Thursday, 31 July 2008

Nationwide July Housing data out today

Nationwide have released their July data report today here

The data shows a drop of 1.7% for the month with an annual change of -8.1% house prices are now down over £16,000 or -9.8% from their peak in October 2007.

Good news for first time buyers looking to enter the market as house prices become more affordable. Not so good news for those who overstretched themselves and jumped on the property bandwagon in the last few years.

See Fionnula Earley on SKY

Tuesday, 29 July 2008

Will it be Harperson against Miliband for PM?

The times is reporting here that Harriet Harperson is readying herself and David Miliband is readying himself for a face off for PM.

My money is on Harperson out of those two. I still reckon Jon Cruddas will come through with a challenge as well though.

Crosby report confirms funds are available

The Crosby report is out now with a small review here

The key phrase is

While there is still good availability of finance for those borrowers who offer significant security, the availability of finance to all other consumers is considerably reduced and likely to remain so.

This is exactly what I have been saying here

If you have a 10% deposit,good credit, can prove your income, want to borrow 3 or 4 times your incomes and have a repayment plan then there is no problem. (Remember this was how mortgage lending was up to 2000)

if you have less than 10% deposit(100% was available last year),bad credit (sub prime was available last year), can't prove your income (self cert was available last year), want to borrow 6 times your income (Northern Rock was available last year)or can't afford a repayment mortgage (interest only with no repayment plan was available last year) then the lenders no longer want to lend to you.

No matter how much money you chuck at the lenders they will not go back to their reckless lending. Know why?

Because the FSA is breathing down their necks with their 'Treating Customers Fairly' initiative. Is it fair to lend to non prime borrowers during a housing crash?

Mortgage lending log jam?

There is way too much garbage in the media at the moment about mortgage lending freezing up or a mortgage lending log jam.

there is plenty of mortgage money out there for the lenders to lend. Another short history again below.

10 years ago a borrower needed at least a 5% deposit, proof of their income and proof of repayment method. The borrowing limit was 2.5 times joint income. A 2 year fixed rate was 6.5% with a booking fee of £299

Today a borrower needs a 10% deposit, proof of their income and proof of repayment method. The borrowing allowed is 4.25 joint income. A 2 year fixed rate is 6.2% with a fee of £599.

So over the 10 years a larger deposit is now needed, although you can still borrow more historically and at a lower rate than 10 years ago.

So why the fuss?

Because under Gordon Brown's watch the lenders changed their lending criteria to a much more loose lending policy. Between 2000 and August 2007 a borrower needed no deposit, no proof of their income, no proof of their repayment method, 6 times joint income on a 2 year fixed rate of 4% with a £149 booking fee.

This had the effect of pushing up house prices to way above their fair value. Now lenders have stopped their loose lending, a massive number of borrowers do not fit the criteria for lending, either because the lenders will not lend them enough, they cannot prove their income or they do not have a deposit.

House prices will now fall no matter what is done.

Monday, 28 July 2008

June land registry data out today

Full data here

Some highlights

monthly change -1%
yearly change +0.1%

Next month will now show a yearly fall in house prices. This data is based on completion prices relating to properties that were put on the market around 6 months ago.

The graph on page 4 shows London annual changes in freefall.

The graph on page 12 shows sales volumes at under 60,000 which is around 39% lower than this time last year.

The land registry data will continue to show falls for over a year and will most likely bottom out at the end of 2009.

Sunday, 27 July 2008

Another poll blow to Brown

Just when you thought it could not get any worse for Brown another dire poll comes along in the Telegraph here

A poll in 30 key marginals has the vote share

Conservative 41
Lib Dems 18
Labour 17

A devastating poll will surely be the final nail in Brown's coffin.

Friday, 25 July 2008

Glasgow East by-election win for SNP

SNP 11,277
Labour 10,912
Conservative 1639
Liberal 915

BBC has this

A dramatic win with a massive swing to the SNP of 22% leaves Gordon Brown looking at the prospect of losing almost every Scottish seat at the next General Election.

Incredibly this was not the largest swing in a by-election ever, but ranks up there in the history books.

