Leeds Property Network

News Archive - October 2009

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Property News Archive for October 2009

Summary of News Week-Ending 31st October 2009

 

 

 


 

Economy

At last, some good news from across the pond, to add to that from France and Germany in recent weeks...let's hope these are not "blips" and that our own UK economy follows suit over the next quarter...
 
US economy starts to grow
The US economy returned to growth in the third quarter after the longest period of economic contraction since the Great Depression, official figures confirmed on Thursday. US gross domestic product grew at an annual rate of 3.5 per cent in the quarter - slightly higher than analysts were expecting - after shrinking in each of the past four. President Barack Obama said the report was "welcome" but stressed his own benchmarks for economic strength included "whether we are creating jobs, whether families are having an easier time paying their bills, whether our businesses are hiring and doing well". At the same time, the International Monetary Fund more than doubled its forecast for Asian economic growth for the year and raised its forecast for 2010, reflecting a sharp improvement in the region's prospects over the past six months.
To read this story on the FT website, follow this link >>>

...and on a lighter note, London Stock Exchange is looking to reinvigorate the start of day trading...
 
LSE to ring changes to rival NYSE bell
The world's share trading pits may be emptying but the London Stock Exchange plans to revive the glamour of the "opening bell" that marks the start of daily trading to boost its brand amid fierce competition from rivals. The exchange closed its pits in 1986 and now marks the start of trading by activating balls on a mobile sculpture in the lobby of its headquarters. But the sculpture - known as "The Source" - is to be dumped in favour of something else that aims to match the branding power of the opening bell at the New York Stock Exchange.
To read this story on the FT website, follow this link >>>


Housing Market & Prices
 
Property price falls spur new buyers on to market
First-time buyers are returning to the housing market again to benefit from price falls and lower interest rates in spite of continuing difficulties in securing attractive -mortgages. The Royal Institution of Chartered Surveyors and Rightmove, the property website, published reports yesterday suggesting that appetite for homes among first-time buyers was on the increase as the fall in the market brings prices within reach again. Overall, Rics said that more surveyors had rep-orted a rise in new buyer inquiries than a fall for 11 consecutive months, with a notable rise in the numbers of first-time buyers in August.
To read this story on the FT website, follow this link >>>

Maintenance cuts threaten property values
Maintenance spending on commercial property in the UK has fallen at its sharpest rate since the 1950s, threatening a future wave of repair costs to landlords. Spending on repair and maintenance has fallen 22 per cent from £4.12bn ($6.7bn) in the last three months of 2007 to £3.2bn in the second quarter of this year, according to a study released on Monday. The drop risks compounding the 45 per cent fall in commercial property values since the bubble burst, since dilapidated buildings can cost up to 20-25 per cent of the property's value to bring back to marketable repair.
To read this story on the FT website, follow this link >>>

Savile Row cuts a dash in real estate
Savile Row, the home to London's tailoring profession, is fast becoming the centre of a fledgling property industry, given the number of start-ups and funds to have set up shop in the neighbourhood. Property is a naturally ego-driven and entrepreneurial sector and the first sniff of a rising market has given many the confidence to leave larger firms to make money of their own.
To read this story on the FT website, follow this link >>>

...and if you want Saville Row quality and style at more affordable prices, have a look at Hemingway, the "Saville Row of the North", and now with a special offer for LPN Newsletter subscribers...find out more on the LPN website >>>
 
Unbelievable returns, thanks to government
Investment strategies designed to profit from government intervention in the markets would appear to be mushrooming. The desire of many western political elites to ensure the living standards and general wellbeing of their populaces do not suffer in the wake of the credit crisis is producing some spectacular market distortions that are being seized on by fund managers.
To read this story on the FT website, follow this link >>>


Mortgage Lending
 
Home loans reach 18-month high
Lenders have stepped up mortgage approvals to their highest in 18 months, but signs of wider stagnation in the credit markets led economists to predict that the monetary authorities will continue their massive programme of purchasing gilts. A fall in several measures of the money supply - closely watched by the Bank of England's monetary policy committee - along with a drop in lending to private companies that form the backbone of the UK economy, may prompt the MPC to increase its quantitative easing programme beyond the current £175bn, economists said.
To read this story on the FT website, follow this link >>>

A number of commentators were predicting that Quantitative Easing would increase at this week's MPC Meeting (between £25 & £50 Bn), although there is an expectation that interest rates will remain unchanged.
 
