CharlieChuck

As the MPC are meeting I reckon it'll be another: NOW CUT INTEREST RATES

I lived in wantage/wastage for a bit when I was younger. It wasn't immune during the last crash, there were nominal falls of 10-15% even on the larger 1960's built areas. Although I live nowhere near know, I still know people there, the amount of new flats is staggering, and they are so close together I can't see anyone wanting to live there. Like a few other areas, I think the crash will happen slowly here, but it will happen. I can see flats falling the furthest and the quickest, I don't know how many of them have been sold as btl 'investments', but I guess we'll find out.

These figures won't include tax credits, which almost every family on average pay gets, I know they're not huge amounts paid but we're always going to have problems comparing things that happen 20years ago. What's really needed is a comparison of disposable income after food, taxes, transport etc, not including mortgage payments/Rent. I would guess it's a lot less now compared to the early 80's. regarding interest rates, the last 5 years have been a cheap credit blip that won't repeat, the long term average of rates is I think about 8%, in a year or so time Mortgage rates will be back up near that level.

Egg is owned by citibank, though it is covered by the FSA guarantee in the UK. Citibank's exposure to subprime has been well documented. It all depends what your happy with, the money will come under the guarantee it's wether you want to test that guarantee and wait if things go wrong. For what it's worth I moved all bar a few hundred quid out of egg and into a building society sometime last year.

It's not going to happen overnight, although it's happening a lot quicker than I and i think a lot of us imagined. The main tipping factor in people's sentiment will be recession, this is when the crash will really happen. Only when we start getting businesses going to the wall in large numbers, big job cuts and the difficulty in getting a new job will people turn against home ownership. MEWing seems have kept GDP positive recently, now the crunch has massively slowed down MEW, less will be spent and companies will start to struggle, but it will take months for this to turn into job losses, and house repossessions. The credit crunch will have a larger impact on people who've bought since 2003-4, btlers, or people who've mew'ed too much in the past few years. When someone who bought in 2000 loses their job, can't get another and starts to struggle, that's when no one will want to buy a house and we will see the largest drops. It's a bit of a depressing thought, wishing a recession on the country, but it's necessary to redress the balance, a lot of people are going to get hurt.

For bank A to lend that 10k to B, it must hold 1k in reserves (either shareholders funds or retained profits). The banks don't have enough reserves to lend anymore (due to writing off bad debts on existing loans), so it can't lend.

I wodner how much of this has been borrowed to pay mortgages with, or to pay the increase in mortgage by people being pushed onto a SVR.

If anyones interested, this website lists all the bunkers across britain. Most of them are derelict now or filled in, but it's surprising how many they were at one point. http://www.subbrit.org.uk/rsg/roc/index2.shtml I found this website a few years ago, can't remeber how I found it.

I may have slightly exagerated the distance, but if you were to drive to sheffield to get to work from there I reckon you'd spend between half an hour to an hour in the morning. Do you know what sort of people have bought these? The ironic thing is, when the reservoir was made, they flooded a town (compulsory purchased the houses and moved the residents to other parts of the area). Local people who have grown up in the area have little chance of affording anything to buy themselves. Now the old pumping house has been made into flats, and these appear to have been bought by btl investor types.

I know the area, I'm surprised any of them have sold at all. For anyone who doesn't know it's a reservoir in the middle of nowhere, very nice scenery, good walks (if you like that sort of thing) and a few quaint type villages nearby. It's about an hours drive to sheffield/manchester (though the road to manchester, snake pass, is closed most of winter). I don't know what type of person would buy there to live (or rent). It's just to far from any workplaces. I bet these were bought from some investment club type thing. Considering what £300,000 buys in most of derbyshire even at the height of ridiculous prices, there are some real muppets out there.

True, but I wouldn't have thought it would have skewed it that much. Northerns business plan over the past few years has been chasing new ftb and high ltv mortgages. I can remember looking at Alliance and Leicester and their average ltv was about 75%. What is really needed, but we're never going to see, is a breakdown by levels, ie £ 40bn at 80%, £ 30bn at 65% etc.

The accounts are on their website, here: http://companyinfo.northernrock.co.uk/down...nual_report.pdf Page 20 shows applegarths and the other directors pension entitlements. It looks as if he'll be entitled to a pension, and a massive one at that (looks like £304,000 a year). page 28 says the average indexed ltv of it's mortgages is 60%, I don't believe that, I wonder what indexing they're using to work it to that. If that is right, how many loans are for flats / or liar loans, they had a bit of a reputation for taking any old valuation and lending to any old scrote. page 44 loss 200m page 45 retained earnings now £1.2bn. If it loses more than 1.2bn while trying to get rid of the 100bn or so of mortgages it holds we (the taxpayer) get to pay the difference

I just caught this, she completely lost it, they might repeat it tonight between 5 and 6 when they do the weekly round up. It was a good one, not as good as the Test match special one from years ago, something along the lines of botham not being able to get his leg over. Back on topic, we'll be yoy negative next month. This is all happening a lot quicker than I thought it would (and loads quicker than the last crash), I'm starting to think a 30% reduction will only be the start of it.

