Here's our summary of articles and data points on the housing market. It's part of Seeking Alpha's coverage of the real estate market and homebuilder stocks. Like all other topics and stock coverage from Seeking Alpha, you can have this sent to your Blackberry or desktop email by signing up for our no-spam free email subscription service.
Quote of the Day
"Interesting presentation. God, I hope you're wrong." – A NY investment firm's chief risk officer said to J. Kyle Bass, a hedge fund manager from Dallas, in August 2006. Bass made a presentation to that CRO's investment firm, drawing a scenario that the housing market would crash Bass offered to set up a hedge fund betting against the housing market. (Seattle PI, Dec. 26th)
Subprime Fallout
* Credit Crunch Amplifies Housing Downturn (Inman News, Dec. 27th): "Private mortgage insurers PMI Group Inc. (PMI) and MGIC Investment Corp. (MTG) have raised or are raising rates for borrowers with lower credit scores and loan-to-value ratios above 95%. Both companies have discontinued mortgage insurance on loans with LTVs above 95% for borrowers with credit scores below 620... MGIC will no longer insure reduced-documentation loans for investment properties or cash-out refinances... Government-sponsored lenders Fannie Mae (FNM) and Freddie Mac (FRE) [announced] new surcharges on most [new] loans... for borrowers with credit scores below 680... Lenders must also be able to provide documentation supporting an assessment that the property is not located in a declining market."
* Online Resources Survey Shows Credit Concerns Not Limited to Mortgages (Fox Business, Dec. 26th): "Online Resources Corporation (ORCC), a leading provider of web-based financial services, today released the results of a survey of U.S. households and billers regarding the effect of the current mortgage crisis on bill payment and collection patterns... The survey of more than 1,000 nationally representative U.S. households finds that Americans are increasingly being forced to prioritize among their bills by creating a "delinquency budget" to determine which bills get paid. While the mortgage bill tends to be the one that households are most likely to pay, businesses across other industries are facing a decreasing share of that delinquency budget."
* Miller Offers Best Way Out Of Mortgage Mess (News Record, Dec. 26th): "In November, the House of Representatives passed a bill to curtail predatory lending that Miller, as well as Reps. Mel Watt and Barney Frank, had sponsored. It would require lenders to provide documentation that applicants can afford the loans they get. It also prohibits prepayment penalties and bans paying bonuses to mortgage brokers for steering people to higher-interest loans when they qualify for ones at lower rates. The bill was modeled after North Carolina law, which is one reason why the subprime crisis hasn’t hit this state as hard as others."
* Mortgage Woes Hurt H&R Block (News Leader, Dec. 26th): "H&R Block's (HRB) plan to sell Option One to Cerberus Capital Management LP, announced in April, fell through by December... HRB said it would shutter most of Option One... The turmoil cost Chairman and CEO Mark Ernst his job... NovaStar Financial Inc. (NFI), also a subprime lender, watched its stock price drop from $105 in January to, at one point, less than $2. Continued losses forced the company to give up its REIT status, incurring large tax payments and leading the NYSE to move to delist NovaStar... Three of NovaStar's top executives will step down early next year: Chairman and CEO Scott Hartman, CFO Gregory Metz and General Counsel Jeff Ayers"
* Making A Profit On The Crashing Market (Seattle PI, Dec. 26th): "J. Kyle Bass conceived a hedge fund that bet on a crash for residential real estate by trading subprime mortgage securities... Bass and investors like him saw opportunity in a range of new investment tools that banks created to sell subprime securities worldwide. These included mortgage bond derivatives, contracts whose values are derived from packages of home loans and are used to hedge risk or for speculation. The vehicles allowed hedge funds such as Bass' to bet against particular pools of mortgages. The new subprime derivatives, which amplified the risks of the underlying mortgages, were sold to banks and institutional investors."
* Indian Mortgage Glass Half-Empty In 2007 (Indian Country, Dec. 26th): "Government numbers released in August [show] the total dollar volume of loans made to Indians and the number of lenders willing to extend credit to Native people fell for 2006, with Indians in danger of being lapped by loans to the much smaller Native Hawaiian contingent... The subprime mortgage crisis shuttered several of the top lenders to Indians, cutting off credit access [although] some of these subprime lenders were accused of predatory lending practices toward Natives. The closure of GreenPoint Mortgage, also shuttered TribalPOINT, an active private-firm mortgage [program which] extended private mortgages to Indians under the HUD-184, Rural Housing Services programs [and] through private mortgages."
* Weekly Guru Bargains Highlights: Ambac Financial Group Inc. (Guru Focus, Dec. 26th): "Analysts predict that Bond insurer Ambac Financial Group, Inc. (ABK) is currently undervalued... Legislation to freeze ARM mortgages [is] good news for bond insurers... Insider buys were made between $25.25-$41.85 as of November: Chairman, President and CEO, Director Robert J. Genader and Senior Managing Director Kathleen A. Mcdonough bought 10,000 shares each, Executive VP John W. Uhlein bought 7,500 shares, Director Thomas C. Theobald bought 4,000 shares, Director Michael A. Callen bought 3,000 shares, Senior Managing Director David W. Wallis bought 2,500 shares, Director Henry D. G. Wallace bought 2,250, and Senior Managing Director Thomas J. Gandolfo bought 1,000 shares."
