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16 posts from September 2007

September 30, 2007

How George Bush Destroyed The U.S. Economy

How George Bush Destroyed The U.S. Economy

…And The Congress That Let Him

4wallsandaceiling.com Newsletter


Nick Says…

I have never been a fan of george “dub-ya” bush, however, did you know that his name is an anagram of “complete and utter numpty!”

From the whole questionable entrance into politics and the presidency to the farce that has become the current American financial situation, via a war that did not need to exsist… he has always had an air of un-reasonable stupidity.

… how can America insist on a president who’s IQ is marginally over that of a Gorilla? … at least Gorillas don't "stitch-up" their "clan" or instigate unecessary wars... or back companies called Enron! Click here

Georgebushandnancypelosi_2 George Bush is shaping up to be the Britney Spears of Presidents. Start off strong, but shaky, substance and position questioned, then crash and burn.

Some believe he won the election, some believe he did not. It was a lip sync victory for some. All that’s left for him to do now is flash, which I trust he won’t

He proclaimed faith in God, even referring to himself as a Christian, but his conduct in very important matters has been anything but.

The war has claimed many lives and usurped over 1 trillion in tax dollars, with the President requesting tens of billions more. Congress, inexplicably, has given him a blank check, underwritten by your tax dollars, for a war the White House lied to the public regarding.

If he had told people what he was truly doing with that war they would have told him: you can’t control that rambunctious region nor its assets and you’re going to send the U.S. economy in a terrible tailspin, from which it may never fully recover.

But, moving on from the spilled blood, oop's, milk for a second. Let’s look at some other lesser, but important factors, in where the nation is headed.

Record Number Of Citizens Lose Their Homes To Foreclosure

This year a record 3 MILLION Americans have lost their homes, breeding the worst mortgage crisis in U.S. history that George Bush does not have the mental capacity to fix.

Said mortgage crisis has caused foreign banks with a culminated trillions in assets to pull out of American financial institutions, freeze assets abroad and adopt a, “We’re not lending you anymore money until we see where this crisis is going” attitude.

U.S. Dollar Declines

The U.S. dollar has decreased in value. So much so that the Euro and Pound have soared and last week, the Canadian dollar caught up with the U.S. dollar for the first time since 1976. That can be interpreted as erasing 30 years of progress.

Bush In Denial

Yale all over again, I see.

Over the last month, economists who don’t use crib sheets, have rendered some dire predictions as to where they think the economy is headed. Yet Bush in his weekly radio addresses continues to declare the economy is “strong.”

Which economy are you looking at? You do realize the £ is not the same as the $ sign.

Citizens are suffering. There is no way Bush’s daze of denial is going to help matters. Since when did denial ever solve a problem.

At the beginning of the 20th century, the world entered it with Britain being number one. By the end of the 20th century, America was number one. Citizens and immigrants from all over, engaged in free enterprise, started businesses and became success stories, and thus the American Dream was born.

You however, Mr. Bush, adopted a terrible financial philosophy on how to run a country…into the ground. You started a costly deceitful war, spent money like it was going out of style and took care of the corporations that were trampling the citizens.

Banking Industry Allowed To Gouge And Swindle Citizens

You left the banking industry unregulated at the worst possible time in history - during the country’s most expensive war. There were credible reports coming out from all over the country of deceitful banking practices gouging citizens and swindling their homes and you did nothing.

Because in your mind, corporations and big business come first, which is a stupid financial motto, but clearly one you live by.

Banks took predatory lending to new extremes during your administration. They knew the ally they had in you and gouged the financial life out the country’s citizens.

Americans were enticed with low introductory new loan and refinance rates, didn’t grasp what they were truly signing and now people who had $600 mortgages are being told THIS YEAR their new mortgage payment is $1,800 per month. How do you expect them to pay that or do you just not give a hoot because your bills are paid.

I know people that this has happened to. There were even people on the national news protesting that they are going to lose their homes to this. MANY CITIZENS ALREADY HAVE. The banks are putting the squeeze on citizens all over the country, left, right and center.

But you, Mr. President, allowed these banks to prey on citizens, because in your eyes big business can do no wrong. Well guess what, they can…and they have…and now it’s effecting the country’s bottom line:

Terrible Economic Ripple Effect

This historic mortgage crisis has created a terrible ripple effect. Home builders are going under, as they have built homes people aren’t buying. People can’t afford it, as the cost of living in the country has risen due to the war.

