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Lloyds falls to a loss as it braces for mortgage defaults


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Same all around.

Santander today:

https://www.ft.com/content/c9c5df8d-1e11-4e76-8114-15e01473ffab

“I am sure they would have been resisting the writedown for a long time,” said former Santander UK chief financial officer Stephen Jones. “[But] the optimism that underpinned that goodwill value must have become unsustainable.

“Retail banking is a very highly regulated and competitive marketplace in the UK and the returns are not at all attractive. This doesn’t look like improving any time soon.”

Natwest (RBS as was) last week:

NatWest became the latest in a string of British banks to report a sharp jump in provisions to absorb an expected surge in bad debts due to the worsening outlook for the UK economy.

 

Same thing - heavily regulated i..e no more shysters of the last 30 years.

Strict rules on lending.

Low IRs, meaning theres f-all margin.

The only sane response is to start wihtd4rawing lending capacity, scale down their operations until 'things get better'

Set this chart to max

https://tradingeconomics.com/united-kingdom/mortgage-approvals

 

 

 

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19 minutes ago, Switch625 said:

And we all know that only one thing has driven the housing market for the last couple of decades and that has been consistent and easy access to cheap credit.

Looks like that game is over.

We can but hope.

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14 minutes ago, dougless said:

We can but hope.

Definitely hope that prices take a tumble over the next couple of years but I’m not reading too much into these bank write downs just now. They’ll be doing much the same as every big company (including mine) this year and getting rid of stuff on their balance sheet they really should have written off already. In the words of one of my bosses “If it’s going to be a bad year then let’s make it a terrible year“.

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13 minutes ago, PalmerEldritch said:

 “If it’s going to be a bad year then let’s make it a terrible year“.

100% this! I have done this myself a few times.

Also there’s an incentive to makes the figure actually look worse than what you report, so that you bake in an instant profit in the next quarter. 

I have seen loads of projects and audits put on hold due to “coco roro”. 

 

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1 hour ago, Switch625 said:

Now we only need our government to take the same sensible approach to the housing market.

It’s a no brainer, but unfortunately Sunak and so many others in the party are up to their necks in property so won’t do the sensible thing.

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4 hours ago, spyguy said:

Same all around.

Santander today:

https://www.ft.com/content/c9c5df8d-1e11-4e76-8114-15e01473ffab

“I am sure they would have been resisting the writedown for a long time,” said former Santander UK chief financial officer Stephen Jones. “[But] the optimism that underpinned that goodwill value must have become unsustainable.

“Retail banking is a very highly regulated and competitive marketplace in the UK and the returns are not at all attractive. This doesn’t look like improving any time soon.”

Natwest (RBS as was) last week:

NatWest became the latest in a string of British banks to report a sharp jump in provisions to absorb an expected surge in bad debts due to the worsening outlook for the UK economy.

 

Same thing - heavily regulated i..e no more shysters of the last 30 years.

Strict rules on lending.

Low IRs, meaning theres f-all margin.

The only sane response is to start wihtd4rawing lending capacity, scale down their operations until 'things get better'

Set this chart to max

https://tradingeconomics.com/united-kingdom/mortgage-approvals

 

 

 

I'm so glad Mark Carney was so vigilant. Otherwise we'd be f#cked.

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Huge provisions, yet will it be enough to weather the storm?

The share price says it all:

 

Lloyds -  down 50% over the year

Natwest - down 50% over the the year

 

 

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4 hours ago, PalmerEldritch said:

Definitely hope that prices take a tumble over the next couple of years but I’m not reading too much into these bank write downs just now. They’ll be doing much the same as every big company (including mine) this year and getting rid of stuff on their balance sheet they really should have written off already. In the words of one of my bosses “If it’s going to be a bad year then let’s make it a terrible year“.

Nope.

Banks are not the same MyCompany Inc.

Bank assets (loans) cannot be written off in the same way orgs goodwill or non performing contracts can.

Companies just update their accounts and, if still solvent, carry on a bug poorer n wiser.

3 rules of banking - dont lose the capital, dont lose the capital and dont lose the capital.

Each failed loan is a hit against the banks capital. Banks operate in such scary leverage that a few bad hits wipe them out.

 

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1 hour ago, Si1 said:

I'm so glad Mark Carney was so vigilant. Otherwise we'd be f#cked.

MMR has  saved what little reputation he had left.

Not that he devised MMR, just that MMR put a drag on Carneys daft ideas.

