Is it safe to buy a house right now ?

Northern Rock are only doing that because they failed to hedge against interest rate increases above a certain level, which have now been surpassed. They are now trying to claw back losses which they have incurred against borrowing, as most of their funds do not come from investors.
On another subject, I have a work colleague who has been offered a mortgage at 9 x salary. Absolutely crazy lending!! 'Tighter criteria' - I certainly hope so!

Blimey, I thought it was mad when they were giving 6x. Seriously, the people borrowing and the banks lending at those rates deserve to go under IMO.

My first mortgage was at 4 x salary, with an add-on of 1.5 x salary of wife. Even then it was hard work not to get in to arrears on a bog standard repayment mortgage (mind you, interest rates were at 15%!).
Now everyone is mortgaged & credit carded up to the max, with the knowledge that if you know how the system works, much of the debt will be written off if you default, as they will nearly always offer you a deal. Pay half & we will forget the rest. Crazy system imo.

I remember having a credit card debt of over 2500 in 1986, when I was out of work, HARRY. I never heard anything when I simply stopped paying. ;-0

House prices hit a standstill


Last Updated: 12:19am BST 29/08/2007

House prices slowed to a standstill during August, according to the latest survey from Hometrack, the property website.

The group recorded the lowest rate of monthly growth since November 2005, with average house prices "unchanged".

London, the real engine for house price growth over the last 18 months, was the only region to record a price increase over August. However, it was a rise of just 0.1pc. Three regions recorded price falls of 0.1pc, namely Yorkshire and Humberside, the North and South West.

------------------

As prices back off, sales number stall and turnover reduces maybe by as much as a third it's going to have a major impact on certain sectors.

Problems is - it all seems negative, as far as I can see anyway, and as I don't short shares, apart from selling up, I can't see anything elso to so do make a profit?

Are there any sectors or individual shares that might profit from a housing pull back?

Contraction in housing market to be worse than expected in rest of 2007 - Fitch


MUMBAI (Thomson Financial) - Fitch Ratings said the contraction in the US
housing market is likely to be more severe than anticipated during the rest of
2007, mainly due to tighter mortgage standards and disrupted mortgage markets.
The rating agency added it sees 2008 to be another challenging year for the
housing sector, as it expects operational and financial pressures not only to
persist but to intensify for public homebuilders.
Fitch said it is lowering its ratings on most of the public homebuilders and
has put a negative rating outlook on most of the homebuilders.
It considers excess inventory as the most challenging issue for housing,
both new and existing.
Fitch assumes that year-over-year declines in starts, new home sales and
existing home sales will be more pronounced during the last five months of the
year.
It expects full year revenues of the builders to drop 30-35 pct, on average,
while pretax profits, before real estate charges, could plummet 75-80 pct.
The rating agency said price competition will persist at current levels and
may well intensify, putting margins under pressure.
It expects deterioration in credit metrics to continue during the rest of
2007, particularly for profit related metrics.
It will be important for builders to continue contracting their balance
sheets, further reducing land and development spending and adopt more aggressive
pricing to lower inventories, Fitch said.
It expects homebuilders to reduce debt where possible and to exercise
restraint as to share repurchase, dividends and acquisitions in these uncertain
times.
Looking ahead, Fitch said the stronger economy will aid the housing sector
in 2008, but will probably not be robust enough to counter continuing negative
buyer psychology, and tight credit qualification standards.
TFN.newsdesk@thomson.com

Will interest rates rise to 6% - Not if housing has anything to do with it!

House prices are rising at the slowest rate for more than a year, with some regions suffering a highly unusual sustained drop in property values, according to authoritative government figures.

Indi


The figures are unlikely to settle the debate on whether interest rates have peaked at 5.75 percent, but may add weight to the view that the housing market is coming off the boil in the wake of rising borrowing costs.

"There are now clearer signs of slower demand in the market," said Fionnuala Earley, Nationwide's chief economist.


Reuters

more dependant on retail sector i suspect...
rate cut for christmas, followed by an increase in January and slapped wrists for spending too much...

Next Monays Rightmove report for September is all over the internet.

Down -2.6% - Some areas (Brent etc) down -7%

Looking at the timing (hit the net at lunchtime yesterday) it was probably 'leaked' on purpose to aid Northern Rocks application for help from the BoE.

Recession looming ?

Prices in many areas have been coming off for ages. It depends how these outfits calculate the numbers. Many use asking prices, which is plainly bogus.

Things could get very messy if prices do start tumbling. Presumably most of the mortgage books are valued based on the property portfolio. If they're struggling to get money at the moment (Northern Rock being the most extreme case), what happens if prices start tumbling and the banks asset values decline dramatically?