Higher Cost Of Living

The war has driven up the cost of living via added food and gas costs and that’s in addition to you raising many fees across the country for government services to pay for said war. It’s a vicious cycle that you initiated with your deeds.

Bad Credit

Many Americans now have bad credit after you allowed all that unprecedented predatory lending to take place that cost millions of citizens the homes they did have - while others were swindled out of their properties via mortgage scams and unscrupulous municipality boards, as you twiddled your thumbs and watched Iraqi oil…and blood flow.

Therefore, with bad credit, how are citizens going to buy new homes to replace the ones they lost. And your nonsensical excuse last month that the government is not going to bail out people who bought homes they couldn’t afford holds no water and contradicts facts.

So, you’re saying the 3 million foreclosures so far this year are 3 million irresponsible Americans who bought homes above what they could afford and not people who were scammed out of their homes as FBI stats suggest, while others were taken advantage of by predatory lenders, who out of nowhere tripled the figure of their mortgage payments this year, as news reports suggest.

One of my friends was paying $380 per month last year. She is now paying $980 with a nasty Washington Mutual bank rep even sniping “we are not obligated to send you a statement” regarding the payment hike.

Another friend, whose mortgage is with another bank, got the shock of her life today when she opened her mail, only to find out that after 15 years of home ownership with payments of $450 per month, her payment has shot up overnight to $1,800 per month.

And this is the story of many all across America with banks putting the squeeze on citizens to compensate for this mortgage crisis. One that the President and Congress allowed to happen, that is hurting millions of Americans.

I started writing about this issue last November in my Sound Off Column and if I saw this disaster coming why didn’t they. After all, they’re supposed to be the professionals, right.

Industries In Trouble

The crisis is breeding the fall of a few industries. Home builders, furniture stores and ironically, mortgage companies.

For further reference on the latter, see predatory lender Countrywide that almost folded with 28,000 employees until Bank Of America sent a cash infusion. See Eagle First Mortgage and its 75 branches that were shutdown for “illegal lending practices” that defrauded Americans. Also see American Home Mortgage that folded, leaving 6,000 people out of work.

But earlier in the year, what was the FBI’s little dingbat reasoning for this unexpected mortgage crisis: oh, rogue independent citizens are trying to take advantage of our lucrative real estate market. Yea, they were part right - they just left out the unscrupulous banks.

Home Builders Going Under

Recently, there was a developer that borrowed $110,000,000 from a bank to build a condo building on popular Miami Beach. This year he had to walk away from the condo building after failing to sell even a single unit. The bank then foreclosed. His business in ruined. That’s a true picture of what the economy is like now.

Furniture Stores In Financial Straits

Furniture stores worth billions are in financial trouble, some closing, because people aren’t buying furniture to put in the homes they aren’t buying from the builders. Once again, a vicious cycle.


The farmers are feeling the heat with the President running away undocumented migrant workers. They can’t afford to pay others to help them run their farms that feed the nation.


With businesses going under in the mortgage crisis, that means jobs are lost, which can cause unemployment to skyrocket. That’s not good for any economy.

But you, Mr. President, clearly don’t grasp that, because you continue to spout your “the economy is strong” speech, while standing idly by as the crisis worsens.

Bush Administration Accused Of Rigging Big Tobacco Verdicts

Former U.S. Attorney Sharon Eubanks

Another example of this practice of yours in looking out for the corporations at the citizens’ expense is illustrated in Big Tobacco.

Last month, I read an excerpt of a book regarding how you “rigged Big Tobacco verdicts” via the court system to benefit your “Big Tobacco friends” in Texas.

Never mind tobacco killed off scores of Americans, who did not know how dangerous those little cancer sticks really were. But Big Tobacco knew, they had advance warning….but they didn’t bother to let everyone else in on what they’d discovered.

Rather than punishing them and giving the money to cancer victims who smoked for years, you protected the corporations. A U.S. attorney, Sharon Eubanks, even spoke out and stated she was instructed to rig award amounts to victims, reducing them by tens of billions of dollars, to protect Big Tobacco. That is unconscionable…and on your shift, Mr. President.


