Monday, 30 June 2008
Where are the ministers lining up to support Brown? After the catastrophe of the Henley byelection when Labour was beaten into fifth place by racists and loopy-loos, there was no senior minister available to do the usual spine-stiffening interviews - it was left to the junior minister, Ben Bradshaw. TV producers and newspaper comment editors say it is near impossible to find senior colleagues to speak up for Brown. Even people who always supported him in the past have retreated into their shells and are privately distancing themselves.
Talking to ministers over the past few weeks, I have been struck by how fatalistic they have become. They do not seem, in the main, to be rebellious, angry or even despairing. Despair is too energetic a word. They seem clinically depressed, tired and flat.
oh dear, oh dear, oh dear
These stand at 42,000 in May 2008 compared to 116,000 in May 2007. A drop of 64%. The lowest number of mortgages approved for home purchase ever.
Gordon Brown really has brought us a crash of mega proportions. Watch this now feed into significantly lower house prices for the rest of this year and into 2009.
It does pose the question though, who on earth are these 42000?
Sunday, 29 June 2008
Interestingly enough Independent News & Media Plc (the owners of the Independent) acquire a 50% stake in Clear Channel Independent an African advertising firm which does business in ...... Zimbabwe.
EDIT at 11am
Guido has the story here as well and the Indy owns 100% not 50%
Saturday, 28 June 2008
You bunch of muppets
and shows a month of no growth in house prices. This data lags the Halifax and Nationwide data by around 6 months.
The really shocking data within the survey relates to the latest recorded monthly sales for March which are now down 50% on the previous year.
This points to a real Brown crash after his Global boom.
Friday, 27 June 2008
Barnsley East 1996
A strong Labour seat - the Tories go from 2nd place and 14% vote share to 3rd place, 7% vote share with 1299 votes. Still ahead of the 4th and 5th placed candidates. The Tories get wiped out at the 1997 General Election.
A strong Labour Welsh seat - the Tories go from 2nd place and 14% vote share to 4th place, 3.9% vote share with 913 votes. Plaid moves ahead of the Tories. The Tories got wiped out in Wales at the 1997 General Election.
Monklands east 1994
A strong Labour Scottish seat - The Tories go from 3rd place and 16% vote share to 4th place, 2.3% vote share with 799 votes. SNP moves ahead of the Tories. The Tories got wiped out in Scotland at the 1997 General Election.
So this leads me to the conclusion that this is not totally unprecedented for a ruling party to drop so low, although to fall behind the BNP is a bit of a howler. However when this happened to the Tories as the last unpopular ruling party, the subsequent General election lead to annihilation.
My prediction - the end of Labour in England apart from maybe 100 urban seats. SNP destroy Labour in Scotland and tactical voting by Lib Dem/Tories and Plaid see Labour off the map in Wales.
Let's hope Labour do not change leaders.
I see Labour are trying to spin that they did worse in the Winchester by-election in 1997 so because Henley was not as bad, it's OK. That is of course ignoring the fact that in Winchester there was a huge tactical vote to get the Tories out.
The result last night is as follows
John Howell – Conservatives 19,796 56.95% +3.46%
Stephen Kearney - Liberal Democrats 9,680 27.85% +1.84%
Mark Stevenson – Greens 1,321 3.80% + 0.54%
Timothy Rait - British National Party 1,243 +3.58%
Richard McKenzie – Labour 1,066 3.07% -11.68%Chris Adams - UK Independence Party 843 2.43% -0.07%
Wednesday, 25 June 2008
Tuesday, 24 June 2008
The Conservatives have a record 20-point lead over Labour, six points up on last month. Labour support has fallen two points to 25%, the lowest recorded in the ICM polls, which began in 1984.
Conservative support, at 45%, is at a 20-year high. That would give David Cameron a landslide victory as big as Labour's win in 1997, with some 400 seats. Labour might be reduced to well under 200 MPs, with many ministers losing their seats. The Tories would retain Crewe and Nantwich, won in a byelection last month, while Labour would lose previously safe seats such as Wakefield.
Conservative support has increased four points since last month's Guardian/ICM poll, and three points since another more recent ICM poll. Labour support has dropped two points since the last Guardian survey.
Liberal Democrat support, at 20%, is two points down but remains only five points behind Labour, the narrowest gap on record.