MBS market reopens in old style
When Northern Rock decided to wind down its Granite master trust - now to be placed in the lender's "bad bank" rump - industry insiders predicted the death of a structure that had helped the UK dominate the European mortgage-backed market. Master trust deals signal reopening of UK RMBS marketThe Granite decision, in November 2008, put all bondholders in a queue for repayments that could take years, regardless of the maturity date of the paper they held. Investors warned that they would demand far simpler structures before venturing near the sector again.
To read this story on the FT website, follow this link >>>

FSA fines mortgage lender GMAC £2.8m
GMAC-RFC has become the first mortgage lender to be fined by the Financial Services Authority for levying unfair charges on borrowers in arrears. The specialist lender, which had focused on subprime and self-certification loans, will have to pay a £2.8m penalty, the biggest mortgage-related fine ever imposed by the FSA, and reimburse more than 46,000 customers up to £7.7m. The regulator warned that fines for other lenders were likely to follow, saying it was determined that mortgage lenders should "sit up and take notice" of yesterday's action. Margaret Cole, director of enforcement and financial crime at the FSA, said the GMAC case was "an excellent example of what the FSA's more intrusive approach can achieve for consumers".
To read this story on the FT website, follow this link >>>


Banking

...as suggested in last week's Newsletter, the fete of Northern Rock is now approved by the EU...
 
EU approves Northern Rock split
The European Union (EU) has approved plans for nationalised bank Northern Rock to be split in two - paving the way for a partial sale. One business, described as the "good" bank, would hold savers' money, carry out new lending and hold some existing mortgages. A second "bad" bank would be set up to hold the rest of the mortgages and repay outstanding government loans. Northern Rock said the EU's approval was "an important and positive step".
To read this story on the BBC website, follow this link >>>

...and in a similar story, Lloyds to investigate refinancing options...
 
Darling to let Lloyds test water for issue
Alistair Darling is to give Lloyds the go-ahead to market-test its ambitious plan for a £25bn refinancing in a clear sign that the chancellor is willing to release the bank from the government's toxic asset insurance scheme. Mr Darling has concluded that Lloyds' plan to bring in more private capital could be in the public interest but he wants to be sure that the market is ready for such a bold capital raising. He will tell the bank within days that it can formally appoint underwriters and test the market, but he will reserve the right to withdraw approval for the plan if he concludes the move is too risky.
To read this story on the FT website, follow this link >>>

Tories urge bank cash-bonus limit
High Street banks should be banned from paying bonuses above about £2,000 in cash, the Conservatives have said. Shadow chancellor George Osborne argued that the banks should be allowed to give out large bonus payments only in the form of shares in the company. The Tories claim this could free-up up to £20bn which could then be lent to businesses and consumers. But the Treasury accused Mr Osborne of "hypocrisy", adding the Tories had not backed plans to support businesses.
To read this story on the BBC website, follow this link >>>

...and fears that this and the Government's approach to bonuses will create a split across the atlantic, paving the way for a "Brain-Drain", and potentially the loss of the UK's status as one of the world's financial centres...
 
Bankers fear transatlantic pay split
US financial groups with operations in London are increasingly concerned that British regulators' tough stance on pay could create a two-tier system in which UK bankers' bonuses are smaller and spread over a longer period than those of American colleagues. Wall Street executives say the line taken by the UK's Financial Services Authority contrasts with the more flexible approach of the Federal Reserve and could lead to uneven pay scales for bankers in similar jobs on opposite sides of the Atlantic. "We have legitimate concerns on how we can pay our people fairly," said a senior banker at a big US bank. "The FSA appears to be more heavy-handed than the Fed so which guidelines should we be following?"
To read this story on the FT website, follow this link >>>

Leeds Property Networking cannot be held responsible for the content of any external sites

 

Summary of News Week-Ending 24th October 2009

 

 

 


 

Economy

Probably the most significant news this week, although not directly related to property, was the news that the UK remains deep in recession with a further contraction of the economy over the last quarter.  Although not widely predicted, this news may not have come as a surprise to some due to the increasing levels of unemployment and the closure of more manufacturing sites, retail outlets and many businesses generally reporting weaker trading...
 
Record recession for UK economy
The UK economy unexpectedly contracted by 0.4% between July and September, according to official figures, meaning the country is still in recession. It is the first time UK gross domestic product (GDP) has contracted for six consecutive quarters, since quarterly figures were first recorded in 1955. But the figures could still be revised up or down at a later date, because this figure is only the first estimate.
To read this story on the BBC website, follow this link >>>
You can also download the full UK Government report here >>>
 
...and in the aftermath of this news...
 
