Thursday, 26 February 2009

A reminder of what the FSA knew and when

Here is a post of mine from June 2008

To summarise

The FSA knew that lenders were lending historically more than was maybe suitable in March 2000

The FSA suggested that when they become regulator for mortgages, they would be stricter controls. In fact the whole thing fell apart.

Fionnuala Earley on Bloomberg 26th February 2009


For those who religiously follow her claptrap - this month's offering is below.

I'm afraid she is still a bear - oh how I miss her bullishness or was that bullshitness. Bring back 'the trend is upwards' - 'lack of supply means house prices will go up' - 'pent up demand'

Watch her here

Skinner lets himself down

At yesterday's PMQs tributes to Ivan Cameron QUENTIN LETTS reports that Dennis Skinner was the only member not to show dignity.

The only person who let the House down was Dennis Skinner (Lab, Bolsover).

He tried first to talk to Nigel Griffiths (Lab, Edinburgh S) who ignored him. Then he tried to engage Cabinet minister Liam Byrne in chat. Mr Byrne blanked him.

Amazing that not even the death of a six-year-old can cure Skinner of his contempt for the Conservatives.

He is such a scumbag.

Although not as big a scumbag as Mandelson rushing through the Royal Mail plans in the Lords a day early to fly under the radar.

Eamonn Holmes struggles with his numbers

Reporting on the monthly house price falls from the Nationwide Eamonn Holmes gets a little confused with the monthly and yearly figures.

Maybe it is because the scale of the losses is so huge. Maybe it is because HBOS reported a large jump in house prices last month. Although HBOS is hardly independent now and Gordon Brown has his sticky fingers all over their monthly report now.

The Government wants to con the public into entering the housing market and still believes that the way out of a depression caused by excessive borrowing and lending is to borrow and lend your way out.

Anyway here he is

Nationwide February housing data out today

Nationwide have released their January data report today here.

The data shows a drop of 1.8% for the month with an annual change of -17.6%. House prices are now down from their peak in October 2007 of £186,044 by over £38,298 or -20.5%.

Thank God Fionnuala Earley has got her name on this report, she was not on the last report and I feared the worst for her. I wonder if she will still entertain us on the news today.

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.

Now that Gordon Brown's time is almost up, maybe the authorities will never again mistake a boom for stability.

Wednesday, 25 February 2009

My thoughts are with David Cameron and his family

Sky is reporting Cameron's disabled son Ivan has died last night after being taken ill.

My thoughts are with him and his family.

Tuesday, 24 February 2009

Record bank withdrawals in January

January saw a record withdrawal of cash from banks according to the BBA.

A massive £2.3 billion was withdrawn as savers gave up on the shambles that has become the government's bank bailout and interest rate policy.

A popular destination was corporate bond funds yielding around 4%, although the capital is not secure. Analysts are predicting that corporate bonds are potentially going to have double digit growth for the next couple of years before returning to normal.

I wonder how much longer the government and the BOE will continue with this low interest rate policy, which is robbing savers (who did the right thing) of their interest.

Where is our bailout money going?

In the US, Obama's website has this

Gordon Brown has launched another government website which is nothing more than a crude propaganda tool telling us nothing useful.

I created this graphic to help us understand where our bailout money is going.

Monday, 23 February 2009

Brown tells Northern Rock to start lending

So Gordon Brown has decided to use Northern Rock to further government policy and no longer operate at arm's length.

The timescale for this is very Gordon Brown sloooooow - £14bn by 2011.

Maximum Loan to value will be a soviet style imposed 90% even though commercial lenders have decided that 90% LTV is too risky with house prices falling by over 1% a month.

It will be interesting to see if they restrict any of their other criteria, such as multiples of income. With a quick look at their calculator, it is still possible to borrow over 4 times joint income.

Another brilliant Daily Mash article.

The Daily Mash has another superb article.

THE brain of prime minister Gordon Brown has gone into administration, Downing Street has confirmed.

The receivers were called in yesterday just hours after the brain decided that banning 100% mortgages would make the slightest difference to anything.

The organ is now being managed by city firm Porter, Pinkney and Turner who will sell off whatever bits they can and feed the rest into a waste disposal unit.

