November 18, 2009
Mortgage lending holding steady
Story link: Mortgage lending holding steady
Mortgage lending is remaining steady at present, but while much has been made of the recent rise in mortgages being taken out, volume is still far below the averages before the credit crunch hit.
Mortgage lending holds up in September
Latest figures from the Council of Mortgage Lenders (CML) show that in September, one third of first-time buyers benefited from the current stamp duty holiday.
There were 6,200 first-time buyer loans for properties priced between the old starting rate of £125,000 and the temporary threshold of £175,000, representing 32% of 19,700 first-time buyer loans approved.
September 2009 saw lenders sanction 50,600 loans for house purchases in total, up 2% on August and 43% on September 2008; remortgage volumes rose 10% on August, to 33,000, but were down 48% on a year earlier.
While the mortgage market is relaxing back more, many lenders are still demanding a 25% deposit, with a recent survey suggesting that at least two-thirds of all mortgage products currently on the market require this as a minimum deposit.
One lender that is bucking the trend is the Nationwide Building Society, which recently announced a raft of upsell measures, offering discounts on a variety of financial products to existing customers at a discount.
One key feature of this is mortgages available with just a 5% deposit, which is certainly a good sign, not least because the Nationwide is the second largest mortgage lender:
* From 30 October, Nationwide will reward existing customers who use FlexAccount as their main current account, with access to competitive mortgages up to 90% LTV.
* The range of competitive mortgages will support first time buyers and home movers without a large deposit.
* For existing mortgage customers moving home, the offer represents a discount of 0.70% off the current range of mortgages available to them at 90% LTV (existing customers moving home range, 85-95% LTV tier).
* Each of these products are available with and without free legal fees, covering the conveyancer’s professional charges relating to the house purchase.
* Rate and reservation fee is identical for each of these options.
* These offers are available to eligible existing customers moving home and first time buyers.
* These offers are available through the Nationwide branch network only.
The question is, how many other lenders will follow suit? Especially considering that the RBS and Lloyds Group are getting direct funding from the UK government to lend, but are still lending more restrictively than non-nationalised banks.
Inflation rise in UK
Story link: Inflation rise in UK
Inflation is on its way up in the UK, reaching 1.5% for October:
UK inflation rises to 1.5% in October
The Office for National Statistics has today announced that Consumer Price Inflation (CPI) rose for the first time in eight months to 1.5% in October from a 5-year low of 1.1% in September.
The rise was not unexpected after a sharp fall in transport costs last year was not repeated this year and because fuel prices had seen record falls this time last year.
The real question everyone will be asking is whether this is simply a technical rise, which will continue a few more months before falling back again – as the Bank of England believes – or whether this is a sign of inflation about to run out of control.
There are two main camps for the latter – one thinks we face deflation in the near term, while the other thinks we face hyper-inflation in the medium term. Both camps are not, however exclusive.
That means you can be sure inflation is going to be watched even more closely than ever, for warning signs of one or the other scenario playing out.
March 9, 2009
No need for nationalisation
Story link: No need for nationalisation
It seems that Lord Mandelson’s view on the recession and the nationalisation of banks is set in stone, but obviously his voice is not being heard. His comments were made just 48 hours after the Government increased its Lloyds Banking group stake by over 20%, the Government now own 65%.
Lord Mandelson has reiterated that the government has no plans to nationalise the banking sector.
His comments come two days after the government increased its stake in Lloyd Banking Group to 65% from 43%.
Will quantitative easing work?
Story link: Will quantitative easing work?
Quantitative easing has been proven as a good method to ease the pain of recession’s in the past, although that is not to say that the latest batch of cash will wave the wond and get rid of all the economic problems. A collection of important decisions are needed to combat the recession, not just one.
Will quantitative easing work?
So determined was the pro-Euro lobby to bury Emu-sceptics, it cast aspersions on the character of those who took an opposing view.
More recently, the same cowardly device has been used by deranged environmentalists. Anyone who dares to suggest “global warming” may not exist – that temperature changes could be driven by long-term climatic cycles rather than human activities – is dubbed a “denier”.
JP Morgan backs Ireland
Story link: JP Morgan backs Ireland
Ireland must be showing its signs of strength and weakness, of course one more than the other. Investors are now banking and in fact hoping, that Ireland defaults on its debts and that their investments pan out!
One of the biggest Wall Street banks has warned investors not to bet on Ireland defaulting on its debt, as its financial position remains “remarkably strong” despite the banking crisis and economic downturn.
JP Morgan bond analysts pointed out in a note to clients this week, that many other eurozone countries “have significantly worse public sector debt to gross domestic product (GDP) ratios”.
The never ending bailout
Story link: The never ending bailout
The global collapse which eventually led to the Wall Street crash is something that is going to be hanging round the centre page of the press for some time. The question is, when will the Government be able to step in, with a big enough plan to combat current problems?
Does anybody in the federal government know or could know “who, what, where and when” of the massive, complex, vertical, horizontal, global collapse of Wall Street and its planetary tentacles in over 100 countries abroad? Step forward if you exist! Uncle Sam needs you!
Is the multi-million dollar bailout of this financial mess and house of cards, this phantom wealth mummy hitting air beyond the federal governments’ salvage capability?
Central banks and the recession
Story link: Central banks and the recession
The central banks did renew their pact to cap bullion sales and the market gladly took the opportunity to accept. But still, the markets are going crazy with gold settling around double their value of 2004 and the property market crashing at an incredible pace, where will we go next?
Central banks and the recession
When Europe’s central banks told the gold market five years ago that they would renew their pact to cap their bullion sales, the sector breathed a sigh of relief. Today, gold prices are double their 2004 level and central bank sales far smaller, but the market is still hoping that the Central Bank Gold Agreement will be renewed again.
The current CBGA, which caps sales at 500 tonnes a year, expires in late September, but the banks have in the past announced the terms of a new agreement in March and there is an expectation in the market that a statement could come soon.
The property peak
Story link: The property peak
The average house price has now settled around somewhere close to £140,000, which for some people, represents a huge loss compared with the capital gains they were sitting on just 12-18 months ago. House prices continue to fall, just like the stability of the futures of people who were depending on their value to retire.
House prices have tumbled a long way since their peak in the autumn of 2007 – by a fifth, in fact.
Much has been made of the fact that they are now roughly back in line with their long-term average, at around £148,000. But that is beside the point – house prices never rise in line with their long-term average: they either grow faster than it or slower, or simply fall – as is now happening.
March 5, 2009
£21bn chase
Story link: £21bn chase
The fees are closing in on £700 million, which seems like over kill, and of course is the biggest flooding on rights issues in the last few years.
What this means is a massive £21bn of new money has been created in the last three months, an astonishing amount in such a short space of time!
Cazenove, has charged fees close to £700 million in return for holding the hands of 11 major companies which have raised £21 billion of new money in just the first two months of 2009, the busiest flood of rights issues in years.
While the deluge of financing fees will help the books of the investment banks and stockbrokers and their coterie of lawyer and accountant advisers, the price being charged for the work is causing alarm.
Sub prime problems!
Story link: Sub prime problems!
Many sub prime lenders are struggling at the moment, as they are being forced to tighten their belts and be increase the stability of their businesses, making sure the number of defaults thanks to the house price crash is kept to an absolute minimum.
UK sub-prime lender Cattles says there has been a failure of internal accounting controls at the firm and it is suspending three senior managers.
It said that it had uncovered problems in the ways it accounts for bad loans.