* Zacks Lowers MGIC Shares To 'Sell' (Milwaukee Journal Sentinel, Dec. 26th): "Zacks Equity Research: The rating on shares of MGIC Investment Corp. (MTG) has been lowered to "sell" from "hold". The mortgage insurance company... expects to post losses through the end of 2008... Q3's $372.5 million loss... "came in substantially below our expectations," Zacks analyst Eric Rothmann wrote... MGIC's "performance trends continue to be negatively impacted by issues within the residential mortgage markets, and expect higher delinquency rates and additional losses from foreclosed loans over the near-term... We are expecting expenses from losses incurred to be substantially elevated over the next year." The company has also cut its quarterly dividend by 90% to $0.02.5/share. Rothmann believes the dividend "remains vulnerable."
Mortgage Lenders
* Wells Fargo Yields to AG Regs (Boston Herald, Dec. 27th): "Wells Fargo (WFC) is refusing to reimburse mortgage brokers across Massachusetts... via a controversial payment system that’s been harshly criticized by Attorney General Martha Coakley. WFC, one of the top mortgage lenders in Massachusetts, told brokers...last week that... it will no longer do business with brokers who use a “yield spread premium” to pay themselves... Traditionally, those seeking mortgages are charged flat upfront point fees to process mortgages [which] many lower-income customers can’t afford... So many brokers... use “ysp” that allow those fees to be paid via higher interest rates spread out over the course of a mortgage loan."
* Most U.S. Stocks Decline on Retail Sales, Home Price Concern (Bloomberg, Dec. 26th): "MBIA, the world's biggest bond insurer, gained $1.84, or 9.2%, to $21.96. Davis Selected Advisers LP, a money manager which also plans to take a $1.2 billion stake in Merrill Lynch & Co., said today in a filing with the SEC that it increased its stake in MBIA to 5.1%.Bear Stearns added $0.49 to $89.29. Billionaire investor Joseph Lewis said he raised his stake in Bear Stearns for the second time this month after the fifth-biggest U.S. securities firm's stock fell 11% in December. Lewis now holds 9.6% of the company, according to a regulatory filing Wednesday."
* Spaces And Places: Home Builders' Solution For State's Housing Slump (San Jose Mercury News, Dec. 25th): "Joseph Perkins, head of the Northern California Home Builders Association... says he will work in 2008 to raise the so-called "conforming" loan limit from $417,000 to $600,000. That refers to loans eligible to be purchased by either Fannie Mae or Freddie Mac. Perkins: "Housing generates $273 billion in economic output in this state. Our governor has declared a fiscal emergency due to diminished tax receipts because of the housing downturn. It makes sense to jump-start housing again by creating some incentives." Building Industry Association: New-home construction in November sank almost 50% from 2006 to 3,200 houses, and more than 20% from October."
http://seekingalpha.com/article/58491-housing-market-tracker-subprime-and-mortgage-review
Saturday, December 29, 2007
Friday, December 28, 2007
Bad Credit Debt Consolidation Mortgage – At Relatively Low Interest Rate
Are you fed up of giving various payments to different creditors. Looking for a program that can bring down your payments by making you debt free within short period? Avail bad credit debt consolidation mortgage.
What is a bad credit debt consolidation mortgage?
A bad credit debt consolidation mortgage is a loan to repay one’s consolidated debt in spite of the bad credit incurred. In other words easing the debt burden off faster is possible through refinancing of the mortgage which means that one pays less interest and swings off the hook by repaying the principal amount.
Comparative shopping for bad credit debt consolidation mortgage loans:
When you undertake debt consolidation loans, having bad credit does not always entail high charges as penalty. Comparative shopping for online consumer debt consolidation loans enables huge savings on these debt consolidation loans which means you have more cash to pay off your debts.
Check out the online quotes offered by consumer debt consolidation agencies. Use a debt consolidation calculator available online to check your stand. Surf the Internet for websites of lenders and brokers. Most websites will display rates of interest lenders are likely to offer but if you are seeking a bad credit debt consolidation mortgage, then, be specific about the quotes.
Financial institutions offer a variety of mortgage loans especially the home equity loans which spell low rates of interest and flexible repayment terms in exchange for collateral like real estate, bonds or shares. A home equity loan is akin to a second mortgage on your asset, the home, and it borrows a portion of or the entire equity though the safeguard is that a line of credit enables one to withdraw the entire equity at a time as and when required.
What to watch for when undertaking a debt consolidation loan:
* Do not jump for the first lender you come across. Check out all options: financial institutions, traditional lenders, private investors and sub prime lenders. The best deals essentially come through from the smaller lenders.
* Know whether the lenders you liaise with are legitimate ones or not. Check out the schemes, questionnaires, costs entailed.
* Know whether the interest rates can be worked on for mutual benefit eventually and whether mortgages can be refinanced once the bad credit has been reasonably eliminated.
* Understand the language the lenders speak and do not sign documents without comprehending them in full.
* Learn to manage your money. Budget your income and expenses every month, avoid credit cards and use cash when making purchases. Keep track of the repayments and make them regularly to avoid penalties and loss of the collateral.
http://www.americanchronicle.com/articles/viewArticle.asp?articleID=47345
What is a bad credit debt consolidation mortgage?
A bad credit debt consolidation mortgage is a loan to repay one’s consolidated debt in spite of the bad credit incurred. In other words easing the debt burden off faster is possible through refinancing of the mortgage which means that one pays less interest and swings off the hook by repaying the principal amount.
Comparative shopping for bad credit debt consolidation mortgage loans:
When you undertake debt consolidation loans, having bad credit does not always entail high charges as penalty. Comparative shopping for online consumer debt consolidation loans enables huge savings on these debt consolidation loans which means you have more cash to pay off your debts.