Then there’s Enron. Credible news pieces have stated that because you and your family are friends with the two CEOs of Enron and their families, they were allowed to continue running that farce of a business.

Rather than stopping the madness, when there were so many terrible warning signs, it was allowed to continue until it culminated into the biggest corporate disaster in U.S. history. Enron hurt many Americans, whose pensions and savings were wiped out.

I saw a 55 year old woman on TV that lost her pension in the whole Enron scandal. She dishearteningly stated she has to work for 10 more years rather than retiring now, as she had planned to do.

Her dreams of retiring with the money she EARNED was destroyed. She was cast into financial uncertainty. Many share her story, while Enron’s executives, your friends, had cashed out to the tune of millions.

But once again, you believe in protecting the corporation, rather than the citizens and it has become a hallmark of your presidency that history certainly will not forget.

It has further come back to burn your administration in a terrible way, as you now have the dubious distinction of being the president when America hit unprecedented financial lows.

The Middle Class Is Disappearing

The American middle class has just about disappeared. Many writers have noted this. It is now rich and poor, when before America had a very strong middle class.

Where This Is All Headed

What is forming is a similar situation to what happened in India, respectfully, with a small group of rich and a large group of poor.

Unemployment is going to skyrocket if the government is not careful.

Bad Financial Ideas

I don’t know who it is that put the idea in your head, Mr. President, that protecting corporate interests at the expense of a country with 300,000,000 citizens was the best course of action, because it wasn’t.

If citizens are broke, struggling to pay bills, losing their homes, they will spend less in the marketplace run by corporations and perform poorly at work at corporations.

You threw ethics out the window and let these corporations do whatever they wanted to the country’s citizens and now the treasury is paying a price for it.

You spent whatever you wanted, whenever you wanted as well, and now the seeds of these terrible decisions are sprouting up all over, threatening to consume the country financially.

You are going to go down as the worst president in U.S. history, but clearly you don’t grasp what that truly means or you wouldn’t have done half the bad things you did.

Senate agrees to raise U.S. credit limit

WASHINGTON, Sept 27 (Reuters) - With the U.S. government fast approaching its current $8.965 trillion credit limit, the Senate on Thursday gave final congressional approval of an $850 billion increase in U.S. borrowing authority.

The Senate voted 53-42 to raise the debt ceiling to $9.815 trillion, the fifth increase in the U.S. credit limit since President George W. Bush took office in January 2001.

“We have no choice but to approve it. If we fail to raise the debt ceiling soon, the U.S. Treasury will default for the first time in its history,” said Senate Finance Committee Chairman Max Baucus.

September 26, 2007

House price index September 2007

Click Here for House price index September 2007

Nick Says...

Click on the above for the latest House Price Index, courtesy of Rightmove.


September 21, 2007

Off-plan property, on target?

Off-plan property, on target?

4wallsandaceiling.com Newsletter

Source The Telegraph

Nick Says…

Amen… please understand, buying property “off plan” is akin to gambling or speculation, you are speculating against the value of the said property in the future.

Personally I like off plan buying, however, it is a skill of it’s own right and right now it’s probably not the best thing to be doing in the UK today based on the popular view that there is a “softening of the market”.

But that does not mean it is not possible to purchase off plan and make some money out of it.

Take Cyprus for example. Late last year I wrote a blog entitled “16 reasons to invest in Cyprus” Click here to read, the reality is these reasons still hold true today, however, there is a time limit to this… the good news is that time limit has not been reached.

For those of you who wish to invest in Cyprus GET GOING.

Buying off-plan, where you stake your claim to a property many months, or even years, before its completion, is heavily hyped up, with both huge discounts and stratospheric profits being promised by developers and property investment clubs.

Off-plan units are often offered for sale before the digger has dug the first hole, and the earlier you put down your deposit, the greater the discount you are offered.

As a very early buyer, you will be offered a discount of between five and 20 per cent on the finished product, which could be two or three years away. If you buy more than one property you can usually negotiate a bigger discount.

After putting down an initial deposit of, typically, 10 per cent, you will buy the rest in pre-arranged stages.

The other advantage of buying early is that you get the pick of the properties, as the choicest ones, not surprisingly, always go first. Buying off-plan also enables you to flip - that is, sell the property on as soon as it is finished.