I'll add my tuppence worth. I think it's whether the Boe short term loans are classed as increasing M4 or not Working it through, a bank issues a mortgage taking security on the house. This loan would have caused an increase in M4 as it got paid to the seller. The banks have been unable to securitise the debt because of the crunch. The bank of england has now effectively securitised the debt (albeit temporarily) by lending money to the bank and taking security of the debt/house. The bank now has an asset loan to the customer, cash borrowed from boe (in the form of a credit balance at the boe) and a liability to the boe to repay this cash/balance. This looks as if it should have increased M4. If it's termed a short term loan or overnight loans I guess they can (and are) ignore it from the M4 figures. In reality though we know they're going to roll it on and on. The banks haven't started to write off big balances yet, when they do M4 will drop. The number of new mortgages has fallen dramatically, which probably just offsets the natural reduction of each month by people paying off their mortgages, so no M4 increase there. Until the banks make enough profit to start writing off the bad debts they are holding, without hurting/breaching their basle requirements, the central banks will keep rolling these loans over. M4 will not drop until then. This might be completley wrong. [edit: typos etc.]

It hasn't been mentioned yet (I think) but Sainsbury's Bank is 50% owned by HBOS. They have a different FSA number than Bank of Scotland Plc. Whether they're both covered individually by the £35k or not I don't know.

There was something in one of the Sunday Papers a few weeks ago, regarding the FSA guarantee in relation to any other loans held. As I remember it, they would offset the mortgage/loan vs. any payout so it would reduce the loan. However the whole guarantee is untested and offset mortgage/current accounts are a whole new ball game. It would be interesting to read the terms and conditions of these.

My understanding was the tripartite (or whatever they call it) FSA, Bank of england and treasury deal with this. I can't see how the MPC can be involved unless it's an emergency rate cut.

I guess all their offshoots are covered by the same FSA number. I always thought HBOS were a lot bigger than Lloyds TSB, I can't see how they could take it over?

Are Intelligent Finance (IF) part of Hbos or RBS, I always get confused. I got about 20k there starting to worry now.

I've been as worried as everyone else on this. The problems as I see them are: 1. In the event of widescale failure of banks how long before you get the money back (could be years, might have missed the bottom of the house crash). 2. If many banks go down the rules could be changed, at the worst to a maximum of £35k per person across all banks and building societies. At the end of the day it's about political votes. How many taxpayers would want to bail out us STR's? There's a lot more voters without savings than there are with more than £35k of savings. 3. At the moment, by saving Northern rock, we have been given the impression that anything will be done to save a large enough bank/ building soc. What is the cut off limit in terms of size? How many will go down/get saved before they change the plan? I'm not risking smaller building societies. 4. NS&I, although guaranteed by the government, when banks start falling will they impose restrictions or change their terms? There's a lot of unanswered questions, the thing that most worries me is if they change the rules on the £35k limit. In some ways if you did buy a house now, and it loses 30% in value it's better than losing 50% of your cash by banks going pop, however I'm not buying untill prices are at the very least 2003 nominal levels again. We're in for a very interesting (and scarey) year or so.

I remember Mr Jolly very well, I am both old and sad enough. It was on paramount or some other channel the other week.

Nice find. The cost of this funding is an extra £150m a year, last years profits were £296mn with only half a years credit crunch in them. 2008 profit will be very skinny, it may well be a loss. Another interesting thing from this is they want to shrink their mortgage book by nearly £5bn (about 10%). With the wreck of northern rock also wanting to shrink it's mortgage book by a half, where are these mortgages going to go?

Alliance & Leicester's latest report http://www.alliance-leicester-group.co.uk/...f/PP1902084.pdf Page 11 is worth a laugh, Alliance and Leicester has No sub prime mortgages, no Near prime mortgages, no self cert mortgages and buy to let average ltv is 68%, maximum 85%. Presumably the 85% ignores gifted deposits / cashbacks that we saw in the panorama program. Page 25 shows breakdown of loan to values. Mortgages outstanding Residential 41.6bn, buy to let 0.6bn. They have 2.4bn shareholders funds, of which 1.8bn appears to be the equity equivalent to B&B for a similar amount of mortgages. A&L certainly seem to be stronger. A&L appear to have better mortgages than B&B (if their figures can be believed), however the main problem with A&L is funding by the money markets http://www.alliance-leicester-group.co.uk/...f/FR1902083.pdf Page 14 of above A&L is financed by 30.8bn deposits, 45.2bn wholesale funds of which 18.6bn has duration of less than 6 months. I don't understand why they hold so much in treasury investments, it could be because of the Girobank side to the company?

I'll try and find their latest accounts and do a similar thing, I'm at work at the moment though, so shouldn't really be doing this My opinion is, anyone offering a very good rate at the moment is only doing it because they need to and they're potentially in trouble. However the FSA have pretty much guaranteed any bank deposit, although until the guarantee is tested we don't know what will happen. My moneys in YBS, NS&I and sainsburys bank (which is HBOS).

In plain english, Tangible equity is profits retained from previous years trading. It's not cash, in effect it means if you broke the business up, sold assets for their book price and paid off all liabilities it's what would be left over. If they make losses of more than 1.1bn they would be technically insolvent. They have 40bn worth of mortgages outstanding. of which £23bn are buy to let, 8.5bn self cert, 7.7 bn standard and 'other specialist' and 1bn commercial. Losses of 1.1bn out of all this in the coming years looks pretty likely to me. their 'preliminary' results for 2007 are here: page 13 is the balance sheet, page 19 mortgage breakdown. http://www.bbg.co.uk/bbg/ir/news/releases/...2008-02-13a.pdf