Check out the online quotes offered by consumer debt consolidation agencies. Use a debt consolidation calculator available online to check your stand. Surf the Internet for websites of lenders and brokers. Most websites will display rates of interest lenders are likely to offer but if you are seeking a bad credit debt consolidation mortgage, then, be specific about the quotes.
Financial institutions offer a variety of mortgage loans especially the home equity loans which spell low rates of interest and flexible repayment terms in exchange for collateral like real estate, bonds or shares. A home equity loan is akin to a second mortgage on your asset, the home, and it borrows a portion of or the entire equity though the safeguard is that a line of credit enables one to withdraw the entire equity at a time as and when required.
What to watch for when undertaking a debt consolidation loan:
* Do not jump for the first lender you come across. Check out all options: financial institutions, traditional lenders, private investors and sub prime lenders. The best deals essentially come through from the smaller lenders.
* Know whether the lenders you liaise with are legitimate ones or not. Check out the schemes, questionnaires, costs entailed.
* Know whether the interest rates can be worked on for mutual benefit eventually and whether mortgages can be refinanced once the bad credit has been reasonably eliminated.
* Understand the language the lenders speak and do not sign documents without comprehending them in full.
* Learn to manage your money. Budget your income and expenses every month, avoid credit cards and use cash when making purchases. Keep track of the repayments and make them regularly to avoid penalties and loss of the collateral.
http://www.americanchronicle.com/articles/viewArticle.asp?articleID=47345
Sunday, December 16, 2007
A Top Secret Investment Opportunity: Don't Fight the Fed!
How the world has changed! Marty Zweig's 1986 book, Winning on Wall Street, gained a lot of popularity after he famously called the market crash of 1987. One of the most noted Zweig precepts was the following: Don't Fight the Fed!
What has changed?
The Challenge
Fed policy under Bernanke has a new challenge. The seizure in the credit markets has created a situation where the Fed Open Market Committee sees a challenge that has several different dimensions. From their perspective, the problem is not just one of adding liquidity. The Fed is attempting to address two specific additional concerns:
1. The elevated LIBOR rate -- something that affects Adjustable Rate Mortgages, swaps, and many business loans. LIBOR, a rate little understood by equity traders, reflects the interest charged by non-US banks holding dollar deposits. It is elevated because the banks are unsure of the counter party exposure to structured investment vehicles that include mortgage securities. The lack of transparency in other bank's holdings makes short-term lending problematic. Why reach for a little yield, when there is a risk of bank failure? When LIBOR was adopted in many agreements, it reflected a reasonable risk premium to Treasury Bills. That was the usefulness - something better than the prime rate. The agreements did not contemplate a situation like the current one.
2. Banks holding mortgage investments on their balance sheets may have difficulty in using these as collateral for additional lending. This limits their ability to do future lending, an important consideration. The discount window accepts these assets as collateral, but the rate is higher and there is still a stigma attached to this approach.
The Fed Reaction
The Fed chose this week to target the specific problem rather than to cut fed funds by 50 bp's instead of 25 bp's. Was this wise?
As we noted in our reaction to the Fed policy, the proposed auction process, the Term Auction Facility [TAF] is explicitly targeted to the perceived problems. We see the Fed as completely engaged in the process of reducing LIBOR and creating a market for mortgage holdings.
Earth to traders! The concept of not fighting the Fed has a new dimension. Get with it, or lose.
The Fed succeeded only marginally with its effort at expanding borrowing through the discount window. It is trying something else. If it works, they will do more of it. If it does not, they will try something else.
The Market Reaction
We are struggling to recall a reaction to a new policy that was more negative. Partly because of the market decline on the day of the Fed announcement, and partly because of the timing of the new policy initiative, nearly everyone is negative.
Leading market pundits of both bullish and bearish persuasions condemn the Fed. Some are unhappy that the markets were misled. Some think the policy will be ineffective. Traders must remember that each day is a new one. Complaints about the sloppy Fed timing of announcements have little bearing on future prospects.
In his excellent blog, Harvard Economist Greg Mankiw highlights the bad press for the Fed. He notes, as we did last week, the divergence of opinion between professional economists and everyone else.
Our Perspective
When so many people have the same reaction, and we think it is incorrect, it provides an unusual opportunity. Leading critics think that the Fed members are not as intelligent as they are, that they are all academics and therefore out of touch, that they are "behind the curve", that another 25 bp's of fed funds would have made the difference, and that the Fed should include trucking company executives and fund managers (to pick at random two recent comments). More on these criticisms in future articles.
The criticisms often point to the lack of reaction in current LIBOR rates (using many incorrect time periods and many irrelevant expirations), while declaring the Fed's innovative TAF as dead on arrival. Anyone thinking this through should realize that the impact on LIBOR cannot be expected to happen until the auctions take place. We shall see this week.
Conclusion
We acknowledged that the timing of the Fed announcements lacked sensitivity to market reactions. The "false signals" were neither planned nor expected. Those who do not understand government agencies tend to impute motives that were not really there. They think that organizations behave like a unitary actors -- with a clear, rational plan in mind.
The simple explanation is that the Fed is doing multiple things, with various other cooperating agencies, on different schedules with different announcement timetables. One of the advantages for our readers is that we have the only approach (we think) that describes for readers the actual policy-making process.
Could the Fed have done better? Sure. But the process of transparency in policy announcements is new, and still developing. Meanwhile, the question for investors is what to do now. We take the approach that no one is stupid. We look for the best information from all sources.