Official receiver Martin Bishop, said: "For 20 years this brain was touted as one of the great cranial success stories, but when you actually get in there and open it up you can see it was all just a lot of carefully orchestrated bollocks.

"It became clear the brain was no longer a going concern when it proposed the 100% mortgage ban, as any functioning brain would have asked two unbelievably obvious questions.

"One - How do you stop potential home buyers just borrowing the difference? And B - how are you supposed to save up for a deposit when half a pound of Tesco butter costs ninety-four fucking pence?"

He added: "Much of this brain is utterly useless. I suppose if you were very hungry you could spread it on toast, or you could use chunks of it to plug the leaks in an old canoe.

"I'm hoping that Virgin will rescue the bit that doesn't understand how anything works and turn it into a radio station. And we may also be able to get a few quid for the bit that pretends to like football."

Sunday, 22 February 2009

Gordon Brown targets 100% mortgages - wrong again Gordon!!

So now Gordon Brown has decided on his latest popular measure. Be it right or wrong he thinks banning 100% mortgages is a popular thing to do.

To give Gordon credit he is getting warmer.

100% mortgages are and were not the housing market problem. Lending more than 2.5 joint income and not verifying income was and is the problem.

Let's look at 100% LTV mortgages first. If you ban them, the lender offers a standard 95% mortgage with a 5% personal loan to get around the ban. After all a 125% LTV mortgage is just a 95% mortgage with a 30% personal loan.

The housing boom was not caused by letting people buy a house with no deposit.

The housing boom was caused because a borrower could borrow more than 2.5 time their joint income and in many cases this was fast tracked with no income checking. So a fast track borrower could make up their income and borrow more than historically was ever possible.

This huge borrowing left the borrower with a problem though. They could not afford the repayments on a 25 year repayment mortgage. Not a problem - the lender stopped checking how a borrower was repaying the mortgage which allowed the borrower to borrow on an interest only basis with no repayments of capital.

We do not need more legislation. All the government has to do is get the FSA to do their job and check what information the lender is gathering to prove that the mortgage is both affordable and suitable.

A minimum should be 3 months bank statements, 3 months payslip and P60 with an employer reference or 1 years accounts with an accountant reference. Interest only should only be allowed with proof of a repayment plan and ongoing payments into this plan.

This government will never get this. A new government has to understand this before any progress will be made.

Did Timms storm off?

SKY News this morning had treasury minister Timms for an interview. After the first question he was interrupted to go over to a live press statement from Max Clifford on Jade's wedding. At the end of the statement Timms had gone.

Did he storm off? I would have done.

Saturday, 21 February 2009

The unstopable rise of the BNP?

With the economy facing the worst downturn for a century (hat tip to Ed Balls) the disgruntled voters are looking for a party to vote for to show their anger at the government.

In England some choose the Tories, some the LibDems and some the Greens.

If the Tories were in power the traditional Labour voters, recently laid off from their jobs would be marching to London with their Trade Union at the head of the march alongside their Labour politicians. In the 80s the left leaning voters turned to those left wing MPs like Jack Straw, Gordon Brown and Alistair Darling to lead their marches.

But now those Labour politicans are the ones in power and who have lead us into this mess. It is their rules and their regulations that have proved not fit for purpose. But the politicians claim that it is not their fault even though jobs are going abroad, preachers of hate claim compensation from the courts and live here on benefits paid for by our taxes.

So who do these voters turn to? The most prominent left of centre party is the BNP, although they are a party of division and hatred, their policies hit the right note with many left leaning voters.

I fear the BNP are unstopable with a Labour government and a deep recession. How else do you explain these reults.

Swanley St Mary's, Sevenoaks district: BNP 41% (up 41), Labour 34% (down 21), Conservative 25% (no change). UKIP did not stand, having previously secured 20%. BNP gain from Lab

Thringstone, North West Leicestershire district: Labour 36% (-7), Conservative 31% (-1), BNP 28% (+28), Liberal Democrat 5% (-20). Labour hold

Friday, 20 February 2009

Does anyone believe Brown anymore

Gordon Brown - "Our debt is low"

Gordon Brown - "Our economy is best placed to weather the storm"

Gordon Brown - "British Jobs for British workers"

CML data on mortgage arrears out today

Makes for some grim reading


1 in 53 mortgages in arrears of three months or more - at a time of historic low interest rates, you would hope this number would reduce now.

