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Confounded

Hbos Share Of U.k Mortgage Market To Half

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Is this a clear sign of credit tightening?

http://www.bloomberg.com/apps/news?pid=206...&refer=home

"June 12 (Bloomberg) -- HBOS Plc, Britain's biggest mortgage bank, said its share of the U.K. home-loan market will fall by half in the first six months of the year as it struggles to maintain profit margins."

"Lending margins will decline this year from 1.78 percent last year, the Edinburgh-based bank said, as peers including Barclays Plc and Nationwide Building Society compete to win mortgage customers with lower interest rates.

``The volume of new mortgage business in the first quarter is surprisingly low,'' said Simon Willis, a London-based analyst at NCB Stockbrokers said. ``They are meeting overall market consensus, but that is about as much you can say on the positive side.'' "

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``The volume of new mortgage business in the first quarter is surprisingly low,'' said Simon Willis, a London-based analyst at NCB Stockbrokers said.

So HPI continues apace, but on weaker and weaker transaction volumes. Sounds a lot like the NASDAQ in 2000 to me...

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So HPI continues apace, but on weaker and weaker transaction volumes. Sounds a lot like the NASDAQ in 2000 to me...

A 'climactic high', as Doug Casey would call it. We'll buy at the 'climactic bottom'. ;)

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Read that as well and thought it should be posted. Another canary in the coal mine. And, of course surprise, surprise.

This is quite a significant Canary that has managed to detect the noxious gas and it rattling the bars on the cage trying to get out. :rolleyes:

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what I wrote elsewhere:

HBOS results this morning.

They showed lending conditions continue to get loosened as the more aggressive players are takings a bigger market share.

This will clearly alarm the BoE but in the short term, it is getting easier to get a mortgage.

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what I wrote elsewhere:

HBOS results this morning.

They showed lending conditions continue to get loosened as the more aggressive players are takings a bigger market share.

This will clearly alarm the BoE but in the short term, it is getting easier to get a mortgage.

Having just read the Bloomberg Version 5 currently published it is painting more of a story of not being competitive and making a misjudgment, as you state, but you could still interpret this as intentional. It does not take a genius to realise if your rates are higher than the competitors then you are going to loose business. Seems amazing they have allowed it to impact their business to this level before "realising".

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what I wrote elsewhere:

HBOS results this morning.

They showed lending conditions continue to get loosened as the more aggressive players are takings a bigger market share.

This will clearly alarm the BoE but in the short term, it is getting easier to get a mortgage.

Banks are getting desperate to find a home for all that lovely M4 money growth magiced out of thin air, hence lax lending conditions are still prevailing.

The large bank that my missus has an account with sends her (unasked) mailshots almost every week with pre-approved credit card cheques for up to £15,000. Obviously, they go straight into the shredder.

The other day she got a letter stating she had been "pre-approved" for a £25K loan. This went into the shredder too. They then rang her on our homephone number at 7.45pm last night, expressing "concern" that she hadn't responded and wanting to make sure all was alright. They tried to push the "pre-approved" loan for about 10 minutes until she told them in no uncertain terms where to stick the pre-approval! :lol:

The cheeky bastards then rang our home phone again today whilst we were at work. It was a different caller, and he left a message stating "This is not a sales or marketing call. We need to speak to you about your account. Please call me on 0845..." As it was an 0845 number, she didn't ring them (why should they profit out of you contacting them at their request?).

The same guy then rang her mobile, and, you guessed it, needed to speak to her urgently about a "pre-approved" loan she was eligible for...... :angry:

Scum. Utter scum.

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The same guy then rang her mobile, and, you guessed it, needed to speak to her urgently about a "pre-approved" loan she was eligible for...... :angry:

Scum. Utter scum.

Banks are no longer banks (in fact I'm suprised they are still able to use the term "bank" in their name).

They are merely supermarkets for stuffing cash and other services down people's throats. Especially since they were able to securitize their loan books and get it off the balance sheet and shuffle the risk around other financial institutions (allegedly).

If you saw that BBC "Whistleblower" programme. "Bank" staff are under incredible pressure to produce results and its very performance related now.

In that TV programme they turned an old boy who just wanted to borrow a small amount of cash for a bed. They turned him down for the loan and tried to sell him contents insurance instead. Cos thats in the job description. They would have been disciplined if they hadn't tried.

We supposedly have an FSA in the country, but I think it fell asleep a long while ago.

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For once I think that this is an example of a bank doing absolutley the right thing. Pricing aggressively to keep existing customers loyal (who will be more creditworthy) and pricing high to drive away FTB/BTL (who will be less creditworthy). I think HBOS should have handled the announcement much more positively - because it will be very good for shareholders in the long run.

Warren Buffet frequently talks about the insurance/reinsurance business which Berkley Hathaway is in. He says they do not mind making an occassional loss due to freak weather as long as they can charge fat premiums that will generate healthy long run profits. He says that when insurance rates collapse because far too much capital is chasing the market then they pull back and deliberatley lose market share because thay do not like charging premiums that only guarantee long term finacial losses.

Strikes me that HBOS is only doing what Warren Buffert would advise. Pull back from lending when risk premia get too low for the risk being taken. Perhaps HBOS found this out by accident and were genuinely surprised by the aggressive nature of the fight for market share that the competitors were waging.

Sometimes the stock market can react in the wrong way to news. Unfortunatley, many bank CEOs will now be even more loath to give up mortgage market share for the long run health of the business if this is the reaction they get.

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