We do not know whether the TAF will be successful, and neither does the Fed. They are attempting something innovative that might work. If it does, you will soon see many articles in mainstream publications that will get around to explaining what economists and our readers already know. It could be a solid market catalyst, and that is our position going into this week.
For readers with futures accounts, we have bought a few Jan 08 Eurodollar contracts. This is an interest rate instrument based upon LIBOR that should rally if the TAF is successful. For those who do not trade futures, a perceived success in the auctions should also help equities.
A Final Thought
http://seekingalpha.com/article/57373-a-top-secret-investment-opportunity-don-t-fight-the-fed
What has changed?
The Challenge
Fed policy under Bernanke has a new challenge. The seizure in the credit markets has created a situation where the Fed Open Market Committee sees a challenge that has several different dimensions. From their perspective, the problem is not just one of adding liquidity. The Fed is attempting to address two specific additional concerns:
1. The elevated LIBOR rate -- something that affects Adjustable Rate Mortgages, swaps, and many business loans. LIBOR, a rate little understood by equity traders, reflects the interest charged by non-US banks holding dollar deposits. It is elevated because the banks are unsure of the counter party exposure to structured investment vehicles that include mortgage securities. The lack of transparency in other bank's holdings makes short-term lending problematic. Why reach for a little yield, when there is a risk of bank failure? When LIBOR was adopted in many agreements, it reflected a reasonable risk premium to Treasury Bills. That was the usefulness - something better than the prime rate. The agreements did not contemplate a situation like the current one.
2. Banks holding mortgage investments on their balance sheets may have difficulty in using these as collateral for additional lending. This limits their ability to do future lending, an important consideration. The discount window accepts these assets as collateral, but the rate is higher and there is still a stigma attached to this approach.
The Fed Reaction
The Fed chose this week to target the specific problem rather than to cut fed funds by 50 bp's instead of 25 bp's. Was this wise?
As we noted in our reaction to the Fed policy, the proposed auction process, the Term Auction Facility [TAF] is explicitly targeted to the perceived problems. We see the Fed as completely engaged in the process of reducing LIBOR and creating a market for mortgage holdings.
Earth to traders! The concept of not fighting the Fed has a new dimension. Get with it, or lose.
The Fed succeeded only marginally with its effort at expanding borrowing through the discount window. It is trying something else. If it works, they will do more of it. If it does not, they will try something else.
The Market Reaction
We are struggling to recall a reaction to a new policy that was more negative. Partly because of the market decline on the day of the Fed announcement, and partly because of the timing of the new policy initiative, nearly everyone is negative.
Leading market pundits of both bullish and bearish persuasions condemn the Fed. Some are unhappy that the markets were misled. Some think the policy will be ineffective. Traders must remember that each day is a new one. Complaints about the sloppy Fed timing of announcements have little bearing on future prospects.
In his excellent blog, Harvard Economist Greg Mankiw highlights the bad press for the Fed. He notes, as we did last week, the divergence of opinion between professional economists and everyone else.
Our Perspective
When so many people have the same reaction, and we think it is incorrect, it provides an unusual opportunity. Leading critics think that the Fed members are not as intelligent as they are, that they are all academics and therefore out of touch, that they are "behind the curve", that another 25 bp's of fed funds would have made the difference, and that the Fed should include trucking company executives and fund managers (to pick at random two recent comments). More on these criticisms in future articles.
The criticisms often point to the lack of reaction in current LIBOR rates (using many incorrect time periods and many irrelevant expirations), while declaring the Fed's innovative TAF as dead on arrival. Anyone thinking this through should realize that the impact on LIBOR cannot be expected to happen until the auctions take place. We shall see this week.
Conclusion
We acknowledged that the timing of the Fed announcements lacked sensitivity to market reactions. The "false signals" were neither planned nor expected. Those who do not understand government agencies tend to impute motives that were not really there. They think that organizations behave like a unitary actors -- with a clear, rational plan in mind.
The simple explanation is that the Fed is doing multiple things, with various other cooperating agencies, on different schedules with different announcement timetables. One of the advantages for our readers is that we have the only approach (we think) that describes for readers the actual policy-making process.
Could the Fed have done better? Sure. But the process of transparency in policy announcements is new, and still developing. Meanwhile, the question for investors is what to do now. We take the approach that no one is stupid. We look for the best information from all sources.
We do not know whether the TAF will be successful, and neither does the Fed. They are attempting something innovative that might work. If it does, you will soon see many articles in mainstream publications that will get around to explaining what economists and our readers already know. It could be a solid market catalyst, and that is our position going into this week.
For readers with futures accounts, we have bought a few Jan 08 Eurodollar contracts. This is an interest rate instrument based upon LIBOR that should rally if the TAF is successful. For those who do not trade futures, a perceived success in the auctions should also help equities.
A Final Thought
http://seekingalpha.com/article/57373-a-top-secret-investment-opportunity-don-t-fight-the-fed
Bush lets banks write rules for mortgage relief
President George W. Bush and Treasury Secretary Henry Paulson have unveiled their subprime mortgage relief plan, which they call the “New Hope Alliance.” The corporate media coverage of Bush’s Dec. 6 announcement was massive. Sadly, the number of families whom this plan will help is miniscule.
Subprime mortgage loans are characterized by interest rates that start at 1 percent to 2 percent but soon “reset” to much higher rates. The Bush administration claims its plan will help families avoid foreclosure by freezing interest rates on some subprime loans for the next five years.
The administration has attempted to portray its mortgage relief plan as a lifeline for at-risk borrowers. But the plan is more akin to a wish list for the very same banks and mortgage lenders whose insatiable greed helped create the currently unfolding economic crisis.