Sterling slides as UK GDP falls 0.4% 
Sterling dropped sharply on Friday after data showed the UK economy unexpectedly contracted in the third quarter.
To read this story on the FT website, follow this link >>>

'Too early' to declare recovery
It is "still premature" to talk about the beginnings of a recovery despite growing optimism, according to the influential Ernst & Young Item Club. It predicted some growth in the second half of 2009 but said the economy would struggle to achieve 1% growth in 2010. The forecasting group blamed the weak growth on consumers repaying debt and tax rises after the election. There was optimism from BT Business research, which found small businesses were optimistic about the coming year.
To read this story on the BBC website, follow this link >>>

Following the hold in interest rates this month, the minutes of the recent MPC meeting have now been published...
 
Bank of England unanimous on holding QE 
Despite differences over the strength of the recovery, the Monetary Policy Committee voted unanimously at its October meeting to postpone any decision on interest rates or the amount of money it is pumping into the economy until November, minutes from its October meeting revealed on Wednesday. Although differences of opinion existed among the the Bank's interest rate-setting committee on the likely strength of the recovery, all nine MPC members decided to wait until the Bank's next quarterly forecast to take a view on monetary policy. The MPC "agreed that recent developments were not sufficiently compelling to justify revising the target level of asset purchases that had been agreed at the August meeting or to change the level of Bank Rate at this meeting", the minutes said.
To read this story on the FT website, follow this link >>>

Housing Market & Prices

Property undergoes dramatic recovery 
The UK commercial property market delivered the highest monthly price growth for more than three years in September, capping a remarkable comeback for a sector that looked to have been wiped out only a matter of months ago. Investors are now chasing commercial property and some are complaining that the market has become too hot again. The switch in sentiment has been tangible as investors look to take advantage of a slump that wiped off about 45 per cent from prices from the peak in 2007 by the beginning of the summer.
To read this story on the FT website, follow this link >>>

UK commercial property draws investors back 
Investors are piling back into UK commercial property with the sector delivering the highest monthly price growth for more than three years last month, capping a remarkable come-back for a market that only months ago looked lifeless. The rebound has prompted some financiers to complain that the market has become too hot again, with certain prime London properties and retail parks achieving values not too far from boom time levels. The switch in sentiment has been tangible, with investment levels in London higher than the long-term average in the third quarter, according to Savills, as funds look to take advantage of a slump in the market that saw 45 per cent wiped off values at their peak in 2007.
To read this story on the FT website, follow this link >>>

Mortgage Lending
 
Mortgage borrowers face stricter tests
Mortgage borrowers will have to prove their income and provide a detailed breakdown of their spending habits to qualify for loans under sweeping new rules laid out by the Financial Services Authority. As part of its wide-ranging review into the mortgage market the City regulator banned "self-certification" loans, which have allowed about 1m borrowers to take mortgages without proving their income. It wants to bring in "affordability tests", which aim to strip bare borrowers' disposable income after bills, other debt commitments and spending on such things as alcohol, eating out and holidays have been taken into account.
To read this story on the FT website, follow this link >>>

...don't be surprised if BTL borrowing begins to look more like commercial lending whereby banks look to see a solid track-record of property management and previous experience of being a landlord!
 
Mortgage reform - what it means for you 
The FT has put together a great summary of how the new FSA Mortgage Reform proposals wil affect each an everyone of us.
To read this story on the FT website, follow this link >>>

Banking
 
King calls for break-up of banks
Mervyn King, governor of the Bank of England, called on Tuesday night for banks to be split into separate utility companies and risky ventures, saying it was "a delusion" to think tougher regulation would prevent future financial crises. Mr King's call for a break-up of banks to prevent them becoming "too important to fail" puts him sharply at odds with the direction of domestic and international banking reform. The Treasury and the Financial Services Authority have specifically rejected the idea of splitting up the banks, while the Conservatives think action in Britain alone along these lines would not be feasible.
To read this story on the FT website, follow this link >>>
To read this story on the BBC website, follow this link >>>

...and following King's speech Bankers' bonuses are set to rise, despite the public outcry that this is likely to bring...
 
UK bank bonuses 'to rise by 50%'
City bank bonuses for 2009 will rise by 50%, a report predicts - a year after a huge financial bail-out. The Centre for Economics and Business Research (CEBR) said payouts would hit £6bn, up from £4bn in 2008, because of rising profits and less competition. However, they would be well below the £10.2bn paid in 2007, it said, adding fewer people now worked in the City and that early 2009 was poor for the banks. The recent G20 summit wanted bonuses linked to long-term performance.
To read this story on the BBC website, follow this link >>>
 
...and an interesting article on what may be on the horizon, from Mohamed El-Erian, author of 'When Markets Collide' which was the winner of the FT/Goldman Sachs award for Business Book of the Year in 2008.
 