Flipping allows you to take advantage of capital growth without actually completing the purchase or applying for a mortgage. You also avoid paying stamp duty as the eventual lease will be in the final purchaser's name.

Increasingly, off-plan developments are being aimed specifically at the buy-to-let investor, so what are the risks and the rewards?

Stephen Ludlow, of Ludlow Thompson estate agents, says: "Buying off-plan can work if the market is rising and there is sustained capital growth.

"But at times of high interest rates and a tightening up of the market, you could be left with something worth less on completion than when you bought it." The Financial Services Authority recently announced that 45 per cent of all repossessions were on new builds.

"And whether you plan to sell straight away or rent out the property, you could find yourself in competition with 50 other identical properties all coming onto the market at the same time.

"When the market goes quiet, you may find selling difficult, and it is impossible to predict any property market two or three years in advance.

"Also, you may not be able to achieve the promised high rents when you come to let." For these reasons, Ludlow believes that buying off-plan can be a high-risk strategy. New developments are heavily and cleverly marketed, and employ glossy, smiling sales teams who may be far better at selling than you are at resisting.

Another factor is that off-plan properties often start to lose value in the months after completion, rather like a new car loses value the very moment it is being driven out of the showroom.

Unlike the car, your property should start to increase in value over time, although Land Registry figures indicate that new builds rise at a slower rate than older properties.

Many new investors are tempted to buy off-plan, but the simple fact is that anything can happen to the property market between putting down that first deposit and being handed the house keys.

So, although it can work, and has worked well for many people, buying off-plan can be risky - particularly if there is no slack in your budget. So proceed - but with caution.


If you are interested in purchasing investment property or your own home in Cyprus, you should consider buying this book. It has 31 pages of the most concise information you could ever need when it come to buying property in Cyprus. From the Legal ramifications through to the Banking issues, all of which is complimented by some beautiful photographs of the island.

Available at 4wallsandaceiling.com for only £4.99.

Mazatos, ''Ornaments'', Cyprus

Rearblocka2_2 4wallsandaceiling.com is delighted to be able to offer its clients the opportunity to exclusively invest in our Mazatos "Ornaments" project in the sought after region of Mazatos, Larnaca Southern Cyprus.

1. 80% LTV
2. Prices start from as little as CYP £105,000
3. Uniquely designed resort offering a selection of 1 and 2 bedroom standard and a business room located on the ground floor
4. Located in a sought after area undergoing significant investment in its infrastructure and only 5 minutes from the newly approved PGA 18 hole Golf Course.
5. Completion date mid 2009 (Allowing investment to mature whilst under construction)


Mazatos "Ornaments" is situated along the south coast of Cyprus, an area of the island which remains unspoilt. The dual offering of a tranquil holiday combined with easy access to Larnaca town and the sea front promenade creates a very different holiday depending on the tastes of the visitor. A new 18 hole PGA approved golf course will be developed some 5 minutes drive away from the resort which will be just one of three on the island. As seen in Paphos property prices took a sharp upturn as a result. Expansion of the local marina will contribute to providing a cruising route to the island further increasing tourism. Together with the expansion of Larnaca Airport to cope with expected increase in visitors, and the introduction of low cost scheduled flights from the UK, it is not surprising that Cyprus has been voted in the top five hotspots for overseas investment!

In its elevated position and government restricting build of more than two stories, the views it currently enjoys should never change. Each apartment has its own individual design giving a distinctive character. This ideally located development is unique and designed to cater to both tourists and the residential market and therefore responding to either demand.

Click here to

September 19, 2007

Buy-to-let lender predicts crisis will be shortlived

Buy-to-let lender predicts crisis will be shortlived

4wallsandaceiling.com Newsletter

Source Guardian Unlimited

Nick Says…

As we thought thing are going to change, and for the better. However, it’s worth noting that over the coming few months before the end of the year there are going to be some bargains out there for those who are willing to put the shoe leather in!

Paragon, the UK mortgage firm that lends to buy-to-let landlords, predicted this morning that the crisis in the credit market will ease before the end of the year.

The company reassured investors that it would still hit its profits targets for this financial year, despite the impact of the disruption in the global markets. It said it had enough funding to see it through to 2008.

It also warned, though, that the hike in lending rates between banks in September might have an impact on overall profitability.

