Building Societies have indeed 'got a hold of a lot of money from somewhere on the cheap and need to offload it' All of the building societies have picked up tens of billions of saver's cash since the run on NR, and cash from savings deposits is now a far cheaper source of funding than the wholesale markets. And they do 'need to offload it'; after all they have to pay interest to their savers. But their are two important factors that will determine WHO they are willing/able to offload it to: 1) This is their member's cash, which by the rules of BS constitution they must invest carefully; so not only are they unwilling to lend to risky borrowers, they are not allowed to. 2) BS are awash with cheap funding (from retail deposits) so they can outbid other lenders by offering cheaper mortgage rates, in order to secure ONLY the mortagage customers with high credit quailty. In effect they are in a position to 'cream top' the mortgage market for the lowest risk lending. Which unsuprisingly, is exactly what they are doing. Most (all?) BS still use relatively low income multiples and detailed credit scoring when assesing mortage applications. This is in stark contrast with the loose 'affordabilty' tests used by the banks funded by the wholesale markets. IMO this headline deal does not therefore represent a loosening of credit at all; it marks a return to tradtional lending models - good deals for low risks Also, perhaps more important to consider what might happen to the mortgage banks that need wholesale funding, when a load of their lowest risk customers are poached by the BSs? They could be left holding all the toxic sub-prime sh1t, and not enough quality debt to dilute it so they can sell it on.
  3. This company suplies the clasic MEW purchases, double glazing & conservatories. Have they been 'credit crunched'? Or perhaps the sheeple have finaly woken up to the fact that 50% off products that are 300% overpriced is not a bargain after all.
  4. Time to dust off those old bass bins? The ones in my garage still have 'spiral tribe' stickers on them.... Best sell your house quick if you live in Caslemorton
  5. This is very, very significant IMO, out of interest, which bank? Why on earth would a bank do this? Unless, of course, they know that the security ( i.e. the houses) against a significant portion of their mortgage book is worth a lot less than they are owed, and want to hide this fact....bring the actual 'asset' on balance sheet at declared value, rather than letting the market find the true price..... just like all those SIV buybacks.
  6. Wife's freind told me that Abbey seem to be having lots of 'technical' problems with their ATMs and has not been able to get cash for some time She went into a branch near work to withdraw £50 and was astounded to be told that she was only allowed to withdraw cash from her account holding branch, but they gave in and handed over cash when she threatened to close the account
  7. Businesses simply cannot afford higher rents, IMO one of the main reasons why our high streets are full of 'carbon copy' chain stores - Indipendent businesses are just not sustainable with current rents. Clasic case of inflated assets strangling the real economy.
  8. I remeber a 90s 'Alex' cartoon along these lines: (tossing a coin to a beggar in the street) Alex: 'look poor Joe has fallen on hard times, lost his business and now his home' Mate: 'Yes, demand for his specialist skills has fallen in the recesion. I realy dont know how he is going to survive in the real world outside the city' Alex: 'Yes, I dont supose there is much call for salmon and avacado sadwiches outside the square mile!'
  9. Funny this because I vividly remeber a conversation I had with a family builder round about 1992, when house prices were falling off a cliff... I was taken aback when I asked him if his business had been hit by the recesion, becuase his answer was 'what recesion?'. Apparently he had never known such a busy time. His firm did extensions, loft conversions and suchlike, most of his clients said that they decided to extend rather than trade up, becuase trading up was too risky with prices falling.
  10. Its the old 'catching a falling sword' argument I don't see why buyers will jump in when they see prices falling M-o-M. 'Get on the ladder before you are priced out' rapidly turns into 'leave it a bit longer and you will get it cheaper' So buyers hold off, and sellers have to drop prices to tempt them back. Those who do choose to buy will demand big discounts, pushing the average sale price lower in a self sustaining cycle. Sentiment pumps the market both ways, and turning it is about as easy as an oil tanker. House prices only ever go down you know.....it's the new paradym
  11. Yep this is nothing new see here my prediction from september IMO the institutionals are the joker in the pack; the ultimate forced sellers! They have to liquidate large volumes within set timescales, and do not have the same emotional atachment as an individual BTL 'investor'. My guese is they will do what they need to do! The institutionals will dump like crazy while the BTL chase the market down. Would you agree FP? how did they behave in the last crash?