The number of buy to let mortgages in arrears of more than 3 months has gone up by almost 400% from the end of 2007, now accounting for 2.32% of all BTL mortgages.

Thursday, 19 February 2009

January budget

January 2009 budget surplus has come in at £3.3 billion against a forecast of £7 billion.

January is normally a surplus month and in previous years the figure has been around £15 billion surplus.

This is a shockingly low figure and just shows that the expected low revenues could actually be double the received figure.

Net debt is now £703 billion or 47.8% of GDP

Another brilliant Daily Mash article.

The Daily Mash has another superb article.


Lord Mandelson pictured last week trying desperately not to lie to someone
LORD Mandelson has been given a resounding answer to the question of who the fuck Starbucks boss Howard Schultz thinks he is.

Earlier this week the business secretary launched a blistering attack on the coffee house tycoon after Schultz claimed the British economy was exactly as bad as it currently is.

But last night everyone in Britain contacted Lord Mandelson to say how much they wished Mr Schultz was running the British economy instead of a sleazy lounge lizard and his idiot friends.

Tom Logan, from Reading, said: "He lived on a council estate, turned Starbucks into one of the biggest brands in history and built a $1bn fortune and you got one of your millionaire chums to pay for your fancy house and then lied about it.

"He has won awards for his support for AIDS charities and you tried to help two of your millionaire chums skip the passport queue.

"He has created jobs for 172,000 people in every corner of the globe and you got a £1 million pension from the EU for doing fuck all and now seem to spend an awful lot of time on other people's yachts.

"And he clearly knows a thing or two about business while you were the 'mastermind' behind a political movement which has pissed a trillion pounds of our money up the wall and driven the country to the brink of bankruptcy."

Mr Logan added: "Oh yeah, and before I forget, you were also in charge of the Millennium Dome.

"So that's who he is and that's who you are. Although you can probably make a better cup of coffee."

Brown and his lack of apologies

When questioned on his inability to admit his mistakes and say sorry Gordon claims to have apologised for the 10p rate fiasco.

Just to be clear he said this

"We made two mistakes. I'll be honest about it, we made two mistakes,"

Note the lack of the word 'I' or the word 'sorry'. So here he is admitting mistakes were made by 'we' which is very different from 'sorry I made a mistake there'

Now when questioned on the lack of any 'sorrys' he has a new line

'I would be happy to say sorry if the banks had collapsed and people had lost their deposits and savings'

But you see if the banks had collapsed and people had lost their money he would now be stood in front of us blaming global factors, bankers, regulations or the Tories.

If he had been asked 2 years ago if he would say sorry for increasing the country's debt and allowing an unprecedented debt fueled housing boom , he would have said. 'I would be happy to say sorry if I had let the country slide into recession'

Wednesday, 18 February 2009

This will be Gordon's downfall

This is what the core Labour votes are worried about

Even though Brown uses BNP style slogans, the BNP are the party that is tapping into the disillusioned working class voter who has lost their job and has to watch while other Europeans are employed on British contracts.

The best the government can offer is

a) British workers are employed abroad (not car workers I might add)

b) Get on your bike and find work in Europe (Auf Wiedersehen Pet)

There are a number of constituencies where a 10% drop in the Labour vote to the BNP would let in the Lib Dems or the Tories as the second placed party. This could lead to a significant fall in the Labour seats held by the 'seat predictors'.

Harriet is positioning for the top job

The Daily Mail reports that Harriet Harperson is getting her face and projects out there.

One senior Labour insider said: 'There is a pattern of behaviour developing with Harriet that is entirely about what happens after a Labour defeat. You can see
it in much of what she is doing at the moment. It is all about sucking up to the Labour party and the unions.'

Politicalbetting call it 'going rogue'. That is how Palin was viewed when she realised defeat was inevitable.

My money is on HH for leader after the next election loss. She will have the job of leading Labour for 4 years in opposition, before watching the Lib Dems overtake Labour in seat numbers at the GE in 2014.

Tuesday, 17 February 2009

The truth is out there

Can anyone help me out. I am coming across more and more cases of claims that the Tories are going to do such and such or have done whatever, but I can find no evidence.