The two-stage de-risking of banks
The first stage of de-risking of the banking sector was led by the markets. Fueled by massive concern about the banks' lax risk management practices and related over-exposure to toxic assets, the process was vicious and indiscriminate. With the market-induced contraction of the banking sector over-shooting, the highly disruptive implications for employment and economic activity forced policymakers into a "WIT" mindset - doing "whatever it takes" to stabilise the sector.
To read this story on the FT website, follow this link >>>
 
Brussels set to pass Northern Rock plan
The European Commission is next week expected to approve a radical restructuring of Northern Rock, paving the way for the break-up and sale of the nationalised bank. Northern Rock's proposal to split itself into two - in effect creating a "good" and a "bad" bank - was submitted to Brussels for state aid approval this year. The Commission is expected to authorise the plan next Wednesday when it holds its final formal session before its five-year term expires at the end of the month. The restructuring of Northern Rock will ultimately lead to the bulk of its retail deposits and low-risk mortgage loans being separated into a good bank and sold off. Its other mortgage assets, including those held in its Granite securitisation programme, will be placed into a separate asset company that will remain under government control.
To read this story on the FT website, follow this link >>>

US bank failures top 100 for year
The number of US bank failures this year has topped more than 100 after US federal regulators shut down a trio of small Florida banks. Bank failures have cost the Federal Deposit Insurance Corporation (FDIC) fund that insures deposits an estimated $25bn this year. More US banks have now failed this year than in any year since 1992. The number is expected to rise as banks continue to suffer from the bad loans that precipitated the financial crisis. Savers' money is not in danger, as the FDIC, which is backed by the US government, insures deposits at failed banks for up to $250,000 per account.
To read this story on the BBC website, follow this link >>>

Leeds Property Networking cannot be held responsible for the content of any external sites

 

Summary of News Week-Ending 17th October 2009

 

 

 


 

Economy

Inflation falls to lowest level in five years
Inflation fell sharply in September to its lowest level in five years, leaving sterling under fresh pressure against major currencies. Inflation as measured by the consumer price index dropped to an annual rate of 1.1 per cent last month, down from 1.6 per cent in August, the Office of National Statistics reported. Economists on average had expected inflation to fall to 1.3 per cent. If inflation falls below 1 per cent Mervyn King, governor of the Bank of England, will have to write a letter of explanation to the Chancellor.
To read this story on the FT website, follow this link >>>

Brown optimistic over UK economy
Prime Minister Gordon Brown has painted an optimistic prediction for the economy, saying it was "simply not true" that tough times are ahead. Mr Brown told the Daily Telegraph that the action the government had taken was bringing the economy around. "We've said that the economy will grow by 1.5% next year and more people are moving towards our position," he said. Mr Brown's assessment of the rate of recovery contrasts with the Treasury's forecasts for annual growth of 1.25%.
To read this story on the BBC website, follow this link >>>

...maybe so, but retail is still struggling...
 
Recession in UK 'still not over'
A leading business group has cast doubt on whether the UK economy emerged from recession in the third quarter of 2009. The British Chambers of Commerce (BCC) said business confidence was improving but the economy was still "frail". Official GDP figures are due next week. If they show no growth, it will be the first time the UK has endured six successive quarters without growth. Separately, UK retail sales rose 2.8% from September 2008, the British Retail Consortium (BRC) said.
To read this story on the BBC website, follow this link >>>

...and in a similar story from the FT...
 
Consumer confidence 'trickles' back
British consumers were in an upbeat mood in September, according to two surveys that registered rising demand in both housing and retailing. Data released on Tuesday by the British Retail Consortium, which takes the pulse on the nation's high streets, said sales volumes in September rose 4.9 per cent, the strongest total growth for any month since This reversed the slowdown seen in August, which was a wet month. Indeed, every category of retail - from food and drink to home accessories - showed a rise in September.
To read this story on the FT website, follow this link >>>

Housing Market & Prices
 
Fitch forecasts steep house price falls
The recent gains in UK house prices are likely to prove only a temporary respite before a further steep fall next year, according to Fitch, the global ratings agency. Fitch warned on Wednesday that it expected prices to fall by about 30 per cent in total from the October 2007 peak, despite three consecutive months of house price growth that has led to hopes of a more sustained recovery.
To read this story on the FT website, follow this link >>>

...and in a similar story from another correspondant...
 