I am sure Gordon will soldier on, but the knives will surely be out now. Someone in the Labour party has to be able to find their balls. Surely?

Monday, 21 July 2008

Why rate cuts won't save the housing market.

With swap rates declining and lenders reducing interest rates, I have noticed a few market commentators discussing if this will 'save' the housing market.

I must add at this point that these commentators talk of the falling housing market being a bad event. This blatantly ignores the fact that millions of people have been priced out of the housing market for years. I would suggest that a falling housing market, although bad for some, was good for first time buyers waiting to buy and homeowners looking to move further up the housing ladder.

In fact 'saving the housing market' would have been questioning the lenders in 2001 about lending 6 times salary and not requiring proof of income.

Anyway back to interest rate cuts - as I have blogged before interest rates are the last housing market crash battle. Remember in 89-95 high interest rates made it unaffordable for homeowners to continue with their mortgage payments causing mass repossessions and a housing crash.

This housing bubble has been caused by massively loose lending criteria leading lenders to lend way more than they have lent historically. This pushed house prices up to record highs. The lenders have now pulled back this lending and are now mainly lending sensibly again.

Reducing interest rates will help home owners afford their mortgages and may help the UK avoid a major recession, but the housing market is still suspended way above the amount that lenders are willing to lend.

It is possible at the moment for a first time buyer to get an affordable mortgage with a 10% deposit on a repayment basis. The problem is that the mortgage allowed is around 30% lower than the property they want to buy.

As the housing market falls, it will meet the armies of first time buyers looking to buy and the market will kick back into life. These armies of first time buyers are sitting on the sidelines waiting for these overvalued properties to adjust to their allowable borrowing.

If you think interest rates being reduced is going to stop the housing market falls, think of it like being on the Titanic after it hits the iceberg and somebody saying - "It's OK I have found another 10 buckets - let's start bailing. If only we had another 10 buckets we could stop it sinking"

Sunday, 20 July 2008

Another Brown poll low

The independent have their latest poll from ComRes here

Conservative 45%
Labour 24%
LibDem 16%
Green 5%
Other 9%

This is the lowest vote share ever for Labour from ComRes.

Friday, 18 July 2008

Brown's scorched earth policy.

Interesting article in the Spectator here today.

As noted elsewhere, Brown is about to break his golden fiscal rules and the treasury are desperately trying to fiddle the figures.

It would appear that Brown may be about to go on a spending spree as it is the next Tory government that will have to pay for this mess.

Why the government cannot cut back on spending as everybody else is having to do I do not know.

Wednesday, 16 July 2008

Brown gets a summer recess PMQ beating

At PMQs today Cameron managed to pin the badge firmly on Brown that says 'I do not answer any questions or take any responsibility'

see it here

Tuesday, 15 July 2008

Jacqui Smith not a U turn on knife crime

Nick Robinson reports here

The Home Secretary on Monday afternoon in the House of Commons:

"I never said, and nor would it be sensible, for young people to be trailed through A&E wards while people were being served."

The Home Secretary yesterday speaking to Adam Boulton on Sky News:

Boulton: And one of those proposals is that people caught carrying knives should be taken to see people in hospital who have been stabbed or to meet the families of victims, is that correct?

Jacqui Smith: It is

A perfect candidate for PM I think

Monday, 14 July 2008

A sign of the times

The US Federal Reserve has issued stricter rules for the US lenders here

The plan would bar lenders from making loans without proof of a borrower's income,

In addition it would prohibit lenders from making a loan without considering a borrower's ability to repay a home loan from sources other than the home's value.

It comes to something when the banks have to be told to check incomes declared on mortgage applications and make sure the mortgage can be repaid.

This kills off the LIAR LOANS in the US. I wonder how long until the FSA figures our the same is needed here.

Well it was needed 8 years ago, but the FSA works slowly.

Time to buy index for june 2008

May index here

This month index

In June the index stands at 496 unadjusted(U) and 694 adjusted(A)

This gives a guide that house prices are around 49% over valued and that market sentiment pushes that to 69% over valued. DO NOT BUY

That is not to say that house prices will fall by either, but it gives an idea of the direction.

