China property crisis enters dangerous next phase 14 Jul 2022 Homebuyers in 22 cities are refusing to make mortgage payments on unfinished homes. It extends the risk of defaults from offshore developer bonds to banks with $6 trln of mortgages. The fat tail risk of deleveraging the sector is emerging, and puts Beijing in a very tight spot.
This time, U.S. housing bubble burst is tolerable 6 Jul 2022 Mortgage rates averaged about 6% before over-leveraged homeowners helped spur the 2008 financial crisis. Now as borrowing costs approach that level, a frothy market is set to decline. But Americans’ budgets are healthier, and a housing correction could actually be good for some.
Barclays adds risky spice to insipid valuation 24 Jun 2022 The UK bank is scooping up specialist lender Kensington for nearly $3 bln. It’s small, and CEO C. S. Venkatakrishnan is right to try to gee up his low-valued shares with retail assets. Still, he’s also bulking up in the riskier end of the market amid a potential house price dip.
Polish mortgage holiday is bad idea with allure 17 May 2022 Warsaw wants to protect citizens from surging inflation and interest rates by offering breaks on home loan repayments. That would cost the country’s banks up to $3.6 bln. Forcing lenders to bear the effects of Russia’s war is crude and distortive, but may also win votes.
ICE’s Black Knight deal has antitrust snare 13 May 2022 The NYSE owner is paying a big premium to round out its mortgage tech dominance with the servicing-focused Black Knight. But the combination looks to pose antitrust problems, and a loose merger agreement gives ICE room to blow up the deal if it runs into resistance.
India’s $168 bln bank merger bets the house 4 Apr 2022 HDFC Bank’s plan to buy its mortgage-lender parent at a tiny discount sparked a 10% rally in shares of both. New capital rules enable the long-speculated union. Benefits range from lower funding costs to resolving CEO succession. Preparing for a home-loan boom is the main goal.
Irish housing bind opens door to radical options 31 Jan 2022 The cost of renting in Ireland has soared, but so has the cost of buying a home. Regulatory reluctance to relax bank lending standards means demand won’t rise to help stimulate new supply. The impasse makes it more likely that leftist Sinn Féin may win the next election.
Capital Calls: Stadium naming, Diageo, Evolution 17 Nov 2021 Concise views on global finance: Crypto.com is paying heavily to rename Staples Center; The drinks maker plans to grow its market share by 50% in the next decade; the $36 bln Swedish gambling firm lost $2 billion of its market capitalisation after accusations of illegal gambling.
Chancellor: U.S. credit cycle close to overheating 30 Jul 2021 Home prices and private-sector borrowing have taken off and credit standards continue to deteriorate. The end may not be nigh, but overvalued stocks and a massive lending boom, especially to corporations, make U.S. financial markets a particularly dangerous place for investors.
Fate of U.S. mortgage giants only half clear 23 Jun 2021 The Supreme Court’s blow to Fannie Mae and Freddie Mac investors leaves a fuzzy future. Bill Ackman’s fund and others had insisted the government illegally confiscated earnings. What Joe Biden wants to do with the firms backing half America’s homes may have bigger consequences.
Capital Calls: Platinum Equity, FTC chair, Tui 16 Jun 2021 Concise views on global finance: The buyout firm acquires textbook company McGraw Hill and the maker of Singer sewing machines; Joe Biden’s pick for the Federal Trade Commission brings swagger; and another capital hike will still leave the German holiday group heavily indebted.
Barclays’ Goldilocks moment faces lurking bears 30 Apr 2021 For the first time under CEO Jes Staley, the UK bank’s three main units all earned a quarterly return on tangible equity over 10%. A looming slowdown in capital markets and UK mortgages, combined with rising costs, means it may not last. That will keep Barclays shares in check.
New Zealand’s diluted punch bowl may tempt others 26 Mar 2021 Prime Minister Jacinda Ardern is combatting a hot housing market by stopping property investors from deducting mortgage interest. This mitigates side effects of low rates and allows the central bank to defer policy tightening. The approach might appeal to governments elsewhere.
UK banks’ mortgage wave may only be knee-high 29 Oct 2020 Lloyds CEO António Horta-Osório hopes a home-loan boom will offset pain from lower central-bank interest rates. But the spike in credit applications is partly pent-up demand from lockdowns. And stiff competition from HSBC and others may force lending margins downwards again.
UK housing crisis needs a well-aimed bazooka 6 Oct 2020 Prime Minister Boris Johnson wants to help 2 million Britons buy their first home. His ideas, from subsidising mortgages to unpicking post-crisis reforms, are risky and may make houses even costlier. His best bet would be to combine new tools with a massive building plan.
U.S. mortgage deals build on shaky foundations 23 Sep 2020 Public markets are luring two big mortgage firms as low rates and resilient house prices send loan demand to record levels. But 2020’s pandemic-skewed market is wacky, risky and unsustainable. Taking more share from banks could justify investor hype, though is hardly guaranteed.
ICE deal risks giving private equity a good name 7 Aug 2020 Thoma Bravo is making around a fourfold return in 16 months selling mortgage processor Ellie Mae to the bourse operator for some $9 bln plus debt. But ICE boss Jeff Sprecher isn’t overpaying. The pandemic, low rates and the target’s growth make this a smart deal for all.
Investors launch Rocket IPO into high orbit 7 Aug 2020 The largest U.S. mortgage lender ended its first day as a public company worth $43 bln. It’s justified if its stellar second-quarter results are sustainable. But chances are the three months were an industry anomaly, meaning gravity will soon pull shareholders back down to earth.
Mortgage IPO brings past crises to the fore 9 Jul 2020 Quicken Loans parent Rocket Companies is profitable, growing, top of its industry and has cutting-edge tech. Founder Dan Gilbert even drove Detroit’s revival. But as crashes like 2008 showed, economic pain hits specialist lenders hard. This time is unlikely to be different.
Bye, bye Mister Hedge Fund Guy 2 Jul 2020 Fund manager John Paulson had the guts to go all-in betting against subprime mortgages over a decade ago. Unable to replicate his biggest claim to fame, he’s turning his fund into a family office. He’s not alone in that, but it’s still a moment that bookends the financial crisis.