Monday, Nov 06, 2006

All is not well

Guardian: Property boom builds on a swamp of debt

I am sensing a real shift in the way media are reporting house prices. After their attack on Abbey, the reports are increasingly pessimistic.

Posted by inbreda @ 09:42 AM (409 views)
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26 Comments

1. tyrellcorporation said...

I think you're right, a shift in sentiment will be catastrophic for the housing market and for the economy in general. Gloom articles will act like a slap across the chops with a wet kipper for all those smug BTLs and hopefully they'll want to cash it all in. The UKs casino-culture has in my opinion massively gone past it's sell-by date. The UK population is behaving rather like the scene in Downfall when the Nazis are still partying hard in their undeground bunker while the Allies encircle them.

...Mmmm, I quite like that analogy... well done me! ;)

PS. I'm gonna shift my savings around today and split it up into chunks of #30k (max amount underwritten by the goverernment if an FI goes tits-up) to minimise my risk if Building Socs and Banks start to look dicey! A great deal of negative comment about Abbey's decision last week has given me the willies!

Monday, November 6, 2006 10:49AM Report Comment
 

2. kpjcomp said...

>> PS. I'm gonna shift my savings around today and split it up into chunks of #30k

Same here, the only problem is deciding on what banks.
Tried using ICICI bank but the Web interface is real guff.
ICESAVE has a nice rate, and the web interfaces is nice.
Bank of Scotland, and Sainsbury's bank are some others I can think off.
What banks have you found so far?..

Monday, November 6, 2006 11:10AM Report Comment
 

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4. Hyrax said...

Tyrellcorp: "PS. I'm gonna shift my savings around today and split it up into chunks of #30k (max amount underwritten by the goverernment if an FI goes tits-up) to minimise my risk.."

Thats funny, me too...that 30k maximum has been playing on my mind. Currently doing the same. Anyone with some savings greater than 30k in one place might want to follow suite or risk the excess exposed above the parapet being shot away.
One internet institute wanted four (!) separate pieces of banking detail to open a new account and still waiting.

Monday, November 6, 2006 11:26AM Report Comment
 

5. the bald man said...

As posted before, Gordans economic mircale has been built on a mountain of debt used to fuel consumer spending which has fed his appetite to tax us. IMHO whne the debt train hits the buffers it is difficult to see anything other than a downward spiral for the Uk economy.

Monday, November 6, 2006 11:39AM Report Comment
 

6. uncle chris said...

I've been doing the same over the past few weeks - moving out of A&L and Halifax to ICESAVE (was fairly straight forward to set-up and is semi-protected by 2 governments) ... trying to make sure we don't have over 30K in any one pot. I have a really bad feeling about all this, and I don't think it's just the housing market that will suffer, but the whole credit-supported economy. When it goes, it's going to go fast.

Monday, November 6, 2006 11:52AM Report Comment
 

7. tyrellcorporation said...

I'm gonna wait until the decision this week and see which Banks/BuildSocs make the best moves. A friend recommended ING for a good rated instant access account and Chelsea are (supposedly - I haven't checked yet) doing a good year bond. I'm now looking at fixed term bonds for some of the cash as the slow-down could be over 12 months or more. As long as I can get a reasonable return to cover my rent I'll be happy. The crucial thing though - as you know - is making sure you don't lose it all if a meltdown begins in earnest...

Monday, November 6, 2006 12:17PM Report Comment
 

8. kpjcomp said...

Hi tryellcorp,

One thing to watch out for, some of these banks offering good rates may stop accepting new applications, does'nt harm to open lots of accounts now and move money about later.
ICESAVE seems the best at the momement, guaranteed to exceed the Bank of England Base Rate by at least 0.25% until 1 October 2009.
Also, Last time interest rates went up I ddi'nt see many banks upping there Savings Accounts.
So if the BOE put up to 5%, the worst ICESAVE after Thursday would be 5.25%, and you never know if the BOE are taking Inflation seriously, maybe 5.5%. :)

Monday, November 6, 2006 12:32PM Report Comment
 

9. Doomwatch said...

Was talking to a friend at the FSA about coverage. He mentioned it's 90% up to 30,000 Euros, not GBP, so watch out.

Monday, November 6, 2006 01:08PM Report Comment
 

10. Gregzki said...

Is ICESAVE as secure as say ING or Intelligent Finance? If so looks the best bet given the guarentee.

Monday, November 6, 2006 01:56PM Report Comment
 

11. Gregzki said...

Other question with ICESAVE - does it have any clauses such as 'no interest paid in any month you make a withdrawal'? Theres no details on their web site.

Monday, November 6, 2006 02:03PM Report Comment
 

12. monty said...

Keeping your institutional risk down to 30k sounds like a sensible approach but I do think this panic over UK banks is misplaced. Most of them have hived off substantial quantities of their debt into into mortgage backed securities which are sold off into the international debt markets.

No matter what your view on the UK economy may be, placing your faith and cash in the extremely volatile emerging markets of Iceland and India has got to be a more risky prospect. I'd like to know if the FSA and BoE back up the claims made by ICESAVE and ICICI when it comes to the security of savings placed with them.

Monday, November 6, 2006 02:18PM Report Comment
 

13. kpjcomp said...

>> I'd like to know if the FSA and BoE back up the claims made by ICESAVE and ICICI when it comes to the security of savings placed with them.

Both banks are members of the FSA, so they give the same gurantee's as any other bank.
But the FSA will only protect you upto a certain value, that's why the 30K splits.

Monday, November 6, 2006 02:36PM Report Comment
 

14. holding out said...

The following is from the ICICI website. It seems to be the agreement that all Banks & Building societies use - it is the same for the Nationwide for example.