Article continues

"Clearly current market conditions have disrupted the normal workings of the money, banking and capital markets. Whilst we expect a return to market stability in due course, the Board will continue to closely monitor developments," said the company.

As it does not have any savers, Paragon is reliant on borrowing money from other financial institutions to underpin its loans. This market has effectively dried up in recent weeks, as banks have been very reluctant to lend to each other.

Last Friday Paragon was forced to issue a statement saying it had not sought help from the Bank of England, after troubled Northern Rock agreed its emergency funding. Despite assuring investors that it was not exposed to the US sub-prime chaos, Paragon's shares still fell almost 17% on Friday.

It said this morning that the buy-to-let market was still strong, echoing record figures from the Council of Mortgage Lenders last week.

Overall trading at Paragon for the last eleven months had been in line with expectations, with lending volumes up 30%.

Shares in the company were up 22.5p at 308.25p by mid-morning.

September 17, 2007

Buy-to-let thought to typify 'correct practices'

Buy-to-let thought to typify 'correct practices'

4wallsandaceiling.com Newsletter


Nick Says…

This is awesome… how true it is that the sub-prime lenders in the State’s should be having their “arses kicked” due to bad business practices. If only they had learnt how to reference their prospects like we do, then this may not have happened.

What a bunch of numpties.

Landlord Mortgages has advised non-conforming lenders to take a leaf out of landlords’ books.

Lee Grandin, managing director of Landlord Mortgages said of the current market conditions: “The news this week that Halifax and Abbey have increased the interest rates on their mortgages has set the media into a frenzy. The question is why? Put into perspective the rise of up to just 0.2% is not a huge one and should not be taken as an indicator of a huge downturn in the market as many of the doom-mongers are suggesting.

“The question is actually how has the US ended up in such a mess. The current situation could have been easily avoided had sub-prime lenders simply introduced the measures that landlords have been implementing for years. Any good landlord knows to check references for new tenants. If a prospective tenant has a history of not paying on time, the obvious answer for the landlord is to not rent to that tenant.

“However, it seems the opposite is true of sub-prime lenders. If a borrower has a history of defaulting on payments, they are still lent money. If a borrower misses a payment, all the better, they are lent even more money. It seems that UK lenders need to tighten guidelines and work to avoid a replication of the problems in the US.”

“Small businesses suffer from cash flow problems but they learn to build in necessary precautions to avoid any conceivable down turn. They know that banks or the Government rarely step in to stop them going into liquidation. Maybe the Government or Bank of England should think twice before bailing out a lender.... a short sharp shock will sort out irresponsible lending in one blow. If lenders are given a 'get out of jail card' then things will never change.”

September 15, 2007

Northern Rock shares crash as customers queue

Northern Rock shares crash as customers queue


Source Harry Wallop, Consumer Affairs Correspondent

Nick says…

Pt 2

Thousands of panicked Northern Rock customers have rushed to withdraw millions of pounds out of their accounts, as fears for the future of the bank sent shockwaves throughout the City and caused its shares to crash.

The bank's phone lines were jammed for most of the day, its website crashed and the company's 72 branches were besieged by worried customers after it admitted being forced to ask the Bank of England for emergency funding.
Northern Rock customer -
Tony Looch: 'I'm taking the lot out'

The unprecedented scenes came as the financial turmoil that has engulfed the money markets in the past month spilled out on to the High Street.

On a day of widespread concern over the future of the economy:

• Northern Rock's shares fell by almost a third, leading to speculation that the bank - the UK's fifth largest lender - could be put up for sale.

• Other major lenders including Bradford & Bingley, Coventry and Paragon to issue statements insisting they were not in similar trouble

• The Chancellor appealed for calm and insisted that both the banking system and the economy were stable

The Bank of England's decision to help Northern Rock - by guaranteeing funds of up to £35 billion - is the first time since 1973 that it has bailed out a High Street lender.

Aware of the panic among its customers, Northern Rock tried to reassure its 1.4 million savers, 800,000 mortgage holders, as well as its thousands of shareholders, that it was not in serious danger.

Adam Applegarth, the company's chief executive, said: "In these extreme times we are pleased to have a high quality asset base and remain confident in the excellence of our strong customer franchise, our efficient business platform and our well-known brand."

However, his words failed to reassure thousands of customers who queued outside the bank's branches from early morning.