Here are 2 examples - can you help me out

Luke Akehurst (Labour blogger) and Rosie Winterton (some Labour minister) say that Cameron said Northern Rock should have been allowed to collapse.

I can find no record of this. This is the nearest quote I can find from Cameron

"I don't support nationalisation [of Northern Rock]," Cameron told the Today programme. "I don't think it would be right for the government to spend even more taxpayers' money nationalising a bank and suddenly becoming responsible for £100 billion of mortgage lending.

"What we want is a private sale, but I suspect the government is running out of time and money and it may well be that it needs to go down the path of nationalisation. If it does it will be a monumental failure."

The second example is from Draper's bizarre blog Labourlist

There is a truly dreadful video of pork pies telling Labour lies as far as I can tell. In the video the pork pies say that the Tories will cut the number of police, nurses and teachers.

I cannot find any information on these Tory cuts either.

Can anyone help me on these 2 stories.


Latest poll data

just in....

Latest poll has Tory lead up to 20 points


Tory 48%

Labour 28%

Lib Dem 17%

Goodbye Gordon

Saturday, 7 February 2009

Time to buy index for January 2009

In January the index stands at 119 unadjusted(U) and 166 adjusted(A)

This gives a guide that house prices are around 11% over valued and that market sentiment pushes that to 16% 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.

Some weird data this month from the Nationwide and Halifax with NW reporting a drop of 1.3% in house prices and Hal reporting a 1.9% rise. Amazing what a £500 billion bung will do to a lender's morals!

I take my data from the Halifax figures, which will probably prove to be a 'rogue' month.

Most sensible commentators agree that this will be seen as a gain amongst further monthly losses and nobody has missed any boat despite what the crazy Express 'news' paper says.

Even though house prices have risen this month, there was a big fall in the rate data I use to determine affordability. The rate fall has a bigger impact than the price rise and so the index has fallen again this month.

Although Bank of England rates have fallen, new mortgage deals are being priced at pre-cut levels.

The price to average earnings ratio has also risen slightly this month and is still indicating house prices are 10% above trend on this indicator.

Most buy to let deals have been withdrawn now and those that remain have seen a lowering of the Loan to Value needed. There exists only one 95% LTV first time buyer deal in the market and this requires a charge on the parents house, so a 90% LTV is the best on offer. Credit remains tight.

The unadjusted index is now down from it's peak of 645 in July 2007


House prices to continue falling with the Halifax index bottoming at £140,000 in Q4 2009.

In my opinion mortgage lending criteria has tightened more than usual with a larger deposit required than in the past, however lenders are still lending above average multipliers and mortgage rates have again fallen to below the longer term normal level.

The end of irresponsible lending means that lenders will never be returning to the days of lending with no deposit or waiving income checks.

House prices are still suspended about 20% above the level of finance that the banks are willing to give out.

Buy to let as one of the key drivers of house prices still does not makes economic sense at current rates. This sector will most likely never return to the heady days of 2007 as the age of irresponsible lending is over.

First time buyers are the main driver of the bottom of the housing market. First time buyers have rightly taken the view that it is best to wait out this drop before entering the market.

Thursday, 5 February 2009

Halifax data out for January 2009

Are you sitting down? Looks like the government's £500 billion was well spent because Halifax have house prices rising by 1.9%!! No fudging there then.

To be fair the report is bearish for the market and does mark this as a positive number within a falling market.

They report house prices down 17.2% annually, but they calculate this using this quarter against the quarter a year ago.

The true yearly drop is 16.4% on a seasonally adjusted basis. House prices peaked in August 2007 at £199,612 against £163,996 for January 2009. A drop of £35,646.

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 17.8% from the peak in August 2007 16 months ago. It took from May 1989 to July 1995 for house price to fall 13.21% that is 74 months and the bottom of the last housing slump.

This housing crash is now worse than the 89-95 housing crash and we are probably half way through now.

The last time house prices were at this level was August 2005.

Crown prediction is still house prices to continue falling with the Halifax index bottoming at £140,000 in Q4 2009. A fall of 30% or £59,600 from the peak in August 2007. That would be house prices returning to levels last seen in Q4 2003.