House price dip forecast for 2010
House prices will weaken next year after ending this year positively, according to Knight Frank, the property consultancy, with a recovery not expected until 2012. Knight Frank on Monday forecast that prices would end this year 2 per cent higher than at the start, with the recovery being led from the south. The agent said, however, that the mainstream UK residential market was likely to see a modest price fall of about 3 per cent in 2010, before a limited rise in 2011 followed by more significant gains in 2012.
To read this story on the FT website, follow this link >>>
 
Lack of sellers ups house prices
A drought in the number of people selling their homes is underpinning the rise in UK house prices, surveyors say. The proportion reporting rises in house prices rather than falls rose to its highest level in September since the onset of the credit crunch. But the picture is different in certain parts of the country, a poll for the Royal Institution of Chartered Surveyors (Rics) found. Prices have been most buoyant in the south of England, the survey showed.
To read this story on the BBC website, follow this link >>>

...and will this "drought" continue...? What with rising unemployment and some close contacts on the inside, both suggesting that a flurry repossessed properties will hit the market during this quarter...
 
Housing group call to end stamp duty
A coalition of housing organisations has called for abolition of the "anachronistic" stamp duty tax. The group, known as the "1808 coalition" after the year of the levy's introduction, says the tax distorts the UK's property market. The initiative comes as housing trade groups raise pressure on the government to extend the stamp duty holiday for properties worth less than £175,000 ($280,703), which will expire at the end of the year. Many hope that the government will extend the scheme, as it did with the car scrappage initiative.
To read this story on the FT website, follow this link >>>

New-build facilities fall short of promises
Promises of "a state-of-the-art gym" or "the highest quality apartments in the city" have long been part of the sales patter that comes with the purchase of new-build flats. But while these facilities were the norm in the good times, some are not being delivered in the current economic climate. "We've had a number of people approach us stating that what the developer represented two years ago simply has not materialised - whether it is the promise of amenities, appropriate mortgage finance or capital growth," says Anjan Patel at Neumans, a law firm in the City of London.
To read this story on the FT website, follow this link >>>

Halifax estate agents sold for £1
Lloyds Banking Group has agreed to sell its Halifax estate agency business to LSL Property Services for £1, and said 460 jobs would go. The loss-making business has 218 offices, 93 of which are franchise operations. There are 121 Halifax banking counters located in estate agents, which will close down in early 2010. Branches will be rebranded as one of LSL's existing brands: Your Move, Reeds Rains or Intercounty.
To read this story on the BBC website, follow this link >>>

Mortgage Lending
 
UK mortgage lending revival continues
Mortgage lending for home purchases slipped slightly in August from July but remains roughly 29 per cent ahead of where it was a year ago as the world's financial system was sliding towards a collapse. New data from the Council of Mortgage Lenders shows that the number of loans for home purchases slipped by 5 per cent in August to 52,700 from July. However, re-mortgage activity - of little relevance to the overall housing market but of great relevance for individual lenders - fell by a further 22 per cent to just 32,000 loans, 57 per cent fewer than at the same time one year earlier.
To read this story on the FT website, follow this link >>>
 
Lending rules to be tightened up
New rules to make sure that mortgages are only given to people who can afford the repayments are due to be announced by the banking regulator on Monday. The Financial Services Authority will make banks liable for loans if they do not check customers can afford them. It is expected to ban self-certified mortgages, in which customers do not have to prove their income. City minister Lord Myners told the BBC that the measures were about "returning to responsible lending". But he added that there would not be specific limits placed on the amount banks would be allowed to lend relative to their income or to the value of the property.
To read this story on the BBC website, follow this link >>>

Banking
 
UK rates 'to stay low for years'
UK interest rates will stay low for years amid tax rises and spending cuts, according to an economic forecast. The Centre for Economics and Business Research (CEBR) believes the rate will remain at its current 0.5% level until 2011 and not reach 2% until 2014. The report predicted the pound will weaken further, falling to $1.40 and "possibly" below 1 euro.
To read this story on the BBC website, follow this link >>> 

Leeds Property Networking cannot be held responsible for the content of any external sites

 

Summary of News Week-Ending 10th October 2009

 

 

 


 

Economy
 
UK holds rates at 0.5%
The Bank of England's monetary policy committee on Thursday voted to leave unchanged its pounds £175bn programme to pump money into the UK economy and keep interest rates at 0.5 per cent. The decision not to alter its policy had been widely expected, after senior officials have emphasised that they will look to the central banks' quarterly inflation forecasts to make major decisions.
To read this story on the FT website, follow this link >>>

...and is this a signal of things to come...?
 