Tony Looch, a 65-year-old with savings of £135,000, queuing outside the bank's Moorgate branch in the heart of the Square Mile, said: "I'm prepared to wait as long as it takes. I'm taking the lot out, if they'll let me have it."

Others were less calm, however, with reports of fights in one queue and even a confrontation with staff where police had to intervene.

Officers were called to the Cheltenham branch after former hotelier Christopher Howard, 64, and wife Fiona, 48, refused to leave the bank until staff transferred their £1m savings, held in an online Northern Rock account.

A spokesman for the mortgage lender, which had £24 billion of savers' deposits at the start of this week, said they had anticipated a run on the bank when they approached the Bank of England.

"It is understandable that customers are concerned but the Bank of England, the Treasury and the Financial Services Authority have all confirmed Northern Rock is solvent," he said.

The mortgage lender said it had yet to use any of the Bank of England's facility, but banking analysts said it was only a matter of time.

Northern Rock is still writing new mortgages "albeit at a lower level than usual", the spokesman added.

Savers money was completely safe, financial experts said. However, Martin Lewis, founder of consumer website MoneySavingExpert.com, pointed out that this did not mean savers should keep their money with the bank.

"Almost all of Northern Rock's savings rates can easily be beaten by the best buys on the market anyway. So this is a good occasion for people to check their rates and ditch and switch to earn more elsewhere," he said.

Rival lenders rushed to take advantage of the chaos in the mortgage market, with both Abbey and First Direct offering eye-catching fixed-rate deals.

However, others including Bradford & Bingley and Coventry felt compelled to issue statements saying they were unaffected by the chaos.

Ray Boulger, the senior technical manager at mortgage broker John Charcol, said: "Paragon is probably the one to worry about most. It has the closest business model to Northern Rock."

Paragon, a buy-to-let mortgage specialist, saw its shares plummet by 17 per cent but quashed rumours in the City that it was next in line, saying it had "adequate" funding until 2008.

Opposition politicians said the crisis that Northern Rock and the banking industry faced were the culmination of a decade of financial mismanagement by the Gordon Brown-run Treasury and "reckless lending" by the banks.

Angela Knight, the chief executive of the British Bankers Association, hit back: "Everyone should calm down and refrain from making simplistic comments in a very complex area which just cause unnecessary worry and concern.

"The British banking system is carefully regulated and overseen, which ensures that all banks operate safely and prudently in the interest of their customers.”"

Alistair Darling, the Chancellor, said the fact that the Bank of England had stepped in was proof the system was working efficiently.

"That is precisely the right action to take when you are faced with the sort of problems that we have just now," he said

But the Bank of England's actions incurred the ire of one of the City's most respected economists, Willem Buiter, from the London School of Economics, who compared it to a "paper tiger".

"Moral hazard has received a boost in the UK banking sector and in the UK financial system as a whole," he said.

"We will all pay the price in the years to come, when the next wave of reckless lending washes over us. Let's hope that the collateral requirements and penalty rate charged on the credit line will be tough enough to limit the damage."

Northern Rock mortgage borrowers and savers told not to panic

Northern Rock mortgage borrowers and savers told not to panic


Source Jennifer Hill, Personal Finance Correspondent

Nick Says…

I found this info’ on the net that pays ref to the Northern Rock incident.

I have to say that having been using their products for the past few years, if Northern Rock had shoes they would’nt be able to tie their own shoe laces! I have never come across such a muddled company in my life… they could’nt punch their way out of a wet paper bag!

My experience of them is thus:- Fantastic products… useless admin.

No wonder they had to go and borrow money to get them out of trouble.


LONDON (Reuters) - Borrowers and savers have little to fear, despite Northern Rock's need for an emergency loan from the Bank of England, industry experts said, though they believe liquidity problems could slow the property market.

Mortgage borrowers and savers with Northern Rock -- the country's eighth-largest listed bank -- can have confidence that the move does not reflect any underlying business problems, the Council of Mortgage Lenders (CML) said.

Northern Rock was forced to ask for the emergency funding, the details of which have not been disclosed, after the credit crunch in the U.S. pushed British inter-bank lending costs to their highest level for nine years.

However, the CML, which represents 98 percent of residential mortgage lending in the UK, said the issue was one of liquidity and funding, as opposed to quality of lending.

