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Sonic the Hedge Fund

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Everything posted by Sonic the Hedge Fund

  1. Seriously, it seems like the credit scoring system has turned on it's head in the last few months. A pile of previous credit no longer seems to enhance your credit score. Banks used to be quite happy to play pass-the-parcel with 'revolvers' (people who pass debts from one lender to another, borrowing ever more to avoid default) but it seems that now the music has stopped. IMO the fact that the bank considers you a good risk (minimum borrowings, zero defaults) marks a return to prudent principals. Lenders used 'affordability' until recently, so any return to fixed income multiples is indeed a cutback, and 4.5x is a lot lower than the 5 or 6 times multiples aviable until recently. Don't forget that LTV is based on the lender's valuation, not the vendor's. What is the interest rate?
  2. Thanks for another great post EDM Just out of interest, what overall effect do you think all this will have on currency? I take this as a defationary stance, would you agree?
  3. A big slump in retail sales and the general crisis in consumer confidence has been all over the news. In addition to all the anecdotals on HPC the Nationwide reports that consumer confidence is at the lowest level since 1995. It strikes me that this is yet another factor that draws a parallel with the 1930s depression. Back then governments and banks tried desperately to restart the boom by injecting more cash. But the intervention didn't work, because the sheeple had been spooked by the market failures and were terrified of what the future might hold. So they just didn't want to spend. As the crazy days of the 1920s drew to a close, people of all classes tightened their belts and prepared for the worst. This caused a big a downturn in consumption and demand for goods and raw materials, which in turn led to business failures, job losses and even falling wages. So just like the recent rampant HPI, fears became a self-fulfilling prophecy. IMO unless the sheeple start spending again very soon, we are heading for a deflationary depression -100% Guaranteed And just like then, house prices will plummet. I should know, my Great Grandfather sold this for £1400 in 1927
  4. Or perhaps not Perhaps somone is playing games in order to manipulate the average price stats?
  5. This is very true Institutions with large piles of retail funding (i.e. Building Societies) are already targeting the lower risk, lower premium business. Banks who depend on wholesale funding cannot compete on rates. IMO the wholesale markets will soon completely die, as they depend on a supply of quality debt to dilute and support the sub-prime sh1t.
  6. The shift to alternate retail channels away from shops has a direct impact on the commercial property market and all the depedent service jobs. So it's still significant IMO, even if it's not the most usefull economic barometer. For my 2p worth, I thought nearly all the shops seemed positively desperate when I went out at the weekend. Shop assistants over-helpfull and a bit pushy too; not used to this recently!
  7. We are smug becuase even with VIs the argument is no longer: will prices drop? But now: how much will prices drop? When people start nitpicking about details, you know it's becuase they have lost the main argument
  8. Yes, I agree you are right. So it's a good job that real world IRs are now set by the market, and not that bunch of jokers at the the MPC
  9. And Nationwide have not forgoten this Try and get a mortagage out of them. To get the best rates, you have to be a member and save for 3 years first.
  10. This deserves a thread of it's own YK As many have said before when 'the Sun sez' then its all over!!
  11. I was in Nationwide today, the bloke told me that they are having a big push on mortgages because they have taken in so much cash and they need to make it pay!. They are aggresivley targeting prime customers (low LTV etc) with competitive rates, taking back a lot of the buisness that they have lost over the last few years. This could have a wider impact on other banks and the whoesale market. The principal of structured credit is to mix different levels of risk to acheive a balance, but now the least risky borrowers are being hoovered up by the B/Ss, concetrating the highest risk borowing in the rest of the market.
  12. Same in my area, volumes have tanked. Try hometrack for a comparison
  13. Interesting response to the rate cut from the previously very bullish beeb http://news.bbc.co.uk/1/hi/business/6272980.stm the main points: Most mortgage rates will not go down Savers will probably still get good rates, becuase banks are desperate for their cash Will this help the housing market? - 'probably not'
  14. LIBOR has already detached from base LIBOR has increased shaply due to banks applying a 'risk premium' to their interbank offers. The BoE rate cut has not decreased risk
  15. Savings are still the cheapest way for banks to raise the cash that many banks now desperatly need. The interbank market is locked up due to percieved risk, not interest rates. If anything the BoE cut will simply increase the divergence of LIBOR from base, driving banks further towards attracting savers. Banks are now aggressivley competing for savings with headline grabbing rates, why should the BoE rate cut change anything?
  16. I just had a very similar conversation. These individauls are about to learn the difference between base and market rates, the hard way. IMO this will be the final and biggest nail in the coffin of sentiment, when all these OOs finaly wake up to the fact that base rate is now irrelivent, that their final hope of a lifeline from the BoE was just wishfull thinking.
  17. She was obviously waiting until she had offloaded all those 'luxury apartments' that used to be her factory: http://www.propertyfinder.com/cgi-bin/rsea...mp;id=501862542
  18. I agree N/W have actively persued a policy of targeting the most prime end of the mortgage market, giving very competitve deals to the least risky borowers. N/W also quite deliberatley conceded market share (to NR and their ilk) in return for quality. In the good old days you had prove your fiscal prudence by saving a deposit with any B/S before they would give you a loan, post credit crunch N/W seem to be heading back towards such principals. Competitive mortgage deals are disapearing by the day, a situation that can only get worse as the market slides. If you want to be poised to pick up some bargains in a few years time, it would not hurt to get a pile of cash in the N/W now, just to build up your credit score with the institiution.
  19. As sensible as this idea is, it would take years to impliment Taking the fuse out of a lamp column on the other hand, takes just a few seconds. One man could do a whole street in an hour.
  20. And herin lies the 'quick fix' emergency energy saving solution, just TURN OFF all the street lights, advertising signs etc. Gigawatts of demand could be shed in a matter of days Not forgeting all those milions of lights on the London Underground that burn 24/7, 'cos there isn't even a switch to turn them off.....
  21. This has already been the case in the USA. Developers have slashed sales prices to stay solvent by increasing volumes against tighter margins, hoovering up the dwidling pool of buyers at the expence of the wider housing market.
  22. I agree Political complacency in a rapidly changing world should not be confused with conspiracy
  23. good point And how about tax credits? there are lots of single mums etc. working just a few hours a week while basicaly living off benefits: tax credits, housing benefit, free school meals etc. In the last downturn these people would have been classed as unemployed, probably working 'on the black' while signing on. Tax credits have simply legalised what was previously classed as benefit fraud.
  24. This is all true, up until exchange of contracts. As my solictor explained it to me, the contract is a legaly binding obligation to complete the deal, if either party pulls out after exhachage the other party can sue for punative damages, including all consequential losses such as alternative housing, furniture storage etc. In theory consequential losses could even include loss of value, if the vendor is subsequently forced to sell at a lower price than is offered by a purchaser who fails to complete after exchange. Market risk passes from vendor to buyer on the day of exchange, not completion. I once brought a house that took 1 year to complete after exchange (for reasons I won't bore you with) In this time prices had gone up about 20%, and the vendor wanted to reprice, but they couldn't back out of the deal becuase we had exchaged contracts with no time limit to completion. Incidently the delay was due to the vendor, before you all shout you scumbag! I think that the mortgage deal is also contractual from the day of exchange, the lender cannot withdraw the offer after exchange. However, if you have lied on the aplication or otherwise breached the terms, then they can simply foreclose, before they even issued the funds. So an honest applicant will not get caught out, but liars will get what they deserve. Of course I am not an expert, please don't take this as advice!
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