Australia raises rates from 49-year low 
Australia became the OECD nation to raise interest rates on Tuesday when its central bank increased the official cash rate from 3 to 3.25 per cent. In raising rates from their 49-year low "emergency" rate, Glenn Stevens, governor of the Reserve Bank of Australia, said economic conditions in Australia had been "stronger than expected", while measures of confidence had recovered. He said that Australia's growth in 2010 was likely to "be close to trend", interpreted by economists to mean 3 to 3.5 per cent, while suggesting the RBA was worried about a potential asset bubble in the housing market. Investors cheered the news pushing the Australian dollar up by a percentage point against the US dollar, to 88.65 US cents.
To read this story on the FT website, follow this link >>>

Brown optimistic over UK economy
Prime Minister Gordon Brown has painted an optimistic prediction for the economy, saying it was "simply not true" that tough times are ahead. Mr Brown told the Daily Telegraph that the action the government had taken was bringing the economy around. "We've said that the economy will grow by 1.5% next year and more people are moving towards our position," he said.
To read this story on the BBC website, follow this link >>>

...although the Prime Minister is not supported by the following report...
 
UK economy 'is still not growing'
Contrary to expectations, the UK economy did not grow in the third quarter of the year, an influential economic group has predicted. Gross domestic product (GDP) was unchanged from July to September, the National Institute of Economic and Social Research (NIESR) calculated. Official GDP figures for the third quarter will be released on 23 October.
To read this story on the BBC website, follow this link >>>

Housing Market & Prices
 
Lettings revived as surplus stock shrinks 
The lettings market, which has been suffering from a glut of supply and weaker demand, is starting to recover as more landlords sell their properties and corporate tenants return to the market. Figures released last week by the Association of Residential Letting Agents (Arla) showed that one third of Arla members felt the supply and demand of rental property was now in balance, up from 19 per cent last quarter. Arla said more people were committing to tenancies, while fewer new properties were becoming available.
To read this story on the FT website, follow this link >>>
 
...good news for all of us, although prices are still lower than say 12-18 months ago and more tenants are not paying due to their financial or personal circumstances...so we are not out of the woods just yet!
 
House prices rise for a fifth month 
UK House prices rose for the fifth month in a row in September and are now at the same level they were a year ago, according to the Nationwide building society. Prices rose by 0.9 per cent to an average of £161,816 over the month on a seasonally adjusted basis after a 1.4 per cent rise in August. House prices rose by 3.8 per cent in the third quarter compared with the second quarter, the fastest three-month increase since 2004. Compared with a year earlier, prices saw no change for the first time since March 2008. Over the first nine months of this year, house prices have risen by 4.1%, although relative to the October 2007 peak prices are still down by 13.5%.
To read this story on the FT website, follow this link >>>

...but beware, if you bought off-plan, you may still be liable to buy once the development is complete...
 
Legal risk to property investors
Investors who do not complete property deals in the downturn can be forced to buy after a court injunction, lawyers warn. Many buyers who agreed to purchase city apartments being built in the boom now find values have plunged or have difficulty in finding a mortgage deal. Some wrongly believe they risk only their deposit by pulling out after exchanging contracts. But lawyers said the legal obligation to complete the transaction was clear.
To read this story on the BBC website, follow this link >>>

Mortgage Lending

Payment shock for low-rate tracker borrowers 
More than 100,000 tracker-mortgage borrowers who have been enjoying near-zero interest costs since the base rate hit 0.5 per cent are now facing increases of hundreds of pounds in their monthly repayments. Deals ending this autumn that had undercut the base rate are, in some cases, set to increase by more than 4 percentage points, adding £500 to the monthly cost of a £140,000 mortgage for an interest-only borrower, according to John Charcol, the broker.
To read this story on the FT website, follow this link >>>
http://www.ft.com/cms/s/2/c6ee1060-af81-11de-ba1c-00144feabdc0.html
 
Probably more relevant to homeowner mortgages, but definitely worth considering a remortgage if the SVR rate is above 3%...
 