Director-general Michael Coogan said: "Consumers need to understand that the problem for lenders generally at the moment is in raising funds, not in lending quality.

"The Bank of England would not have provided the loan to Northern Rock if it had concerns about the quality of the lender's own business."

Melanie Bien, a director at independent mortgage broker Savills Private Finance, said Northern Rock viewed the funding package as a "temporary blip" and that Savills would continue to recommend its mortgage products in the right circumstances.

"If you've got a mortgage with Northern Rock, there is nothing to worry about as you shouldn't be affected," she said. "The important thing is not to panic."

She said there were no signs that other lenders would have to call on the Bank for emergency funding, citing the "specialist nature" of Northern Rock's business.

Northern Rock has a small deposit base and, therefore, has to draw most of its funding from the money markets.

Even if rival lenders did encounter similar problems, existing borrowers would be unaffected, said Bien.

But she said that the fall-out from the credit squeeze sparked by the crisis in U.S. subprime mortgage markets was likely to slow the property market further, as people adopt a "wait and see" approach.

House prices fell for the first time in nearly two years in the three months to August, according to data from the Royal Institution of Chartered Surveyors.

Bien added: "Some people may find it harder to get mortgages as lenders reassess risk and look at who they lend to even more carefully.

"We saw Norwich & Peterborough reduce maximum LTVs (loan to value) this week and, if other lenders follow suit, first-time buyers with little or no deposit may find it harder to get a mortgage." 

Industry commentators also moved to calm fears amid reports of consumers clamouring to withdraw savings.

Martin Lewis, of consumer Web site MoneySavingExpert.com, said: "People queuing outside Northern Rock to withdraw savings need to calm down."

He said it was "enormously, unthinkably unlikely" that the bank would go bust.

In that event, savers would be protected by the Financial Services Compensation Scheme, which pays out up to 31,700 pounds per saver should a company cease trading.

But Rachel Thrussell, head of savings at price comparison site Moneyfacts.co.uk, warned that the compensation applies per group of companies and not individual brands.

"For many years it has been taken for granted that the UK banking industry is almost invincible, but with recent uncertainty, savers may be wise to take account of where their savings portfolio is invested," she said.

"Spread your risk and make the most of the diverse and competitive range of products available."

September 13, 2007

Rental demand surge provides new buy-to-let opportunity

Rental demand surge provides new buy-to-let opportunity

4wallsandaceiling.com Newsletter

Source Assetz

Nick Says…

The reality is this… as it becomes more difficult to purchase property (from am owner occupier’s point of view) the rental market starts to get stronger and this can only be good news for us landlords.

This article really compounds the science behind an investment strategy. There are too many “pundits” out there that have no idea the massive difference between a tactic and a strategy. A tactic is a manoeuvre that driven by the short term and a strategy is a collective of these that gets you to where you want to be over a given long term.

These “pundits”, therefore, are giving opinions on an investment strategy using information that is, by it’s nature, misleading to that goal by using short term information.

The overall picture, in my mind, is this: - Yes there is a “slowing of the market”, therefore, builders are not selling as many houses as they should… in my mind the tactic should be, buy as many as you safely can as there is a sale on. Lenders are putting the interest rates up and/or pulling products due to the American “credit crunch”… in my mind the tactic should be patience, soon they are not going to be lending as much as they were used to, therefore, they will start to release very good products too entice us back in to them (remember their business is lending money, so if their not then they have no business). Etc etc.

So based on the above how can you dictate or predict the property market over a short term? You can’t. What we do know is this, over the medium to long term I think it’s fair to say that investing in property is a safe, therefore, you’re strategy is safe. What you need to do, however, is take advantage of the tactics of acquisition and to do this you need to filter out the “pundits” view and see the opportunities as they are.

This article does.

To read some commentators recently, one might have gained the impression that buy-to-let in the UK was about to bite the dust as increased borrowing costs put a squeeze on the industry. But new evidence has suggested this is far from being the case.

It is true, as the Daily Telegraph reports today, that lenders have been putting up their buy-to-let lending rates, with Advantage and Edeus doing so this week after Northern Rock plus Alliance & Leicester did so last week.