The Bush-Paulson plan includes a maze of eligibility requirements that are designed to disqualify all but a handful of the more than 2 million households facing foreclosure. Housing advocacy groups estimate that less than 2 percent of subprime borrowers nationwide would qualify for a rate freeze under the administration’s plan. And it provides no help for the growing number of renters across the country who have been left homeless since their landlords entered foreclosure due to a subprime loan.
The Bush administration has ensured, however, that the plan is agreeable to mortgage lenders and Wall Street banks by making lender participation in the relief plan completely voluntary. In other words, the banks and mortgage lenders don’t have to freeze interest rates if they don’t want to. They are likely to do so only if they decide that the housing market is so glutted that going the foreclosure route could leave them stuck with property that can’t be sold.
This hollow “relief” plan stands in stark contrast to the hundreds of billions of dollars in bailout money that the Federal Reserve has handed the Wall Street banks and investment funds over the past few months.
These bailout funds have come in the form of massive liquidity infusions and central bank purchases of collateralized debt obligations. CDOs are asset-backed securities that are tied to mortgage loans. Banks such as Citigroup and Bank of America hold this now-worthless paper in massive quantities. The Federal Reserve has been attempting to bail the major banks out of their crisis by essentially taking the worthless paper off the banks’ balance sheets.
Working-class households are entering into foreclosure and bankruptcy at levels not seen since the Great Depression, yet it is the rich capitalist investors and bankers who are given hundreds of billions of dollars in rescue funds.
Across the country, once-vibrant working-class communities have turned into near ghost towns as “For Sale” signs and boarded-up windows have become ubiquitous. Workers are also suffering under the weight of rising food and energy costs at the same time that the economic downturn is intensifying the bosses’ drive to slash wages and cut jobs. Yet the only relief plan the president can conjure up is to tell workers to “hope” that banks will voluntarily freeze interest rates on some mortgages.
Recent polls suggest that the economy is fast becoming the number one issue on the minds of potential voters in the 2008 election. Eager to garner votes, the Democrats have also been outlining proposals for mortgage relief. It’s part of a debate within the ruling class over how to smooth over some of the massive fallout from the currently unfolding crisis.
“Relief” for the working class will not come through the empty proposals of ruling-class politicians. It takes the organized resistance of the multinational working class against the banks and swindlers on Wall Street who are robbing workers of their homes. Democrats and Republicans can debate back and forth endlessly over their mortgage plans, with little consequence. But millions of workers in the streets demanding a moratorium on foreclosures, layoffs and wage cuts would create the potential for truly lasting relief.
Articles copyright 1995-2007 Workers World. Verbatim copying and distribution of this entire article is permitted in any medium without royalty provided this notice is preserved.
http://www.workers.org/2007/us/mortgages-1220/
AM, Sun 16th Dec - UK house prices: Spin on this
The worrying factor here is that consumer confidence and sentiment dictates house prices. After-all, if we decide to lower our values, house prices will fall...
Posted: 10:04 am, 16th December 2007
UK house prices have risen according to Government figures. And, as the DCLG index uses data from the land registry, it would seem the opinionated 'gloomers' writing articles for media these days have got it all wrong. Again!
I was looking back at some house price forecasts from the so called 'experts' over the past 5 years. Our hastiness to fall for the spin that is spun by freelance editors listening to these predictions is worrying to say the least.
Most experts are actually still predicting a positive outlook for house prices in 2008. Knight Frank believe house prices will rise 10% in prime London while the Council of Mortgage Lenders (CML) predict a 2-3% rise. Lombard, Nationwide, HSBC, Hometrack and Savills all predict 0-5% growth during 2008. In fact, the only notable gloomers are HousePriceCrash.co.uk and FirstRung.co.uk - hardly suprising considering their alliance.
We will brush past the rediculous 35% fall for 2008 predicted by HousePriceCrash.co.uk and focus on the much publicised fall predicted by the well respected Capital Economics, one of the leading economic research consultancies in the UK and founded by Roger Bootle who is one of the City of London’s best known economists, having worked in or around the financial markets since 1978.
As many people are placing a good deal of their faith on such organisations, I thought it pertinent to highlight some cracks.
Capital Economics predicted that house prices were going to fall by some staggering 20% from January 2005 through to January 2007. Clearly, Mr Bootle has a bad opinion of our own property market. And, it would seem, a knack for getting things glaringly wrong. House prices actually rose by some 22% over this period making the Capital Economic prediction a massive 42% wide of the mark.
FirstRung.co.uk and HousePriceCrash.co.uk are new additions to the prediction pile - mainly because they are trying to make up the numbers in the notable absence of past public prophets.
It would seem predicting house prices is an impossible task. Those that do stick their necks out usually get it wrong and those that don't just sit back and laugh at the endless spin.
I read an article on FirstRung.co.uk that had the headline "UK house prices crash 1.1%". A little desperate I am sure you will agree. Aside from the fact that house prices haven't crashed, such a minute 'fall' certainly doesn't justify such a ludicrous spin. Strangely, this actually filled me with some confidence. If such websites are declaring a crash at a time when a crash is not even close it surely shows that they have decided to clutch at as many straws as they can!
The worrying factor here is that consumer confidence and sentiment dictates house prices. After-all, if we decide to lower our values out of fear of a falling market, house prices will innevitably fall. This is actually the main problem, not the housing market or house prices themsleves.
With RightMove reporting a drop in prices, it would seem that this theory is correct. Asking prices have fallen because the press are spinning yarns fuelled by wild predictions from historically innacurate forecasters influenced by largely unreliable data.