House prices have fallen this month which would have improved the index if it was not for the fact that mortgage rates were raised since last month.

It is pretty clear that house prices are not 69% over valued, however they may as well be as nobody in their right mind is currently buying.


House prices to drop another 20% with the Halifax index bottoming at £140,000 in Q4 2009.

In my opinion mortgage lending has pretty much returned to normal even though lenders are still lending above average multipliers and mortgage rates have again returned to a longer term normal level. This has meant that buy to let as one of the key drivers of house prices is not makes economic sense at current rates.

Sunday, 13 July 2008

Friday, 11 July 2008

Portillo and Abbott on this week make sense

Michael and Dianne (Itchy and Scratchy) talk some sense at last on the housing market

watch them here

Thursday, 10 July 2008

George Osbourne today

Today George Osbourne was teasing Darling about Gordon saying 'or do we have to wait for Heathcliff to come down from dithering heights'

Watch it here

Gordon Brown accused of misleading Parliament

The Telegraph has the story here. The main points are below.

The Treasury admitted on Wednesday that almost half of all drivers will be hit with significant rises in Vehicle Excise Duty (VED) on cars with larger engines.

Less than 20 per cent will be better off because of tax cuts on cars with lower emissions.

But only last month in the House of Commons, the Prime Minister told David Cameron, the Tory leader, that if he looked at the VED plan, "he will see that the majority of drivers will benefit from it."

George Osborne, the Tory shadow chancellor, has said that Mr Brown "misled" parliament, and called on the Prime Minister to explain his remark.

Halifax data out for june 2008


month on month house prices are down 2%. The Halifax report house prices down 6.1% annually, but they calculate this using this quarter against the quarter a year ago.

The true yearly drop is 8.6% on a seasonally adjusted basis. June 2007 average house price was £197,450 against £180,355 for June 2008.

The last 12 months has seen the biggest falls ever from the Halifax. The previous biggest 12 month fall was in October 1992 of -8.5%

House prices have fallen 9.65% from the peak in August 2007 10 months ago. It took from May 1989 to September 1992 for house price to fall 9.65% that is 41 months.

Wednesday, 9 July 2008

Gordon and Labour new poll low

Yes I know that almost every poll now is 'a new low' for either Brown or Labour or both but the latest poll from the Telegraph, has Labour's support at 23% the lowest since the Battle of El Alamein in 1943, beating the previous worst by Michael Foot's Labour of 23.5%

Gordon Brown's personal rating is now the same as John Major's at his lowest point.

The poll also shows Labour would be more popular with another leader. Step up Harriet Harperson.

So another historic low - until the next set of polls of course.

Neil skewers Jowell

On the Daily Politics show today Andrew Neil skewers Tessa Jowell on the economy and housing.

Watch it here

Harriet Harperson at PMQs

Further to posts on Harriet Harperson's challenge to Brown here and here here we have Harriet at PMQs in all her glory. She makes Brown look like a plodding Oaf and displays all the signs of a leader in waiting (apart from an inability to lead or make sense)

The Harriet Harperson bandwagon rolls

I guess it was to be expected - The Harriet Harperson bandwagon is rolling. The Sun reports her positioning here

Harriet Harman is privately sounding out MPs about her chances while Mr Brown is in Japan at the G8 summit.

Her allies believe the privately-educated MP can win back Middle England voters who have abandoned Labour. It'll take more than that.

They also claim she has greater public appeal than geeky Foreign Secretary David Miliband. Bitchy as well.

Ms Harman has long argued that Labour needs more women in top jobs. Looking to emulate Thatcher?

But her plotting will enrage the PM, who insisted yesterday he is still the “right man” to lead the party. He might be the right man to lead the party, but everyone knows he is not the right anything to lead the country.

Not that HH is either!

Tuesday, 8 July 2008

Time for Harriet Harperson to shine

Tomorrow HH does PMQs again and after her last display it should be a good knock around. Unlike Gordon Brown she is well able to deal with the weekly knock about. The chance of her standing to topple Gordon must be increasing especially as Gordon is out of the country.