Such moves, the paper reports, have been prompted by the difficulties faced by some mortgage lenders following the sub-prime crisis. But to suggest that these increases, such as the Northern Rock rise from 5.69 per cent to 5.79 per cent, or the Alliance & Leicester hike from 6.94 per cent to 7.49 per cent, will bring the market tumbling would be to take this news in isolation.

Rather than do this, a broader analysis would show that other factors, far more favourable to the market, are at play. In particular, the overall increase in borrowing brought about by five Bank of England base rate rises in the last 13 months has raised borrowing costs to a point where a squeeze on the residential mortgage market is apparent. Noting the overall drop in mortgage lending between June and July and a seven per cent fall in borrowing by first-time buyers, Michael Coogan, director general of the Council of Mortgage Lenders (CML), has acknowledged that "the long-anticipated slowdown in the housing and mortgage markets may now be beginning to materialise".

The effect of this on the buy-to-let market has been established by the Royal Institution of Chartered Surveyors (Rics), which has found that in the last quarter 29 per cent more chartered surveyors were reporting a rise in tenant lettings than a fall, compared with a 15 per cent difference in the previous quarter. Rics has concluded that "declining accessibility, rising uncertainty and a slowing housing market" has brought about an increase in rental demand as people put off entering the housing market.

As a result, demand for rented property is on the rise, exactly the sort of thing that should encourage investors. Rics spokesman Jeremy Leaf commented: "Current economic uncertainty has created an ideal platform for buy-to-let investors to cash in on rising rental levels. Many would-be buyers have decided to wait and see how the interest rate cycle will affect the market."

Mr Leaf added that higher rents would also provide "some compensation" for those buy-to-let landlords who are feeling the pinch from higher borrowing costs.

Thus a more balanced view of the prospects for buy-to-let can be established by noting both sides of the coin and how they affect the industry. What must also be understood is that what constitutes a good investment now is not necessarily the same as when the buy-to-let market was a new, small segment of the property sector.

Speaking to This is Money this week, Tinas Huelin, a buy-to-let millionaire, explained: "In 2000, you could get a yield of 20 per cent or more. That was a good income. Today, I aim for eight per cent". Her point was that, as the market has matured and the best bargains have been snapped up, the large returns possible on investments made when the buy-to-let market was fresh, new and booming were never likely to last. Thus the investor now needs to be more astute. But, as the Rics figures have shown, the market is still on the rise, meaning the opportunities to be successful are still there.

September 12, 2007

UK Property Executives comment on housing market

UK Property Executives comment on housing market

4wallsandaceiling.com Newsletter


Nick Says…

More info on the current market place in the UK.

UK property industry executives from PropertyFinder.com, Savills Finance, Smart New Homes, and Knight Frank all comment on the recent turmoil in UK  mortgages and bank rates. Yesterday saw The Bank of England's monetary policy committee (MPC) giving borrowers some respite by deciding to keep the official rate of interest paid on bank reserves unchanged at 5.75 per cent.

"Borrowers will be breathing a huge sigh of relief today. The housing market has been slowing down and price growth is moderating in a controlled fashion," said Warren Bright, chief executive of propertyfinder.com.

"The credit crunch in the wholesale money markets is effectively a rate rise by another name which will ultimately impact on mortgage borrowers. There is no justification for the Bank of England to raise base rates again this year."

Smart New Homes
"I am pleased to see that interest rates have been held at 5.75 per cent. However, this comes as no surprise considering that there is already evidence of a slowdown in the market and recent reports of an increase in repossessions” comments David Bexon, managing director of SmartNewHomes.com.

Knight Frank's
"No more can be squeezed out of the system. It would surprise me if what has happened in the States would be allowed to happen here. The UK did not see the expansion of a large sub-prime mortgage market in recent years. We are not as directly exposed to that scenario as the US is." Liam Bailey of Knight Frank’s research team

Melanie Bien, a director at Savills Personal Finance, said: "The longer this turmoil goes on the more likely it is to hit consumers directly.
''Banks will have to start re pricing their mortgages upwards, even if interest rates do not increase. The reality is that banks cannot absorb all these costs."

Meanwhile Rightmove.co.uk remain upbeat about their prospects for profits despite the squeeze on UK homeowners. Ed Williams, chief executive, acknowledged that a slowdown was taking place but insists the his companies was on target to make nearly £30 million for the full year.,