  12. I would expect at least one, if not all of the 'mortgage banks' (demutualised BS) to go under in the next year or so. Of course normaly banks are not allowed to go under, they get taken over. The powers that be just missed the boat with the LTSB offer for NR; I doubt they will make the same mistake again No, I very much doubt it. I wont profess to be an expert, but my best guess is that they needed to attract savers deposits in order to maintain their minimum funding ratios against a rapidly growing mortgage book. They could possibly even afford to run savings at a loss, making this up with good margins over (cheap) wholesale funding. Of course wholesale funding is no longer cheap! (if available at all!) Already happening IMO, very few savings rates have fallen in line with BoE base, and the best rates are being offered by banks that are short of real cash.
  13. the key question is, what is your neighbour's LTV? If he has a low LTV then Nationwide may be keen to hang on to him. A mortgage paid at a low rate is better than an unpaid mortgage at any rate. Nationwide are more or less unaffected by the credit crunch. They are 70% funded with retail deposits, and will get good rates even on the 30% wholesale portion due to their above average quality mortgage book.
  14. The Building Societies are already leading this charge. They are drowing in retail cash post NR, these deposits are (relatively speaking) a very cheap source of funding. The tables have turned on the mortgage market; conservative, deposit-funded BS can now underbid wholsale market 'ponies' by a significant margin on interest rate. So it's obvious that they will chase quailty as they can take their pick of the customers - a sellers market for quality mortgages if you like. This is a double whamy for banks that rely on wholesale funding. They not only loose market share as they cannot compete against BS funded with retail cash, but also find themselves with a reducing average quality on their mortgage book, which makes it even harder for them to secure competitive (if any) funding. And so on......
  15. Who cares? they can bitch all they want like the cold-turkey credit-junkies they are! If you take too much of a drug for too long, you become tolerant and it no longer has the same effect. The interest rate drug no longer works
  16. MEW, probably either because they have no other way of meeting repayments, or have no intention of repaying To MEW at this point of the cycle these LL must be either desperate or insane. So much for BTL keeping the market up!
  17. I actulay dispare at seeing all this sh1t in the shops! I don't have anything against the Chinese; good luck to em I say. But to think that we are now paying £1.15 for a litre of petrol, and £1.50 for a loaf of bread, mostly due to demand for oil from a Chinese ecconomy that churns out all this crap no one actualy needs!
  18. This is VERY interesting as I see it the Saudis have 3 choices: Ignoore the clerics (and risk a domestic backlash) Increase oil output (and loose vital tax revenue) Dump the Dollar (Bye bye USD)
  19. What about the govenment? do you think thet will stand by and suffer the political fallout of famlies being turfed out on the street? If they are prepared to spend £30Bn propping up jobs in a failed bank, then I cant see that they will bat an eyelid in using BTL Landlords as a conveinent scapegoat. BTL will be blamed for the property bubble, and screwed by tax raises and rent caps as part of the solution. After all most BTLs probably vote Tory, and most tenenants (all DSS tenanants?) will probably vote Labour. And by definition there are more tenants than landlords.
  20. Wow, what an impresive website! breaking news: Kirsty's candles to save the housing market! Not bad for a non 'non-entitiy with an ISP'
  21. As I remember it was these same 'non-entities' that first got housing in the political spotlight by hijacking WebCameron in a coordinated action So it seems that you owe your new advisory job to a bunch of 'non-entities' Mrs Allsop. But I do agree with you on one thing: This would never have happened if they hadn't given working men the vote. That bloody grocer's daughter with her 'market socialism', it will take years to undo.
  22. Most 'mortgage banks' (i.e. Demutualised BS) have a little trick: You must open a current account to qualifiy for the mortgage The small print says that the bank can collect funds from any account to pay the mortgage So if the mortgage is not paid, they simply take the 'money' from the current acount (even if there isn't any) and by a magic trick of creative accounting a mortgage default becomes an unauthorised overdraft.
  23. I know of at least one other company that is laying off for this same reason, and would expect any leveraged business to be under the same pressure. Banks are not just charging more interest, they are simply telling business that they want the money back - NOW. Leaving business with no alternative to aggressive cost cutting i.e. job losses. Of course in hindsight it will be claimed that the rise in unemployment was the trigger for the HPC, when the reality will be that the credt crunch caused both.
  24. Valid and interesting point at the end- 89 crash was casued by problems with OO's repaying mortgages; the current probmlem is much worse, buyers can't even get the mortgagaes they need to pay the inflated prices
  25. Interesting point, but it didn't work in japan. the government actualy gave away cash to stimulate the economy, but the shepple refused to spend, using the cash to save or pay off debt instead Again, did not work in Japan. Japanese savers just moved their savings overseas, a form of 'carry trade' which has depressed the currency, making imports more expensive, leading to a further fall in domestic consumption.
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