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" The End Is Nigh"

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Wednesday February 27, 02:37 PM

The End Is Nigh...

By David Stevenson
Another day, another bank statement.
Thankfully we're nearing the backend of the bank reporting season. So, if you're fed up with hearing from all those lenders who have contrived to lose grillions while self righteously lecturing the rest of us on the need for belt tightening...relief is at hand!
Today HBOS (LSE: HBOS.L - news) (LSE: HBOS), the UK's biggest mortgage lender, admitted a 9% second-half profit fall after writing down...yes, you've guessed it...the valuation of its subprime investments.
And apparently, conditions in 2008 remain "uncertain"..../
But with a 15% share of net new mortgage lending in 2007, just down on 2006's 17%, HBOS has the biggest exposure to the UK's home loan market. Although Halifax is taking a cautious stance by not chasing after market share at the expense of profit, it does expect house prices to remain flat this year.
That sounds like a rather over-optimistic assessment.
Don't just take my view, look at what's been happening to housebuilders' share prices to see what the stock market thinks about residential property prospects in Britain. Not good.
As the credit crunch bites harder, HBOS is almost bound to feel the fallout as mortgage defaults rise.
Is the price factoring in all the bad news? Getting there, in my view, but not yet.
The shares have undershot the FTSE 100 index by over 35% over the last twelve months. On a trailing price to earnings ratio of 6 and a chunky 7.7% yield after today's 10% plunge, HBOS is cheap. Though as I've said several times before, the same applies to quite a lot of banks right now.
But with the risk of more lending shocks still out there, I'm content to watch and wait for the moment.

The banks are only just entering choppy seas and the storm is still brewing. There is a lot more poision to come hatching out of the mud yet.

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the big boys will survive and prosper thereafter.

one of the big four only just made it with major bail outs last time- this time its worse.

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  • 293 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% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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