Guido has this on HH and Ian Dale has this

More poll bad news for Gordon

A poll in the Times today makes further bad reading for Gordon Brown. Only 25% of those asked thought he was up to the job of PM. This makes his ratings worse than his party and may now encourage some Labour MPs that the next election may not be so bad if there was a change of leader. To encourage these MPs the Labour share of the vote slightly increased and the Tory share slightly decreased, indicating that the Tory vote may be a bit soft and could swing to Labour with another leader.

Monday, 7 July 2008

Mortgage lending realism

I just wanted to comment on some of the dire mortgage lending news out at the moment.

It is certainly true that if you are a riskier borrower defined as having less than a 10% deposit or have any bad debt or cannot prove your salary, then it is very difficult to get a mortgage approved.

However if you are a prime borrower with a decent deposit or equity in your property, you are employed or have accounts as self employed and have no bad debt, then there is no problem getting a mortgage although the rates will be higher than they were 3 years ago.

But to me this is just lending returning to normal. The lenders have seen common sense and are now lending responsibly after years of madness.

The reason that mortgage lending has collapsed is not that the lenders are no longer lending, but that they are no longer willing to lend to the more riskier borrower. Prime borrowers who could get a mortgage approved are sitting on the sidelines having seen the market for what it is - horribly overvalued.

So to sum up - mortgage lending has almost returned to normal. Lenders are checking incomes, requiring a deposit, requiring a clean borrowing history. They are still lending historically higher multipliers, but this will also be changing over the coming months.

So for any market commentators who think that the housing market will recover once mortgage lending returns to normal, mortgage lending HAS returned to normal.

Friday, 4 July 2008

MPs vote to keep expenses

BBC has this and you can see which ministers voted for continued 'snouts in the trough (SITT) here notably Andy Burnham, Caroline Flint, Tony McNulty, Jacqui Smith, Kitty Ussher, Tom Watson & Shaun Woodward (for his butler's house). Even Gordon Brown's parliamentary private secretaries Ian Austin and Angela Smith voted for SITT. Remember this was a free vote but Gordon was not in favour of keeping the current system.

Highlights for me are

1 - Gordon Brown showed what sort of leader he is by not turning up and voting.

2 - 30 Government ministers voted for SITT

3 - 172 MPs voted for SITT with 146 of them Labour MPs

4 - After the expenses vote announcement was read out, Mr Cameron was heard to exclaim: "Where's the government?"

What a sorry affair

Thursday, 3 July 2008

Keith Vaz jokes about his 'appropriate reward'

Following on from yesterday's 'Vaz letter' , in today's select committee quizzing of Gordon Brown 'Sir' Keith Vaz joked about being short changed.

Watch it here

Andy Murray loses to Nadal

Even Andy Murray cannot beat Gordon's curse. Murray who has been powering his way through his games at Wimbledon was crushed by Nadal in the quarter finals.

Gordon Brown wished him luck yesterday here and the rest is history.

Is there anybody who can help throw him overboard?

Tuesday, 1 July 2008

Can Gordon break his Jonah's curse?

On the Daily Politics today Andrew Neil announced

'The Prime minister's official spokesman has wished Andy Murray well in the quarter finals, given the Prime Minister's record in these matters looks like he's not going to make the semi finals . Sorry about that Andy.'

So can Andy Murray help Gordon break his curse?

For more on Gordon Brown's Jonah curse see Guido here

Fionnula Earley on SKY

A small clip of the interview, a much better interview than normal I thought.

Fionnula is questioned on why her predictions were wrong.

watch it here

Nationwide report house price falls in June

The June report from Nationwide is out at last and shows further falls in house prices.

The full report is here

I have commented on the report later in this post, but first here is Financial Planner from on BBC breakfast talking to Declan.

House prices were down 0.9% in the month, down 6.3% over the last year and down 7.3% since the market peaked in september. The data continues to show a weakening housing market. The report mentions housing transaction levels are key to house price movements and as transactions are now the lowest ever recorded, this points to a still further deterioration in house prices.