I feel we're still at the tip of the iceberg, and I suspect the credit crunch will create a much bigger domino effect in the wider economy over the next few years.

Strawbs.

It's going to get far worse yet, Strawbs. ;-))))

You can tell it's only just begun coz daytime telly is still full of dickheads showing everyone how to buy properties at auction and overspend whilst doing them up. The sooner these folks go to the wall the better IMO. ;-0

UK house prices slump 2.6 pct in Sept from Aug - Rightmove - sources UPDATE
AFX


(Updating with further details, analyst comment)

LONDON (Thomson Financial) - UK house prices fell sharply in September, the latest Rightmove survey has found, sources said.

The survey shows asking prices for houses slumped by 2.6 pct in September from August, taking the average price to 235,176 stg from 241,474 in August, the lowest September for new sellers since 2004. This brings annual growth down to 9.6 pct from 12.8 pct the previous month.

The details of the release were leaked in the market ahead of the official release scheduled for Monday.

Rightmove blamed the sharp falls on distortions caused by the implementation of Home Information Packs, but the news will spark fears of a housing market crash, particularly after today's news that Northern Rock has had to turn to the Bank of England for emergency funding.

Commenting on the figures, Howard Archer at Global Insight said he still expects house price growth slowdown to 'become more marked' over the coming months before prices settle down into 'an extended overall period of very modest rises'. However, there are clearly risks of a deeper slowdown, given the current credit crisis.

'Clearly ... if the current turmoil in global credit and financial markets is extended and increasingly feeds through to have a marked dampening impact on UK economic activity and employment, the risk will grow that the housing market could see a sharp slowdown,' he said.

The report comes after the Royal Institution of Chartered Surveyors earlier this week reported the first fall in house prices since October 2005.

You can short uk house prices on IG index either London area or UK as a whole, they told me it was based on the latest HBOS suvey. Might be good way of hedging if selling up is too risky or hassle

Further to my 30, asking prices may be bogus, but when those surveys start to indicate falls, it has already happened coz Joe Punter drops his asking price way after actual selling prices have begun to decline.

;-)))

In my area I can see that the estate agents are twiddling their thumbs and yawning...house price will be crashing next.

Greenspan says "painful correction ahead" for UK housing: http://www.telegraph.co.uk/money/main.jhtml;jsessionid=FSZEWDGW3IL4ZQFIQMFCFFOAVCBQYIV0?xml=/money/2007/09/17/cngrspan117.xml

UK inflation jumps to 4pc, double the target
British inflation surged to double the Bank of England's target in January, raising pressure on the central bank to seriously consider raising interest rates.

9:45AM GMT 15 Feb 2011


The Office for National Statistics said that the rate of consumer price inflation rose to 4pc in January, in line with economists' forecasts, from 3.7pc in December. It is the biggest increase in more than two years.

The rise, which was driven by higher oil prices and the increase in value added tax (VAT), means inflation has been at least a percentage point above the Bank of England's 2pc target for more than a year.

Mervyn King, the Governor of the Bank of England, will have to publish a letter to finance minister George Osborne later on Tuesday explaining why inflation remains so high.

Previously Mr King has blamed above-target inflation on a succession of one-off factors, including rises in value-added tax, the depreciation of sterling and spikes in commodity prices.

Economists expect the Bank of England to raise interest rates from their record low of 0.5pc later this year, and investors are betting a rise will come by May.


http://www.telegraph.co.uk/finance/economics/8325130/UK-inflation-jumps-to-4pc-double-the-target.html

Vince Cable says interest rate rise would be 'very difficult'

Vince Cable has been accused of creating difficulties for the Bank of England after branding a rise in interest rates as "potentially very difficult", ahead of figures today which are expected to show inflation running above 4pc


By Jonathan Sibun 6:11AM GMT 15 Feb 2011


The Business Secretary's comments come ahead of the release of economic data today which are expected to show UK inflation climbing to over 4pc, more than double the Bank of England's target level.

Mr Cable used an interview with Bloomberg Television to suggest the Bank of England retain its loose monetary policy.

"As an outsider looking in, I take the view of the doves," he said. "Although you have inflation, it's almost entirely imported. There's not very much evidence of British inflation taking place. It's virtually deflation."

Mr Cable said that with the Coalition's fiscal squeeze in full throw, tightening monetary policy was "potentially very difficult".

Mr Cable's views follow comments from David Cameron last month when the prime minister described inflation as "worrying". While Mr Cameron was careful to point out that he supported the independence of the Bank of England, he faced criticism from some quarters for involving himself in the debate.


http://www.telegraph.co.uk/finance/economics/8324233/Vince-Cable-says-interest-rate-rise-would-be-very-difficult.html

Is there any point in having the Bank of England?