Call for regulation of buy-to-let mortgage market 
Buy-to-let mortgages should be regulated by the Financial Services Authority in the same way as other home loans, according to the British Property Federation.  Currently, buy to let mortgages are treated like business loans, unlike other mortgages such as equity release products which are regulated by the city watchdog.
To read this story on the FT website, follow this link >>>

Mortgage rates cut for borrowers with big deposits 
Homebuyers who can afford to put down a 30 per cent deposit can now access cheaper tracker and fixed-rate mortgages, following rate cuts from Woolwich and Northern Rock. Woolwich has cut its lifetime tracker mortgage rate for loan-to-value (LTV) ratios of up to 70 per cent. It now charges 2.29 percentage points over the Bank of England base rate, giving an effective rate of 2.79 per cent at present. This is a reduction of 0.45 percentage points on its previous lifetime tracker deal. Woolwich has also reduced the period in which a 1 per cent early redemption charge applies, from three to two years.
To read this story on the FT website, follow this link >>>

Banking
 
Banks 'show first recovery signs'
Financial firms may be recovering, with business volumes growing for the first time in two years, a survey has shown. Business increased in three months to early September, said 7% of those surveyed by PricewaterhouseCoopers and business organisation the CBI. But building societies returned to feeling "downbeat" and business levels were weak in other areas, suggesting the recovery still has a way to go.
To read this story on the BBC website, follow this link >>>

FSA sets out tough new liquidity rules
Groundbreaking new liquidity standards from the Financial Services Authority could force UK banks and investment companies to increase their holdings of cash and government bonds by £110bn and cut their reliance on short-term funding by 20 per cent in the first year alone. If the FSA ramps up the requirements in subsequent years, as is likely, banks might have to increase their holdings of easily saleable assets by a total of £370bn or significantly cut their reliance on short-term funding.
To read this story on the FT website, follow this link >>>

Lenders flock back to property 
The number of banks prepared to lend significant amounts for real estate investment has almost doubled in the past six months amid more favourable funding conditions in the sector. There are now 23 lenders prepared to lend more than £20m for real estate investment, according to Savills, the property consultancy, and about six willing to lend more than £100m to the sector. This marks a rapid change in stance in the banking sector, with many lenders averse to property at the beginning of this year when prices were in freefall. The stabilisation of finance markets has seen lenders look to take advantage of the recent recovery in real estate.
To read this story on the FT website, follow this link >>> 

Leeds Property Networking cannot be held responsible for the content of any external sites

 

Summary of News Week-Ending 3rd October 2009

 

 

 


 

The Economy

UK contraction less than thought
The rate of contraction of the UK economy in the three months from April to June has been reduced again. Gross domestic product (GDP) fell by 0.6% compared with the previous quarter, better than the previous estimate of a 0.7% contraction. The latest improvement came mostly from the manufacturing and construction sectors of the economy. It suggests that the UK may see more signs of recovery, and possibly even growth, in the third quarter.
To read this story on the BBC website, follow this link >>>

IMF says world economy is recovering
A recovery in the world economy is now in place, the International Monetary Fund said, but it warned there were many obstacles to sustained rapid growth. Publishing its twice-yearly World Economic Outlook, the Fund rejected forecasts for either a rapid V-shaped recovery or a double-dip recession, saying the recovery will most likely be "weak by historical standards".
To read this story on the FT website, follow this link >>>

...although, bizarrely, this appears to partially contradict the same organisation's (IMF) report into the potential risk to the global economy that some banks may have not yet seen, or indeed revealed the true extent of their financial losses...see article in Banking section below...

Housing Market & Prices

House prices rise in London and SE
House prices rose in September, but the improvement is concentrated in London and the South-East and is being driven by a shortage of homes on the market, according to a report out last Monday. Hometrack, the housing market data group, said prices rose by 0.2 per cent this month and for the second month in a row, after two years of falling or stagnant values. Rising prices have been recorded by all the main measures of the market, and its recovery has been one of the biggest surprises among a plethora of green shoots sprouting across the economy. However, many observers are sceptical about whether prices can sustain this upward momentum - Nationwide has reported that, four months after prices stopped falling, they are rising at an annualised rate of nearly 14 per cent.
To read this story on the FT website, follow this link >>>

...and although the headline below appears to contradict this, the article states that London prices increased by 0.8% in August, fuelled by a demand based on a short-supply rather than any sustained buying by first-time buyers...
 
Land Registry reports slight fall in house prices
House prices fell slightly in August, but still showed a stabilising trend in recent months after the rapid declines seen throughout last year and earlier this year, according to data from the Land Registry. House prices fell by 0.1 per cent to an average of just under £156,000, the first fall since April and a small slip following a 1.8 per cent rise in July, which was the biggest one month jump since 2004, the Registry reported. The biggest house price declines were in the Northwest, which saw prices drop by 2.1 per cent, and Yorkshire and Humber, where they fell by 1.8 per cent, more than wiping out gains in the previous month.
To read this story on the FT website, follow this link >>>
 
...more signs of house price recovery...?
 