House price then rose from an average of £68,085 to peak at £199,600 in August 2007.
In March 2000 when the FSA chairman warned that lenders were lending too much, did Gordon Brown call the lenders to the Treasury to ask them why? NO
When lenders stopped checking income on loans under 75% loan to value did the FSA or Gordon Brown call the lenders in to ask if this would encourage borrowers to lie about their incomes? NO
Gordon Brown now passes his Jonah touch as PM onto the housing market. Since he became PM mortgage lending for home purchases has fallen 64%.
House prices have fallen over 7% in 9 months (according to the Halifax). Under the Tories it took over 3 years for house prices to fall that much from 1989 to 1992.
Gordon presided over an unprecedented housing boom and now he is watching a housing bust take place. I wonder if he will get as much of a battering as he dished out to the Tories 15 years ago?
Mortgage lending for home purchase is now down a whopping 64% on the year.
This indicates further significant falls for house prices over the coming months.
Does beg the question - who are these 27968 that are buying at the moment?
Back in the office and a bit of digging later I found this article
The FSA did not start regulating mortgages until November 2004, before that it was the Council of Mortgage Lenders.
Howard Davies (head of FSA in 2000) said regulators had found worrying signs that credit standards are reducing.
Credit standards loosened significantly when the FSA took over regulating.
upper range normal income multiples are moving from between 3 and 3.25 times prime income towards 3.5 to 3.75 times prime income
Multiples went to 6 times income when the FSA took over regulating.
Howard Davies said we look to lenders to retain good debt servicing capacity tests and prudent lending concentration risk limits
I have no idea what this 'Government worker speak' means, but I am guessing at 'Don't lend too much money to people who cannot afford to repay the debt'. Once the FSA took over the regulation of the mortgage industry, lenders stopped checking incomes on the majority of mortgages under 75% loan to value.
So to summarise
The mortgage industry regulated itself better than the FSA.
The FSA cannot regulate anything, says one thing and does another and then finds someone else to blame.
Gordon Brown has presided over this whole sorry affair for 11 years. In his opinion as long as it is not as bad as under the Tories it is OK.
Thursday, 19 June 2008
1998 Standard Life Bank introduced lending based on affordability meaning that salary multiples were no longer 2.5 joint income but between 2 times and 4 times joint income. Income confirmed by payslips, employer reference or accountant reference.
1998 - 2001 ish most other lenders start to lend on affordability. This has the effect of starting to push house prices above their mean price.
Interest rates are cut after 9/11 meaning that lenders lending on affordability will lend more. So the affordability model gives multipliers from 2.5 times to 6 times income.
house prices continue to rise
2001 ish to speed up the processing lenders introduce fast track where no income verification is needed. Mortgage rates on Self cert are brought more in to line with prime rates and lenders stop requiring bank statements to prove income declared.
2001 - 2007 As house prices continue to push up further and further above their mean, borrowers start to inflate their income (no proof is now needed on fast track) with or without help from their brokers. The LIAR LOAN is born.
2003 - Government abandons RPI (that includes housing costs) in favour of CPI (that doesn't...) as official measure of inflation, thus causing interest rates to become artificially low and helping to fuel the biggest house price bubble in history.
2006/2007 Almost every one of 80 new mortgage enquiries I have I tell the client that on their salary they cannot buy the place they want and the client says that they thought they did not have to declare their salary anymore for a self cert mortgage. 'WRONG you have to declare your earnings - you cannot lie'
2007 Northern Rock e-mail me to confirm that they guarantee they will not check the income of my clients if the LTV is less than 75%
Lenders continue to lend on affordability with the same multiples as in 2001 even though mortgage rates are now double.
summer 2007 northern rock goes bust. Lenders realise they are in trouble.
June 2008 lenders still lending well over 2.5 joint income, but now mostly with full income verification on fast track and increasing rates on self cert to create some risk premium for the lender.
Mortgage lending collapses and house prices start the long downwards spiral.
Next - a 30% drop in the housing market leaves only crazy dogs trying to inflate their salary to buy.
2010 new legislation introduced by a Conservative government requiring the FSA to actually do some of the things a regulator is supposed to do, like make sure lenders are lending in a responsible way.
