UK banks keep on lending to property 20 Aug 2008 Despite an increasingly grisly UK real estate market, bank loans to the sector rose 30% in the last year. Only a bit of that balance sheet growth is new, though. The rest is involuntary some banks didn t stop lending in time. That could hurt as the UK economy slows.
US foreclosure surge piles on more woes for GSEs 14 Aug 2008 The number of houses in receivership is rising fast, and those held by Fannie and Freddie have doubled in the past year meaning even betterquality owners are defaulting. That s a bad omen for the market and for the companies, which must pay a bundle to maintain the properties.
British Land suffers from economy – and gloom 14 Aug 2008 The UK real estate firms exposure to the City of London where rents are now falling may justify it trading at a hefty discount to its assets. But the company's shares are also suffering from the bearish assumption that falling rents will be more than fully reflected in prices.
West End real estate slide is test case for UK 12 Aug 2008 London s West End should have the safest commercial property in the country. But even here a double dip is under way falling rents are now joining falling prices caused by the recent property boom unwinding. How bad it gets will be a pointer for the rest of the UK.
GSE shareholders should recall the Federal bit 8 Aug 2008 In another reminder that Fannie Mae and Freddie Mac are cuddlysounding nicknames for companies whose names actually begin with Federal , both US mortgage giants have slashed dividends after billions more in losses. They re right to do so, but shareholders will be the losers.
Repossession threatens UK with return of 1990s 31 Jul 2008 As UK house prices decline, many highly leveraged homeowners will fall into negative equity. House repossessions could rise sharply and recovery is likely to be slow. But lenders and the Bank of England may be able to help more now than the last time around, only two decades ago.
Taylor Wimpey moves to Plan B 24 Jul 2008 The UK house builder has called in NM Rothschild to renegotiate its covenants, confirming that the sector can t raise equity in the current environment. Taylor Wimpey will now try to ensure its bondholders don t abandon the company. Luckily, that doesn t look likely.
US housing bill could turn into albatross 23 Jul 2008 Legislators want to be seen doing something. But the bill which President Bush now says he ll support has flaws. For instance, it entrenches Fannie and Freddie and adds fresh government exposure to mortgages. These and other temporary fixes could prove hard to shake off.
Agency debt trades on Panglossian assumptions 16 Jul 2008 The proposed bailout of mortgage giants Fannie and Freddie has given a big boost to their debt. Spreads are now back in line with their historic levels. Yet terms of the bailout are unknown. With so much uncertainty, larger spreads seem warranted.
Spain lets top property company go bust 15 Jul 2008 Martinsa Fadesa filed for administration with E5.4bn in debts after the government refused a bailout. The decision must have been tough: it could lead to a cascade of failures, restructurings and bank woes. But a purge is required to restore balance in the overbuilt market.
Should rescued GSEs now be slowly killed off? 14 Jul 2008 Fannie Mae and Freddie Mac distort the US economy, and one option now available is gradually to kill them off. They can t be closed immediately, but if they were run down though higher fees and lower salaries, market forces would probably replace them within five years.
Fannie-Freddie containment is crucial 11 Jul 2008 If US policy wonks handle the crisis poorly, the mortgage giants woes could spread throughout the economy with dire consequences for banks, consumers and the government itself. Decisive action is called for, but the pain should be spread gradually.
Fannie, Freddie are US government’s monster SIVs 10 Jul 2008 Like the banks that ignored their contingent exposures to offbalancesheet vehicles during the boom years and lost billions when things soured, the US chose to pretend it wouldn't ever have to back the mortgage giants. Now it faces an unpleasant reality.
Abu Dhabi could avoid making Mitsubishi’s mistake 9 Jul 2008 One of the emirate s sovereign wealth funds has bought 90% of New York s iconic Chrysler building. It s reminiscent of Mitsubishi Estate s disastrous 1989 investment in Rockefeller Center. But Abu Dhabi has missed the peak and it has enough wealth to wait out the downturn.
Investing in US mortgage giants is a lottery 7 Jul 2008 Fannie Mae and Freddie Mac shares fell sharply on Monday. The future for the US mortgage groups is clear as mud. Even ignoring loan losses, the impact of their use as government policy tools and their supposed taxpayer backing is murky. Shareholders are right to be wary.
JPMorgan defection a coup for Canary Wharf 1 Jul 2008 When the US investment bank decided last year to locate its European HQ in the City it was considered a shot in the arm for London s historic Square Mile. Now it is defecting to Canary Wharf. With office rents now falling, it s a setback the City didn t need.
Taylor Wimpey kicks off UK housebuilder capital-raising spree 30 Jun 2008 The UK company is unlikely to be the last in the sector to pass the cap if house prices keep falling, most will have to write down asset values. But the deal's likely structure suggests the builders may have learned from UK banks chequered attempts to raise capital.
UK housebuilders face bank straitjacket 18 Jun 2008 Shares in Taylor Wimpey, Barratt and their peers have dived again. If UK house prices fall 20%, some big names could break their covenants. Banks would then have to nurse them back to health. But the medicine tight controls on their spending and higher rates could be painful.
UK bank exposure to mortgages: not all bad 13 Jun 2008 Taken as a whole, the UK banking sector s mortgage exposure is well collateralised, less exposed to first time buyers than the last crash, and with better legal protection than US lenders. That does not mean the banks are immune from a recession but it helps.
Bradford & Bingley’s buy-to-let bombshell spooks UK banks 2 Jun 2008 B&B s profits warning makes the UK buytolet market look precarious. Highly leveraged borrowers already in negative equity are now heading into arrears. A wave of forced selling would hit house prices and spell more pain for all UK mortgage lenders.