With the US subprime crisis spreading to Europe, shockwaves in Northern Rock which would spread to other banks, UK economy growth not looking healthy, increasing trade deficits, sharply rising mortgage costs, falling corporate profits and job cuts especially in the City, and as market turmoils escalates, housing price which shows a first drop of 2.6% (from Rightmove last month), this are the signs of the beginning of a housing crash. PROPERTY SHARES ARE A SELL!

Lending, at 25.5 billion pounds in May, was some 20 percent lower on the year. Remortgaging accounted for most of that as homeowners sit tight and new buyers avoid taking their first steps on the ladder amid the downbeat outlook and jump in the cost of borrowing.

The cost of fixed-rate mortgages has hit a 10-year high -- and is set to climb further, analysts say -- as lenders pull cheap deals and repeatedly replace them with higher rates.

Nationwide, Halifax, the Woolwich and Abbey have all hiked the cost of some of their deals since the start of this month, blaming the rise in money market rates.

It is this ongoing fallout from the credit crunch and rise in swap rates that have led to the unusual situation of fixed and tracker rates being much in line with standard variable rates (SVRs) -- those that banks and building societies normally charge only when borrowers come to the end of a special deal.

As a result, some lenders -- Royal Bank of Scotland, Woolwich, Halifax, Lloyds TSB and Cheltenham and Gloucester included -- have stopped offering SVRs to new customers.

Looking expensive at 62p with 1.9 billion debt and profit warning very likely with poor liquidity. Housing market likely to deteriorate with rising mortgage rates will not help.
SELL...


Emergency rescue for housebuilder Taylor Wimpey

Taylor Wimpey is in an emergency 400m fund-raising to save it from collapse.

Chairman Norman Askew and Peter Redfern, chief executive, are also close to securing a deal with its banks to relax lending covenants on bank debt of 1.9 billion.

Taylor Wimpey, which was formed out of the merger of Taylor Woodrow and Wimpey a year ago, is one of Britains biggest housebuilders. It also has sizeable operations in America, where it is building houses in Florida, San Francisco and Texas. In Europe the group has divisions in Spain and Gibraltar.

It has been badly hit by the credit crisis, though, which has made it difficult to sell new homes and has put pressure on prices. In addition the company, which last year built 14,862 homes in the UK, is committed to spending 453m this year on completing land purchases that have already been agreed.

One analyst said: No-one wants to give away these land banks on the cheap. The problem is one of liquidity and this is what the group is trying to address.

Other builders are also in trouble. Among them are Crest Nicholson and McCarthy & Stone, two companies that were both taken private in consortiums led by HBOS. In most cases, banks are being supportive, and within the next three weeks Barratt, which is now chaired by Bob Lawson, should confirm that its banks have agreed to relax covenants on debt totalling 1.7 billion.

The City is keen to hear the details of Taylor Wimpeys trading statement and whether it will give an insight into additional writedowns on the land banks value. It is likely the statement will include a profit warning.

Last year Taylor Wimpey wrote off 283m against its North American business. According to its last set of report and accounts, the company has net assets of 3.7 billion, equivalent to a share price of 352p per share. This compares with Fridays share price of 62p, which values the builder at 654m.

Redfern is also expected to say that the dividend will be cut back dramatically. Taylor Wimpeys pension trustees are understood to be taking advice from lawyers. The builders scheme has a deficit of 216m at present.

The group has already moved to address its cost base and recently announced it will close 13 of its 39 UK offices, which could cost up to 600 jobs. It has also asked suppliers to reduce their bills.

John Charcoal cuts workforce by 25% and closed 3 offices, Manchester, Guildford and Birmingham. 5 outlets remain. Loan approvals last month sank to unpresidented low. CEO and Finance director to leave. Founders John Garfield and Charles Wishart and long time investor Jon Moulton have pumped in an undisclosed sum to keep business afloat. Garfield will take over as Executive Chairman

Don't say I didn't forecast this a couple of months ago on this very thread (or was it the BANK thread???) ;-)

For my next Nostradamus moment, I would not be suprised to see the OFT getting involved in the mortgage market.
Reason? The banks are operating what could almost be called a cartel. They are ensuring that none of them are offering anything dramatically different to the others, by way of rates, criteria or underwriting.
It could also be argued they are maintaining an artificailly high LIBOR & swap rates for their own benefit.
It will not last of course, capitalism will out, but in the meantime it is very damaging to the economy, while maintaining high margins for the banks.

Good to see that you followed my idea, Alan

hewittalan6, quite right, you said watch this space, can't remember what thread it was myself. I suppose one of the fortunate deals was for Hunt, the owner of Foxtons who sold out at around 283million I think it was just before the crunch. John Riblatt sold most of his British Land holding around 16 a share not long before the trouble started. Both turned out to be shrewd guides. Keep watching.