Which leaves us with
LIAR LOANS - an applicant has lied on the application about income or occupancy (residential loan with property let)
SUB PRIME - an applicant has had a previous credit black mark
SELF CERT - a mortgage where the income is stated but not checked
FAST TRACK - a mortgage where the salary/net profit is stated but not checked
AT RISK - a mortgage of >95% LTV or higher multipliers than 2.5 joint income or no repayment vehicle or ends after retirement.
Tuesday, 17 June 2008
Watch it here
So it would seem that because the Government has not planned ahead, we are totally at the mercy of global forces.
At least when George Osbourne was interviewed, he said he would cancel the tax rises on small business, car owners and the low paid. George is right there is nothing that can be done to lower world prices that is not already being done, however the government can stop taking more money out of our pockets.
The government should look at itself and local government to cut costs and go without as the rest of the industry and people in this country suffer.
At a time when we need to be tightening our belts and finding economies, who worse to be at the helm than an ex chancellor who has taxed us to the rafters and spent all the money.
God save our souls.
Halifax have adjusted the April 2008 data downwards and this now makes the data the worst 10 months on record as well as the worst 9,8,7,6,5,4,3 months.
If you look at the Halifax data from the last crash the average house peaked at £70,246 in May 1989 and then bottomed out at £60,965 in July 1995. A drop of 13.2% and this was called a crash.
This time prices peaked at £199,600 in August 2007 and have fallen 7.8% to date.
In Great Crash 1 the housing market took 3 years to drop 7.7%, this time it has happened in 9 months.
As lenders continue to credit tighten and increase rates, so it becomes more unaffordable to buy or to keep mortgage payments up to date.
The gulf between where property is being marketed and what finance is available continues to widen.
I am still predicting continued monthly falls (with the occasional positive months) for several years. I am still seeing substantial falls or around 25% from the peak over the next year and then gradual falls for a further 2 years to give a total drop of around 35% from the August peak.
I will continue to update my predictions as well as the time to buy index. I suspect that the falls will not actually end up as severe as the 35% I am currently predicting because for these falls to materialise houses actually have to be sold.
Friday, 13 June 2008
Thursday, 12 June 2008
Monday, 9 June 2008
The index is designed so that in a perfectly valued market with house price increase flat the index will be at 0.
If property is undervalued the Time to Buy unadjusted will be negative and if it is overvalued the Time to Buy unadjusted will be positive.
The index will then be adjusted to produce a final index. The adjustments are based on a number of factors including direction of mortgage rate predictions, house price rises or falls and credit supply.
So I reckon that even though property may be overvalued at any particular time, the market sentiment may still drive the property upwards for many years. Obviously the opposite is also true. Hopefully the index will allow me to determine months in advance the time to advise clients to buy or sell.
So as of May the index stands at 465 unadjusted(U) and 680 adjusted(A)
This gives a guide that house prices are around 46% over valued and that market sentiment pushes that to 68% 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.
Back testing produces the following
January 2008 476U 571A (house prices overvalued and sentiment says even more overvalued so the direction is predicted down) DO NOT BUY
September 2007 575U 689U (house prices overvalued and sentiment says even more overvalued so the direction is predicted down) DO NOT BUY
July 2007 645U 710A (house prices overvalued and sentiment says even more overvalued so the direction is predicted down) DO NOT BUY
January 2007 420U 439A (house prices overvalued and sentiment says about right so the direction is predicted level ish) DO NOT BUY
January 2005 269U 219A (house prices overvalued and sentiment says not so over valued, so the direction is predicted up) BUY
January 2002 -194U -230A (house prices undervalued and sentiment says even more undervalued so the direction is predicted upwards) BUY
January 1997 -78U -92A (house prices undervalued and sentiment says even more undervalued so the direction is predicted upwards) BUY
January 1995 -128U -102A (house prices undervalued and sentiment says not so undervalued so the direction is predicted level ish) BUY
July 1989 292U 389A (house prices overvalued and sentiment says even more overvalued so the direction is predicted down) DO NOT BUY
For many years I have been advising my clients on my take on the housing market. I feel my views on the market go deeper than the lender surveys as my views are based on a number of additional factors.
1 - lenders lending practices that are not understood by lenders! (lie to buy, liar loans, fast track)
2 - buyer sentiment. You can't beat sitting down face to face with someone and talking to them about their feelings.
3 - forums. Many different angles an data are presented in a range of internet forums.