If we ignore the spin and focus on the actual prices of property sold we will surely not go far wrong. For the most accuarate index look to the DCLG data. They showed house prices rising 0.5% in November following a rise of 0.7% in October.
Strange then how so many other less reliable indices are showing house prices falling!? It would seem innacurate information is available in abundance.
A friend once said to me - "54.9% of statistics are made up on the spot".
The worrying factor here is that consumer confidence and sentiment dictates house prices. After-all, if we decide to lower our values, house prices will fall...
Posted: 10:04 am, 16th December 2007
UK house prices have risen according to Government figures. And, as the DCLG index uses data from the land registry, it would seem the opinionated 'gloomers' writing articles for media these days have got it all wrong. Again!
I was looking back at some house price forecasts from the so called 'experts' over the past 5 years. Our hastiness to fall for the spin that is spun by freelance editors listening to these predictions is worrying to say the least.
Most experts are actually still predicting a positive outlook for house prices in 2008. Knight Frank believe house prices will rise 10% in prime London while the Council of Mortgage Lenders (CML) predict a 2-3% rise. Lombard, Nationwide, HSBC, Hometrack and Savills all predict 0-5% growth during 2008. In fact, the only notable gloomers are HousePriceCrash.co.uk and FirstRung.co.uk - hardly suprising considering their alliance.
We will brush past the rediculous 35% fall for 2008 predicted by HousePriceCrash.co.uk and focus on the much publicised fall predicted by the well respected Capital Economics, one of the leading economic research consultancies in the UK and founded by Roger Bootle who is one of the City of London’s best known economists, having worked in or around the financial markets since 1978.
As many people are placing a good deal of their faith on such organisations, I thought it pertinent to highlight some cracks.
Capital Economics predicted that house prices were going to fall by some staggering 20% from January 2005 through to January 2007. Clearly, Mr Bootle has a bad opinion of our own property market. And, it would seem, a knack for getting things glaringly wrong. House prices actually rose by some 22% over this period making the Capital Economic prediction a massive 42% wide of the mark.
FirstRung.co.uk and HousePriceCrash.co.uk are new additions to the prediction pile - mainly because they are trying to make up the numbers in the notable absence of past public prophets.
It would seem predicting house prices is an impossible task. Those that do stick their necks out usually get it wrong and those that don't just sit back and laugh at the endless spin.
I read an article on FirstRung.co.uk that had the headline "UK house prices crash 1.1%". A little desperate I am sure you will agree. Aside from the fact that house prices haven't crashed, such a minute 'fall' certainly doesn't justify such a ludicrous spin. Strangely, this actually filled me with some confidence. If such websites are declaring a crash at a time when a crash is not even close it surely shows that they have decided to clutch at as many straws as they can!
The worrying factor here is that consumer confidence and sentiment dictates house prices. After-all, if we decide to lower our values out of fear of a falling market, house prices will innevitably fall. This is actually the main problem, not the housing market or house prices themsleves.
With RightMove reporting a drop in prices, it would seem that this theory is correct. Asking prices have fallen because the press are spinning yarns fuelled by wild predictions from historically innacurate forecasters influenced by largely unreliable data.
If we ignore the spin and focus on the actual prices of property sold we will surely not go far wrong. For the most accuarate index look to the DCLG data. They showed house prices rising 0.5% in November following a rise of 0.7% in October.
Strange then how so many other less reliable indices are showing house prices falling!? It would seem innacurate information is available in abundance.
A friend once said to me - "54.9% of statistics are made up on the spot".
Posted: 10:04 am, 16th December 2007
UK house prices have risen according to Government figures. And, as the DCLG index uses data from the land registry, it would seem the opinionated 'gloomers' writing articles for media these days have got it all wrong. Again!
I was looking back at some house price forecasts from the so called 'experts' over the past 5 years. Our hastiness to fall for the spin that is spun by freelance editors listening to these predictions is worrying to say the least.
Most experts are actually still predicting a positive outlook for house prices in 2008. Knight Frank believe house prices will rise 10% in prime London while the Council of Mortgage Lenders (CML) predict a 2-3% rise. Lombard, Nationwide, HSBC, Hometrack and Savills all predict 0-5% growth during 2008. In fact, the only notable gloomers are HousePriceCrash.co.uk and FirstRung.co.uk - hardly suprising considering their alliance.
We will brush past the rediculous 35% fall for 2008 predicted by HousePriceCrash.co.uk and focus on the much publicised fall predicted by the well respected Capital Economics, one of the leading economic research consultancies in the UK and founded by Roger Bootle who is one of the City of London’s best known economists, having worked in or around the financial markets since 1978.
As many people are placing a good deal of their faith on such organisations, I thought it pertinent to highlight some cracks.
Capital Economics predicted that house prices were going to fall by some staggering 20% from January 2005 through to January 2007. Clearly, Mr Bootle has a bad opinion of our own property market. And, it would seem, a knack for getting things glaringly wrong. House prices actually rose by some 22% over this period making the Capital Economic prediction a massive 42% wide of the mark.
FirstRung.co.uk and HousePriceCrash.co.uk are new additions to the prediction pile - mainly because they are trying to make up the numbers in the notable absence of past public prophets.
It would seem predicting house prices is an impossible task. Those that do stick their necks out usually get it wrong and those that don't just sit back and laugh at the endless spin.