House prices 'back to 2008 level'
UK house prices have now recovered to the same level as a year ago, according to the latest figures from the Nationwide. The average price of a home last month rose by 0.9% to £161,816, almost identical to September 2008. The building society said house prices had now risen for five months in a row. However, the nation's homeowners continued to pay off more of their mortgages between April and June, according to the Bank of England.
To read this story on the BBC website, follow this link >>>

...maybe, but the Society's chief does warn that the trend is unlikely to continue with rising unemployment, more houses coming onto the market (supply outstrips demand, particularly if "accidental landlords" start to sell and repossessions go up) and credit continues to be difficult to obtain.
 
London no longer tops European property league
London has been knocked from the top of a list of best European cities for real estate investment for commercial property occupiers and investors for the first time since 2005, according to LaSalle Investment Management, a leading global property fund manager. Munich has been identified as European city most attractive for investment on a medium term outlook, followed by Paris, according to LaSalle's eleventh European Regional Economic Growth Index. London's slippage in the ranking reflects the city's exposure to the financial downturn compared with other rival business hubs.
To read this story on the FT website, follow this link >>>

Investment seekers drive up farmland prices
The value of farmland has returned almost to its 2008 peak as investors seek a haven in the face of economic uncertainty. Farmland, which has risen in price for the second quarter in a row, is being traded at almost £5,000 an acre, according to Knight Frank, the property consultancy. That is only £125 an acre less than at the top of the market in June 2008. Andrew Shirley, head of rural property research at Knight Frank, said the resurgence was partly the result of wealthy investors looking for steady returns, but also of farmers being keen to buy more land to extend their businesses.
To read this story on the FT website, follow this link >>>

Mortgage Lending & Credit

Credit conditions tighten for home buyers 
British households have found access to credit tougher over the past three months than earlier in the year, but banks expect to loosen up on lending towards the end of the year, according to the latest Bank of England survey. The Bank's quarterly Credit Conditions Survey for the three months to the middle of September, presented a mixed picture of the cost and availability of credit, not just to households but to large and small businesses as well. The report noted that the reduced availability of secured lending - mortgages - for households during the previous three months had been unexpected and reflected a deterioration in the cost and availability of banks' own funds.
To read this story on the FT website, follow this link >>>

Banking

IMF says banks yet to reveal extent of losses
Banks around the world have still to reveal around half of their likely losses resulting from the financial and economic crisis, the International Monetary Fund said on Wednesday, warning that there was still a "significant" risk of another downward lurch in the global recession. The Fund described credit risks as remaining "elevated" even though financial conditions have improved significantly since the spring. A failure to reveal the true scale of the losses they are likely to face and boost capital held in the banks would undermine the economies of the US, the UK and the eurozone and could generate a renewed vicious spiral where weak banks damage economic prospects, raising default rates and further threatening the health of banks, the IMF said.
To read this story on the FT website, follow this link >>>
 
UK banks face stricter bonus rules than US
A divide has already emerged between Europe and the US over how to implement new Group of 20 rules on bankers' bonuses, with British banks facing a stricter regime than is likely to apply in the US. The UK government on Wednesday night rushed out a statement trumpeting the agreement of Britain's top five banks to apply the bonus restrictions agreed at last week's G20 meeting in Pittsburgh, in a bid to become the first member nation to implement the accord. France is expected soon to follow suit.
To read this story on the FT website, follow this link >>>
To read this story on the BBC website, follow this link >>>
 
BNP Paribas launches €4.3bn capital raising
BNP Paribas on Tuesday launched a €4.3bn ($6.3bn) cash call, becoming the latest bank to buy itself out of a government bail-out. France's biggest bank said it would use the funds to repay €5.1bn of non-voting stock issued to the French government this year in addition to a €226m interest payment.
To read this story on the FT website, follow this link >>>
 
...and even more signs that bankers are getting back to "normal activity"...
 
Whose life is it anyway? 
Even though bankers' last foray into securitisation pushed global economies into a tailspin, following the collapse of the subprime mortgage market, they have not given up on these types of investments. Banks including JP Morgan and Credit Suisse are considering the conversion of life insurance policies into securitised bonds. Just as subprime mortgages for low-income borrowers were bundled and traded, life insurance policies are being purchased and their revenue streams sold again as debt issues.
To read this story on the FT website, follow this link >>>
 
Yes, we've seen this all before with sub-prime mortgages, but surely the bankers will not make the same mistakes again...?

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