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.
Spanish house sales tumble, prices to follow 29 May 2008 Spanish mortgage borrowers are much less stretched than their UK counterparts. And house prices are still going up. But transactions are down by 38%. Buyers suspect that the huge overhang of unsold houses will eventually bring prices down to even more affordable levels.
Even the faithful should now sell Fannie and Freddie 21 May 2008 The mortgage giants spun profits before the crunch. Now US lawmakers want their shareholders to bear a lot of the burden of cleaning up the mortgage mess. If GSEs are predominantly tools of public policy, shareholders should sell maybe to the government itself.
US housing bailout risks making matters worse 20 May 2008 The Senate s $300bn political figleaf courts disaster. Slashing principal on underwater mortgages and refinancing homeowners into cheaper loans may sound good. But it could push house prices down rather than supporting them. And it provides perverse incentives.
Shareholders shouldn’t trust Freddie Mac 14 May 2008 The mortgage giant says its accounting snafus are behind it. But its credibility is shot. Freddie is raising $5.5bn after saying in March that it didn t need more capital. And its watchdogs are loosening its leash just as the mortgage mess deepens. Investors should worry.
Should Goldman dabble in some DIY? 13 May 2008 The prospect of paying the Wall Street firm $320m in penalties might not be enough to encourage New York s politicians to speed up construction and security work around its shiny new HQ. Goldman could offer to oversee the project and even get some of its bankers to chip in.
UK house prices likely to fall at least another 20% 7 May 2008 After six months of decline, most forecasters don t expect sharp further falls. But it will take a big drop in the typical mortgage payment to bring its share of income down to the longterm average. With mortgage volumes cut almost in half from last year, that s quite possible.
Fannie’s $6bn capital-raising is a fig leaf 6 May 2008 After all, the mortgage giant s regulator is reducing its capital standards, despite its $2.2bn loss. Allowing Fannie to leverage itself up makes the most of the government s tacit guarantee. But Fannie's shareholders should beware it could burn through the new capital fast.
UK commercial property slump isn’t over yet 1 May 2008 The 17% fall in values since last summer seems to be easing off April s decline was the mildest this year. But while yields on commercial property have risen close to their longterm average, rents could tumble if the economy slows. That s beginning to look more likely.
Colonial lenders face uphill struggle to recoup losses 28 Apr 2008 Spanish banks are counting the cost of financing leveraged stakebuilding in the stricken property firm. After a debtfor equity swap, they need to almost double Colonial's share price to break even. That's not impossible, but the property market outlook isn't that rosy.
Flowers’s E1.1bn Hypo bid hardly the dream deal 17 Apr 2008 The German bank looks a better bet for the private equity firm than Friends Provident. Hypo is cheap and has a promising loan flow. But it s not ideal. Flowers is getting only 25%, and Hypo s discredited bosses will stay. Flowers may be feeling the pressure to do a deal.
UK voters right not to trust PM Brown 14 Apr 2008 Faced with a slight dip in house prices and the scrapping of irresponsible loan offers, the UK is in the grip of panic and polls show the government on the ropes. But the real risk is not that a dithering prime minister does too little, but a desperate Brown does too much.
UK house price slump will get worse 8 Apr 2008 UK house prices fell 2.5% in March, the biggest drop since 1992. Lenders have withdrawn all nodeposit home loans, mortgages are being rationed, and a glut of buytolet property is waiting to hit the market. Forecasts of 5% price falls this year look increasingly complacent.
Greenspan should bear blame for bubble and crash 7 Apr 2008 The former Fed chairman grew US M3 money supply 3% faster than GDP for 11 years, flooding the world with cash. He also allowed US banks to build huge webs of obligations on inadequate capital. That makes him a prime suspect as an architect of the current mess.
Expedience jeopardises a simple housing fix 3 Apr 2008 Letting US bankruptcy courts adjust mortgages just like other loans would help hardesthit borrowers those braving personal bankruptcy. It would cost the government nothing, and could help lenders. But with Congress compromising in pursuit of speed, the idea has been shelved.
Sacyr spared forced E8bn cash bid for Eiffage 2 Apr 2008 The Spanish group has avoided the worst. A court has ruled it won t have to pay cash for the rest of its French rival s shares. But Sacyr is still in a bind. The lawsuits may not be over, a full share bid would be difficult, and it won t find many buyers for its 33% stake.
Debt-for-equity swap could soothe Colonial’s woes 2 Apr 2008 Banks backing Colonial s indebted shareholders are considering swapping their loans for some 50% of the stricken Spanish property group. The banks would lose money initially, but stronger shareholders would give the company a chance to recover. It could be the least bad option.
Homeowners shouldn’t wish for a Bear-like bailout 27 Mar 2008 Struggling borrowers objecting to JPMorgan s takeover of the Wall Street firm would probably be worse off under a similar deal than under existing relief efforts. What s more, the rapid drop in Libor has, for now, removed the risk of sharp rises in their interest payments.
Dubai-Colonial drama may not be quite over 20 Mar 2008 Talks have broken down between Dubai s sovereign wealth fund ICD and the creditor banks of Colonial, the Spanish construction group that is teetering on the brink of bankruptcy. This may not be the end of the party but Dubai will have to make more concessions.
First biggish Spanish construction firm goes bust 19 Mar 2008 Seop filed for creditor protection after its clients, mostly property developers, fell behind on payments. The bigger construction companies are more diversified and so on safer ground. But with financing increasingly hard to come by, Seop may not be the last to bite the dust.