I read an article on FirstRung.co.uk that had the headline "UK house prices crash 1.1%". A little desperate I am sure you will agree. Aside from the fact that house prices haven't crashed, such a minute 'fall' certainly doesn't justify such a ludicrous spin. Strangely, this actually filled me with some confidence. If such websites are declaring a crash at a time when a crash is not even close it surely shows that they have decided to clutch at as many straws as they can!
The worrying factor here is that consumer confidence and sentiment dictates house prices. After-all, if we decide to lower our values out of fear of a falling market, house prices will innevitably fall. This is actually the main problem, not the housing market or house prices themsleves.
With RightMove reporting a drop in prices, it would seem that this theory is correct. Asking prices have fallen because the press are spinning yarns fuelled by wild predictions from historically innacurate forecasters influenced by largely unreliable data.
If we ignore the spin and focus on the actual prices of property sold we will surely not go far wrong. For the most accuarate index look to the DCLG data. They showed house prices rising 0.5% in November following a rise of 0.7% in October.
Strange then how so many other less reliable indices are showing house prices falling!? It would seem innacurate information is available in abundance.
A friend once said to me - "54.9% of statistics are made up on the spot".
The worrying factor here is that consumer confidence and sentiment dictates house prices. After-all, if we decide to lower our values, house prices will fall...
Posted: 10:04 am, 16th December 2007
UK house prices have risen according to Government figures. And, as the DCLG index uses data from the land registry, it would seem the opinionated 'gloomers' writing articles for media these days have got it all wrong. Again!
I was looking back at some house price forecasts from the so called 'experts' over the past 5 years. Our hastiness to fall for the spin that is spun by freelance editors listening to these predictions is worrying to say the least.
Most experts are actually still predicting a positive outlook for house prices in 2008. Knight Frank believe house prices will rise 10% in prime London while the Council of Mortgage Lenders (CML) predict a 2-3% rise. Lombard, Nationwide, HSBC, Hometrack and Savills all predict 0-5% growth during 2008. In fact, the only notable gloomers are HousePriceCrash.co.uk and FirstRung.co.uk - hardly suprising considering their alliance.
We will brush past the rediculous 35% fall for 2008 predicted by HousePriceCrash.co.uk and focus on the much publicised fall predicted by the well respected Capital Economics, one of the leading economic research consultancies in the UK and founded by Roger Bootle who is one of the City of London’s best known economists, having worked in or around the financial markets since 1978.
As many people are placing a good deal of their faith on such organisations, I thought it pertinent to highlight some cracks.
Capital Economics predicted that house prices were going to fall by some staggering 20% from January 2005 through to January 2007. Clearly, Mr Bootle has a bad opinion of our own property market. And, it would seem, a knack for getting things glaringly wrong. House prices actually rose by some 22% over this period making the Capital Economic prediction a massive 42% wide of the mark.
FirstRung.co.uk and HousePriceCrash.co.uk are new additions to the prediction pile - mainly because they are trying to make up the numbers in the notable absence of past public prophets.
It would seem predicting house prices is an impossible task. Those that do stick their necks out usually get it wrong and those that don't just sit back and laugh at the endless spin.
I read an article on FirstRung.co.uk that had the headline "UK house prices crash 1.1%". A little desperate I am sure you will agree. Aside from the fact that house prices haven't crashed, such a minute 'fall' certainly doesn't justify such a ludicrous spin. Strangely, this actually filled me with some confidence. If such websites are declaring a crash at a time when a crash is not even close it surely shows that they have decided to clutch at as many straws as they can!
The worrying factor here is that consumer confidence and sentiment dictates house prices. After-all, if we decide to lower our values out of fear of a falling market, house prices will innevitably fall. This is actually the main problem, not the housing market or house prices themsleves.
With RightMove reporting a drop in prices, it would seem that this theory is correct. Asking prices have fallen because the press are spinning yarns fuelled by wild predictions from historically innacurate forecasters influenced by largely unreliable data.
If we ignore the spin and focus on the actual prices of property sold we will surely not go far wrong. For the most accuarate index look to the DCLG data. They showed house prices rising 0.5% in November following a rise of 0.7% in October.
Strange then how so many other less reliable indices are showing house prices falling!? It would seem innacurate information is available in abundance.
A friend once said to me - "54.9% of statistics are made up on the spot".
Vote in Congress backs law to help subprime victims
The US Senate passed a bill yesterday that could help an estimated 200,000 homeowners avoid foreclosure, bringing lawmakers a step nearer to enacting legislation addressing the subprime mortgage crisis after weeks of deadlock.
The Senate bill raises the limit on the number of loans available through the Federal Housing Administration by allowing the federal agency that insures mortgage loans to halve the required downpayment for an FHA loan. It also increases the maximum allowable loan to $417,000.
The legislation passed on a 93-1 vote days after Harry Reid, the Senate majority leader, called on President George W. Bush to intervene in a long-running standoff with Republican lawmakers over the housing legislation.
The White House urged Congress to pass FHA reform when it unveiled its own industry-backed plan to address the housing meltdown. But the bill was stalled for weeks because of objections from Tom Coburn, a Republican senator. Hr said the FHA bill would create more liability for the government by leading to more, not fewer, risky loans.
Chuck Schumer, a New York Democratic senator, said: "It was past time to approve a proposal like this that can help a good number of Americans save their homes."
The Senate version of the legislation differs from the proposal passed in the House of Representatives, which has higher loan limits and more flexible downpayment standards. A White House spokesman said Mr Bush was pleased the Senate had passed the bill, but that he had "some concerns" with both versions. He is, nevertheless, expected to sign the bill into law once both houses agree on the final legislation.