Carney was appointed as United Nations special envoy for climate action and finance as he prepared to step down as governor of the Bank of England in March 2020.[43] In January 2020, UK Prime Minister, Boris Johnson, appointed Carney to the position of finance advisor for the UK presidency of the COP26 United Nations Climate Change conference due to take place in Glasgow;[44] at that time the conference was scheduled for November 2020 but was later postponed to November 2021.[45]

 

Ok Mr Carney, global warming is bad. Why dont you go outside and wave this sheet of cardboard about, you know, cool the earth down.

That's right, run up n down waving it. Well save those Polar bears yet...

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2 hours ago, Si1 said:

I'm so glad Mark Carney was so vigilant. Otherwise we'd be f#cked.

Article in Thurs Telegraph about Carney encouraging post pandemic society to focus on humanitarianism rather than market values. He believes that the naton's collective wellbeing has been neglected, apparently. Overemphasis on the market has been bad for social values he reckons.

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22 minutes ago, rantnrave said:

Article in Thurs Telegraph about Carney encouraging post pandemic society to focus on humanitarianism rather than market values. He believes that the naton's collective wellbeing has been neglected, apparently. Overemphasis on the market has been bad for social values he reckons.

I never did "like" Carney.  I couldn't put my finger on it - but he struck me as being 'slimy'.

That said, I wonder if he's at least partly right... I don't think we can rely upon 'the markets' to predict investment returns.  Carney seems to be suggesting that philantrhocapitalism is about to have its day.  While I hope he is completely wrong - perhaps he isn't?  It is unpleasant to be exploited - but it's even more unpleasant to be exploited by someone who proclaims that they are doing you a great favour.

 

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31 minutes ago, rantnrave said:

Article in Thurs Telegraph about Carney encouraging post pandemic society to focus on humanitarianism rather than market values. He believes that the naton's collective wellbeing has been neglected, apparently. Overemphasis on the market has been bad for social values he reckons.

In short, he cant get another job.

 

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3 minutes ago, A.steve said:

I never did "like" Carney.  I couldn't put my finger on it - but he struck me as being 'slimy'.

That said, I wonder if he's at least partly right... I don't think we can rely upon 'the markets' to predict investment returns.  Carney seems to be suggesting that philantrhocapitalism is about to have its day.  While I hope he is completely wrong - perhaps he isn't?  It is unpleasant to be exploited - but it's even more unpleasant to be exploited by someone who proclaims that they are doing you a great favour.

 

Goldman Sachs, of 90s 00s heritage.

Dont touch with a barge pole.

Bit like putting an 'ex's CCP member in your intelligence agency.

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8 hours ago, Martin_JD said:

anecdotal from my mortgage broker who has been in the game 20 years suggests a surge in approvals when the data for July is in.

20 years sounds good. However, thats only 2000.

He *wants* a surge of approvals as hell be on commission.

Its unlikely he'll get them.

Mortgage brokers tend to deal with the more 'specialist' end of mortgages, people the bank long gave up dealing with,. just so theres no come back.

These are the *exact* people the banks will be reluctant to lend to.

There might be a surge when covid settles down. Until then, I can see the banks sitting on their money. However, by that time Id guess the mortgage broker will be broke.

 

 

 

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5 minutes ago, spyguy said:

20 years sounds good. However, thats only 2000.

He *wants* a surge of approvals as hell be on commission.

Its unlikely he'll get them.

Mortgage brokers tend to deal with the more 'specialist' end of mortgages, people the bank long gave up dealing with,. just so theres no come back.

These are the *exact* people the banks will be reluctant to lend to.

There might be a surge when covid settles down. Until then, I can see the banks sitting on their money. However, by that time Id guess the mortgage broker will be broke.

 

 

 

You are correct in that he does deal with specialist/edge cases.  Anyway said he's had double the amount go through this month in comparison to what he usually does, it's been his best month ever. 

A tiny sample size i grant you, but will be interesting to see how this is just a short spike or if the stamp duty holiday does encourage more activity over the next few months.  I think it might do.

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1 hour ago, Martin_JD said:

You are correct in that he does deal with specialist/edge cases.  Anyway said he's had double the amount go through this month in comparison to what he usually does, it's been his best month ever. 

A tiny sample size i grant you, but will be interesting to see how this is just a short spike or if the stamp duty holiday does encourage more activity over the next few months.  I think it might do.

The stamp duty will encourage a lot of activity - anything property boosting and 80% of ukpop jump on it.

However, theyll all be met with 'Computer says No'

 

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My question is... How many people out there have provisions to absorb for instance a 5% rise in interest rates? 

My sister is an accountant and before she bought her first home she priced in a significant affordability buffer in a worst case scenario of up to a 10% rise in interest rates.

I wonder how many peoples minds this actually crossed when they took out their mortgage

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  • 417 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
      • up 2.5%
      • up 5%



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