Housing price fall fastest in 16 years


House prices are falling at their fastest annual rate for nearly 16 years, figures show.

The average home has seen 6.3% wiped off its value during the 12 months to the end of June, the biggest annual fall since December 1992, according to Nationwide Building Society.

The cost of property fell for the eighth month in a row during June, sliding by 0.9%, to leave the typical home worth 172,415.

The housing market downturn has now wiped 7.3%, or 13,500, off the value of homes compared with their peak in October last year, with prices falling by 6.4% since the beginning of 2008.

Falls are even steeper in some areas of the country, with the average cost of a home in Northern Ireland sliding by 9% during the past 12 months, while Scotland is the only region to have seen price rises, with the value of property there creeping up by just 0.6% during the year.

Nationwide said the pace of price falls had slowed "significantly" during June, following May's 2.5% dive, adding that prices were still 4% higher than they were two-years ago.

But economists warned that the housing market correction could be more prolonged than previously predicted as the problems in the mortgage market caused potential buyers to sit on their hands.

Seema Shah, property economist at Capital Economics, said: "Evidence is growing that this housing market correction will be sharper and steeper than previous downturns."

She added that recent data showing that activity has slowed sharply, suggested house price falls would "step up a gear" in the coming months.

;-)))))

scotland has gone down very slightly in last 3 months but theres big differences depending on where u r in country just like areas in england.

expect at least 20% decline in next 18 months in uk

It's bloodbath in the housing sector today

Taylor Wimpey fails to get funding and closing one-thirds of its premises and this spells deep trouble ...now 30p...but could go below 20p soon as it says no real recovery foreseen

;-(

With Taylor Wimpey's debts standing at 1.7m at the end of June, Taylor Wimpey also announced plans to close a third of its 39 offices, axe about 900 jobs and cut costs by 45m.

Taylor Wimpey, which has expanded aggressively in both America and Spain in recent years, added that disposing of smaller businesses would not be central to its bid to raise cash.

Alongside the cost-cutting plans, Taylor Wimpey revealed that finance director Peter Johnson will leave by the end of the year, becoming the biggest casualty so far of the crisis afflicting the entire sector.

Mr Redfern said that although Taylor Wimpey stopped buying new land in the UK last September, the company had underestimated the scale of the downturn now facing the industry.

The group now expects to write down the value of its landbank and work-in-progress across the UK by around 550m, representing 11pc of its total.

Echoing comments from most businesses whose fortunes are tied to the housing market, Mr Redfern said that transaction are down by a third this year and he does not expect "any recovery in the short-term".

Housebuilders shares have been falling since sales during the traditionally strong Spring market was hit by the evaporation of credit in the mortgage markets and a weakening of consumer confidence. Taylor Wimpey said that reservations are down sharply and cancellation rates jumped from 19pc to 29pc in the first six months of the year.

Its a funny thing, but when rates rise it is headline news. Has anyone seen blazing headlines today announcing that Nationwide have cut fixed and tracker rates???
No???
Well they have, from 9th July, on the most popular 2 year deals.
Trouble is it is not in line with media policy of selling doom and gloom, so there is no report, but some banks feel we have ridden out the worst.

They're wrong. This ain't even started yet.

I am refering to the financial sector, but I would agree about the economy as a whole.
The financial sector was first in and will be first out.
The real economy is at least 6 months behind. Lenders are now 12 months into the crisis, whereas everyone else is just starting to feel it.
This morning, 2 lenders have reduced fixed and tracker rates for their 2 & 3 year deals. This is tantamount to a forecast that LIBOR and swap rates are due to ease. 2 year fixes (without stupidly high fees) are now <6% again.
It is a start, but criteria needs to relax for there to be a real impact and move the housing market, which is the real driver of our economy.
This will take a while after relaxing criteria as housing relies so heavily on confidence and this has been knocked badly. But the first signs are in place. It remains to be seen if other lenders follow. If they do, this is a firmer indicator. If they do not then the lenders concerned will be over exposed and up their rates again.

Nationwide are in a better state than most so can risk increasing their market share. The rest don't want to and if there is a stampede to Nationwide they will up their rates again.

"and move the housing market, which is the real driver of our economy"

I actually find that a really, really sad comment on our 'economy'....

Attended this auction last night - 36 properties of varying quality were offered :

http://www.boultonsauctions.co.uk/properties/

10 sold on the night
4 sold prior
3 withdrawn
3 postponed
16 failed to sell

Unusually, of those that sold, only one property beat the published guide price - and that by only 500.
Those that did sell were mainly the lower priced 'tat' and a couple were knocked down at well below guide.

Normally at Boultons the guide is published, fairly conservatively to attract interest, around 4 to 6 weeks prior. A couple of days before the auction the reserve price will be set, dependant on viewer footfall and general interest shown. Usually the reserve will be set somewhat higher than the top guide price. Not yesterday though!