Monday, February 18, 2008

Banks can nationalise mortgages

Bank shares rise on NR nationalisation

This snippet makes the point that the lack of competition with the withdrawal of NR from the public sector is beneficial to the other banks. Although, competition backed by the government isn't beneficial. Perhaps the shares have risen because NR will continue to trade as usual, whereas the other banks are certainly not trading as usual, and are making their mortgage deals less and less attractive. The unwanted mortgages finally have a home away from the private sector banks in NR. The proof of the pudding would be an increase in the NR book as they take more risky mortgages on.

Posted by stillthinking @ 12:42 PM (619 views)
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3 thoughts on “Banks can nationalise mortgages

  • Risen for three reasons:

    1. The uncertainty has been removed.
    2. On balance the public are likely to invest in NR – open new accounts etc. In that way less money required from Bonds. [so the bank will probably move toward retail funding, when that happens to a large degree then there will be the opportunity to sell back to the private sector (all other things – i.e. ex a HPC – being equal].
    3. Ftsie was at the bottom of an upward trendline from the low and had had 2 retracements.

    This is yet another example of people trying to fit the market moves to the news stories. IF the market had gone lower then everyone would have said – ah the market doesnt like what the government did on NR. To be fair (although i am long from last week) there was a possibility of the market taking this badly and for the chart formations to support a fall. Infact going into today i was thinking around 60/40 bullish interpretation (falling that it might have had no real impact). Now move should be up for a few days (in my view). Resistance @ 5935 [which we should overcome to the upside], a fall below 5830 would negate the bullish outlook. Target 6200.

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  • Interesting, but I think shares would have risen anyway today. There are companies that have absoluetly nothing to do with NR that are up today — virtually no shares are down.

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  • Does this mean HPC will be mitigated because higher-risk borrowers eg BTL can get mortgages again – with the taxpayer now taking the risk? Nothing this government do could surprise me now…

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