Democrats feel that White House moves to tackle the mortgage crisis do not go far enough. But until yesterday, the Senate had failed to gather the political consensus needed to pass any legislation to address the housing meltdown.
http://www.ft.com/cms/s/0/cadc0304-aaaf-11dc-a779-0000779fd2ac.html
The Senate bill raises the limit on the number of loans available through the Federal Housing Administration by allowing the federal agency that insures mortgage loans to halve the required downpayment for an FHA loan. It also increases the maximum allowable loan to $417,000.
The legislation passed on a 93-1 vote days after Harry Reid, the Senate majority leader, called on President George W. Bush to intervene in a long-running standoff with Republican lawmakers over the housing legislation.
The White House urged Congress to pass FHA reform when it unveiled its own industry-backed plan to address the housing meltdown. But the bill was stalled for weeks because of objections from Tom Coburn, a Republican senator. Hr said the FHA bill would create more liability for the government by leading to more, not fewer, risky loans.
Chuck Schumer, a New York Democratic senator, said: "It was past time to approve a proposal like this that can help a good number of Americans save their homes."
The Senate version of the legislation differs from the proposal passed in the House of Representatives, which has higher loan limits and more flexible downpayment standards. A White House spokesman said Mr Bush was pleased the Senate had passed the bill, but that he had "some concerns" with both versions. He is, nevertheless, expected to sign the bill into law once both houses agree on the final legislation.
Democrats feel that White House moves to tackle the mortgage crisis do not go far enough. But until yesterday, the Senate had failed to gather the political consensus needed to pass any legislation to address the housing meltdown.
http://www.ft.com/cms/s/0/cadc0304-aaaf-11dc-a779-0000779fd2ac.html
Mortgage pain starts to hit spending
Half of homeowners whose mortgage rates have risen in the past year have cut back on spending to pay the more expensive loans, according to Bank of England research published today.
The rise in the number of households struggling to pay their debts is small but likely to fuel concerns about the ability of the 1.4m homeowners on fixed rates facing a sharp jump in repayments when their deals expire.
The NMG Research survey of 2,000 people in the Bank's quarterly bulletin found
8 per cent of homeowners with loans reported problems paying for their accommodation, similar to last year, but up on 2005. Almost one-quarter of those coming off cheap fixed-rate deals reported problems and 22 per cent found it difficult to service their new loans.
According to the article by Matt Waldron and Garry Young: "This was appreciably higher than the 5 per cent of mortgagors on continuing fixed-rate deals who reported problems." Of the total number of mortgage-holders, 16 per cent said that they had been on a fixed-rate deal that had expired over the year. Most reported a rise in repayments of £59 a month, or about 12 per cent of their average monthly repayments. The rise in mortgage payments was equivalent to 0.4 per cent of total household disposable income, the research said.
Another 38 per cent of homeowners with a mortgage were on a fixed rate and 23 per cent said their deal would expire within the next year.
About 30 per cent of people with mortgages owe more than £5,000 on top of their mortgage. Six per cent of those with a mortgage reported their unsecured debts were a heavy burden.
The Bank has been monitoring household finances to see whether the number of people getting into financial difficulty is large enough to pose a threat to the economy.
The survey was conducted in September, when the Bank's main rate was 5.75. It cut its main rate to 5.5 per cent this month.
*UK house prices slumped for the second month in a row from November to December, with the annual measure hitting a 21-month low, online estate agent Rightmove said today.
House prices in mid-December were 3.2 per cent lower on the month, the sharpest monthly decline since the series began in January 2002. The largest decline was a 6.8 per cent drop in Greater London followed by a 3.8 per cent slide in south-east England.
http://www.ft.com/cms/s/0/1f09c216-ac42-11dc-82f0-0000779fd2ac.html
The rise in the number of households struggling to pay their debts is small but likely to fuel concerns about the ability of the 1.4m homeowners on fixed rates facing a sharp jump in repayments when their deals expire.
The NMG Research survey of 2,000 people in the Bank's quarterly bulletin found
8 per cent of homeowners with loans reported problems paying for their accommodation, similar to last year, but up on 2005. Almost one-quarter of those coming off cheap fixed-rate deals reported problems and 22 per cent found it difficult to service their new loans.
According to the article by Matt Waldron and Garry Young: "This was appreciably higher than the 5 per cent of mortgagors on continuing fixed-rate deals who reported problems." Of the total number of mortgage-holders, 16 per cent said that they had been on a fixed-rate deal that had expired over the year. Most reported a rise in repayments of £59 a month, or about 12 per cent of their average monthly repayments. The rise in mortgage payments was equivalent to 0.4 per cent of total household disposable income, the research said.
Another 38 per cent of homeowners with a mortgage were on a fixed rate and 23 per cent said their deal would expire within the next year.
About 30 per cent of people with mortgages owe more than £5,000 on top of their mortgage. Six per cent of those with a mortgage reported their unsecured debts were a heavy burden.
The Bank has been monitoring household finances to see whether the number of people getting into financial difficulty is large enough to pose a threat to the economy.
The survey was conducted in September, when the Bank's main rate was 5.75. It cut its main rate to 5.5 per cent this month.
*UK house prices slumped for the second month in a row from November to December, with the annual measure hitting a 21-month low, online estate agent Rightmove said today.
House prices in mid-December were 3.2 per cent lower on the month, the sharpest monthly decline since the series began in January 2002. The largest decline was a 6.8 per cent drop in Greater London followed by a 3.8 per cent slide in south-east England.
http://www.ft.com/cms/s/0/1f09c216-ac42-11dc-82f0-0000779fd2ac.html
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