So my Time to Buy index is based on the following
The over or under value of property based on price, mortgage rates available for buying and letting and rental income.
Market sentiment and direction of sentiment.
Sunday, 8 June 2008
Thursday, 5 June 2008
For anyone still doubting the severity of the housing market (pay attention Flint, Darling, Brown and Ms Balls)
Here are some facts based on the monthly Halifax figures
The last 12 months have been the worst since Feb1993
The last 11 months have been the worst since December 1992
The last 10 months have been the worst since September 1992
The last 9,8,7,6,5,4,3 months have been the worst ever (YES EVER)
The last 2 months was the worst since last month!
So these figures are as bad or worse than the market was at the depths of the last housing crash and as some experts are pointing out, we have not even had the repossessions or slowing economy hit yet.
Halifax actually use some dodgy figures for their annual decreases. Halifax claim that house prices fell 3.8% over the last year.
The average house price was £196636 in May 2007
The average house price is now £184111 in May 2008
That is a drop of 6.4% - go figure.
Halifax handily release this before the BOE announcement at noon today, however interest rates will not help matters now.
Gordon Brown sowed these seeds over many years and now the housing market will have to deal with it. There is nothing that can now be done to save the housing market (as if it needed saving) we are on a roller coaster, we rode the peak and now the home owners are screaming on the way down.
Watch for all the priced out first time buyers and home movers waiting to jump on at the bottom, so that they can get a chance to enjoy the ride.
How bad can it get for buy to let investors and what are vulture funds
Wednesday, 4 June 2008
I can think of 3 aims.
1 - To not appear complacent, the big guns have to give as much to this by-election as they did to Crewe & Nantwich.
2 - To ensure that Labour lose their deposit
3 - To take the number of Lib Dem voters down from 2005.
The Lib Dems have to move within striking distance for 2010. So I reckon they will be realistically squeezing Labour to come a good 2nd. They will then be able to claim that it is Labour suffering from the 3 party squeeze.
For Labour they must be aiming not to lose their deposit, hold their 2005 vote and to squeeze the Lib Dem vote. I don't fancy any of these 3 aims.
Tory % up on 2005
Tory vote down on 2005
Lib Dem vote % up on 2005
Lib Dem vote steady on 2005
Labour collapse down % and number of votes on 2005
Tuesday, 3 June 2008
After last night's PLP meeting that Gordon was too scared to attend, JS is sent along to plead the case for 42 days. By all accounts she did very well.
Now I have no party allegiance, although at the moment I am leaning towards the Tories. I am leaning partly because of Cameron's personal appeal but also the appeal of the direction and tone of the party.
I am leaning away from Labour mainly because Brown is such an inept fool and seems to have a team of incompetents around him. However I like Jacqui, she seems to be able to communicate, which is the key attribute for a leader followed by charisma and likeability. Brown has none of these.
I can see Jacqui appealing to a large number of these middle ground voters like myself, if only Labour could come up with some policies that a) work b) don't involve taxing us more.
Monday, 2 June 2008
I felt that this was a good thing because first time buyers are priced out of the market and homeowners like myself are prevented from climbing the housing ladder.
I still feel that falls in the housing market are a good thing.
What is concerning me now though is the degree of credit tightening by lenders, much more so than I had ever imagined and the utter waste of space that the government has become.
Firstly on credit tightening - I had assumed that lenders would continue to offer new deals to existing borrowers when their existing deal ends. I was shocked this week to discover that Standard Life bank has withdrawn all deals for existing borrowers. So if your fixed rate ends, you will have to go onto their standard variable rate of 7%+ or remortgage elsewhere. Now remortgaging used to be the norm, but as the credit has tightened, this is now not possible for a number of borrowers.
Secondly on credit tightening - Abbey have confirmed that when your existing deal ends, they will theoretically revalue your property and if you do not have 10% theoretical equity, there are no deals available.
Now both of these mean that a bog standard borrower could be looking at a rate rise of 3% from their deal to the SVR with only a month's notice.
The reason this now concerns me is that I had assumed that homeowners would lose equity, but still be able to pay their mortgages, however it now seems likely that equity will be lost and monthly payments will also go sky high.
Finally on the government - as we know the country is leaderless and rudderless. At a time when we need some inspiration and a clear direction for government, we have this bunch of fools chasing their tales. It is going to be a long hard 2 years.