In the unlikely event that we are unable to repay the funds in your Account, compensation may be available from the Financial Services Compensation Scheme. The Bank is a member of the Financial Services Compensation Scheme established under the Financial Services and Market Act 2000. The scheme affords 100% protection to the first 2000 of a depositors total deposits with the Bank and 90% of the next 33,000 amounting to a maximum payout of 31,700. The scheme covers deposits made with offices of the Bank within the European Economic Area and applies to deposits in all currencies.

Monday, November 6, 2006 02:40PM Report Comment
 

15. David20040_0 said...

The prices won't crash as credit is easier to get. The banks aren't stupid they will make sure that will be able to recoup these costs. House prices are not going to crash, they will keep going up even if the interest rate is raised.

Monday, November 6, 2006 02:46PM Report Comment
 

16. monty said...

Fair enough, so you have the same level of protection but your argument for shying away from UK banks is their risky lending profile. What do you know about that of ICESAVE and ICICI?

Any Chinese banks on board yet? This one's from Friday - "Bad debts mount for Chinese banks"
http://news.bbc.co.uk/1/hi/business/6113390.stm

Monday, November 6, 2006 03:00PM Report Comment
 

17. miniftse said...

Guys, i love your conviction, but in the nicest possible way, you're a bunch of nutters. Day in, day out, you predict armageddon (and take great joy in doing so). Its a beautiful day outside, go and out have a look around, all is running well. Yeah some people have big debts, some always have and some always will - big deal. Probably the same people that are going to inherit huge amounts of money. So todays plot, banks collapse and you have 30k stashed in an icelandic bank account - you really think its going to be worth anything? Nutters. Nice nutters...but nutters!

Monday, November 6, 2006 03:13PM Report Comment
 

18. denzil said...

This quote from the article hit a chord with me,
"In the short term, though, loosening the criteria for lending helps sustain economic growth. Last week's survey of the service sector was strong, helped in no small part by the huge industry that has grown up in the high street to finance secured and unsecured debt."
The above is one of the vital ingrediants of Gordon's so called economic miracle.

Monday, November 6, 2006 03:14PM Report Comment
 

19. george monsoon said...

hey miniftse, I will be enjoying the afternoon sun when I leave work, but I still can't afford to get on the property ladder...!!

Monday, November 6, 2006 03:30PM Report Comment
 

20. tyrellcorporation said...

Miniftse... I think the issue raised here is that it's not a good idea to have all your eggs in one basket...surely you agree with that?

Monday, November 6, 2006 03:32PM Report Comment
 

21. kpjcomp said...

Monty!!

The point of ICESAVE is not because is Non UK, but because it's got a good rate.
Who said anything about moving away from UK banks because there risky?.. All what was said is to split the risks into 30K chunks, could be UK or Non-UK banks I don't care.

Miniftse!!

What's the weather got to do with anything?. And this site aint about a giant meteor heading towards Earth either, just in case you had'nt notised.
I'd just like to point out a couple of things, Banks do collapse, Recessions happen, and house prices do fall. And if you really beleive none of that is possible, then I think you one of those nice nutters who really does think money grows on tree's.

Monday, November 6, 2006 03:33PM Report Comment
 

22. the bald man said...

Momtfse
having lived through recessions and seen runs on banks, and people losing everything I think that being aware of risk and diversifying is a resaonable strategy not one for the funny farm. No one is saying there will be armageddon but all bull runs come to an end and the ends are usually unpleasant.

By the way debt level is at its historic highest and is the highest in Europe.

Kjcomp: I believe that banks are part of a guarantee scheme which may not cover non-uk banks.

Monday, November 6, 2006 03:40PM Report Comment
 

23. kpjcomp said...

bald man!!

I think it's the Banking Codes your thinking off!!

The Banking and Business Banking Codes are voluntary codes which set standards of good banking practice for banks and building societies to follow when they are dealing with personal or business customers in the United Kingdom.

I don't beleive this gives you any more of a gurantee, also I believe ICICI are currently in the progress of implementing them anyway.
It's the FSA that's does the gurantee and both ICICI and ICESAVE are both part off it.

Monday, November 6, 2006 03:52PM Report Comment
 

24. indiablue19 said...

bald man....

True about record debt. The article I'd just posted on Ireland says similar things about people's perception of risk over there being distorted as the numbers grow so huge as to be meaningless to most people; with nothing having yet sunk in about the extraordinary personal indebtedness and that they've cantilevered one huge mortgage off another on properties that collectively aren't worth what has been borrowed.

I think I've mentioned on this blog any number of times the collapse of the Savings and Loans in the USA in the late eighties. Those banks were GONE the next day. Doors locked, windows shuttered. Not even a phone number posted. Try approaching a monolith like the Federal Deposit Insurance Corporation [insurance on deposits up to $100,000 in any one institution] and mentioning that you've lost all your money to people who have left town yesterday. Even with insurance it's a daunting prospect.

How dare they leave the British people with no better comfort than to assume that the media is in charge of calling a halt to the madness. When does this government bother to protect the future of the nation? What does it take for them to start shutting down these abusive and absurd banking practises in advance of cataclysm?

Monday, November 6, 2006 03:58PM Report Comment
 

25. sovietuk said...

"But it is the closest thing to a sure-fire bet that rates will go up on Thursday, and the City believes that the Bank has at least one other bullet in the chamber ready to be fired in the new year."


I would prefer a multichamber Gatlin gun with a long belt of ammunition.

Monday, November 6, 2006 05:10PM Report Comment
 

26. paul said...

How about stalking from office to office with an Armalite AR-10 carbine gas-powered semi-automatic weapon? (had to get that quote in)

Tuesday, November 7, 2006 09:13AM Report Comment
 

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