We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Will house prices crash? Poll Discussion
Comments
-
comdot, fraid your completely wrong.
Markets go around in cycles those that hang on to their optimism when it down turns get their fingers burnt.
NRs fingers are well and truely burnt, the directors must be heading for the nearest sky scraper.
You don't provide much of a critique of what I said and say nothing I don't already know. Though I do disagree with your last sentence.
As I understand it Northern Rock have not done much or anything wrong. I have not looked deeply into this but I did read a Reuters article. Northern Rock are being affected by the rate they can borrow money. Northern Rock, in a perfect world would not have relied on interbank loans to the degree it has. That, is what it has done wrong.
The reason I post on these forums is because I don't like trawling news stories all day, every day. It's nice to have a break and ask other people sometimes. Other people can point me to their sources.
Here's mine:
http://uk.reuters.com/article/UKNews1/idUKWLB190920070914
They don't go into much detail on my specific question.
Some quotes:
"Financial authorities stepped in to rescue mortgage lender Northern Rock on Friday as the group, which has lent aggressively to home buyers, fell victim to the sharp rise in borrowing costs between banks."
"Northern Rock...has been hit by banks' reluctance to lend as they hoard cash to cope with the fallout from bad U.S. loans."
"[The Bank of England], which has come under fire from some financial institutions for its hands-off response to market turmoil, said Northern Rock was solvent and only in need of short-term help."
Just read the article.
"While it has little exposure to poorer-quality, or "subprime," U.S. mortgages, Northern Rock has been hit by the liquidity squeeze triggered by the crisis in that market because it has a small deposit base and so has to draw most of its funding from money markets."
"Interbank lending costs rose to their highest level for nine years this week as banks scaled back lending to each other."
"It had been a darling of the bank sector in recent years after posting 23 years of record earnings, but now there is a strong chance it will be taken over by a well capitalised rival, analysts said."
The FT reported on Wednesday that the credit problem will work itself out when lenders are able to assess the exposure of those in the money market to sub-prime U.S. mortgages and that will take a long time.
None of this helps me understand why NR should have a problem with the lending rate going up. Unless they can't help themselves taking on new customers but can't raise the debt to do so.
EDIT: To clarify, what I mean by NR not doing any wrong is this: NR appear from what I can gather to have done nothing wrong. It is not their responsibilty to cope with these money market problems, as they don't create them. The Bank of England is there to support them during a time of market failure.0 -
from what I hear in my industry - i think that prices will swiftly fall 3 years from now. We are in financial poo poo and we are thinking of taking what equity we have and running for a few years, getting back on our feet slightly and starting again.0
-
harryhound wrote: »Hi Moneysavers,
In the recent poll there were at least 63 of you in every 100 who were more "bullish" than I was.
Can I revise my vote from "at least 2% drop" to at "least 12% drop"?
Turning to the specifics of Northern Rock bank:
Why can the big banks "screw" Northern Rock?
What is the future of Northern Rock's:
Borrowers?
Shareholders?
Depositors?
Has the Bank of England done the right thing?
The big banks know that they are home to an unexploded bomb, placed by American financial terrorists. But they don't know where it is and who has got it. Meanwhile they enjoy an army of "numpties" who are depositing loads of money with them for free, So they are sitting on that money, just in case they might have to pay for the bomb damage.
Meanwhile, most mortgage providers have been handing out cheap money like there is no tomorrow. Northern rock has been borrowing wholesale. Northern Rock has been shovelling out this retail money faster than most and suddenly their suppliers have gone on strike. This looks like classic borrowing short and lending long?
Does anybody know Northern Rock's loan to (inflated) value ratio of loans over the last 12 months? More specifically the proportion over (say) 80%, with or without a loan guarantee ? (Remember the South of England Building Society ?). How large are last year's mortgages as a percentage of all NR mortgages?
So what is the position of a borrower? In the old days, when Abbey National was turning itself into a Bank; I hated the place because I always had lots of time to stand in the Q and study the warning notice that said a mortgage was repayable on demand (just like an overdraft).
Does anyone know if this is still the legal position?
If I had borrowed, in the last year more than 3 X my income and had a loan to value ratio of more than 90%, I think I would be buying a cheap caravan and asking my parents if I could park it on their front lawn.
If you are a depositor of less than 32K, you are more or less covered, though if the worst happened, it might be like trying to get your money back if a holiday company goes bust. (I seem to remember it took about 3 months and then they knocked off a 10'er for "administration".)
If I had more money than that deposited, I think I would take out the excess and buy short term Gilts (are these still available through the Post Office, because you just do not know where the bombs have been placed).
If you are a shareholder (and I am, I had my 100GBP+ in NR when it became a bank) the future is foggy. As I write, I hear on the radio, that there is "blood on the screen" this morning. Price down 20%? In the day's when I had a mortgage, it was with The Leeds Permanent Building Society. It too was caught with its financial trousers down and ran out of money (or so I am told;)). However, as a "club" that had grown up on legislation dating back to the days of self builders getting together in pubs to pool their savings, everything was hushed up, Leeds merged into Halifax; and I eventually got a double dose of HBOS shares. However, when you are a public company in global era of the internet and the satellite 'phone it is no longer possible to call on fellow members of the cartel to hush things up.
So has the Bank of England done the right thing? - In the short term, yes. The prospect of a crop of mortgagees facing repossession proceedings in the run up to Xmas, does not bare thinking about. BUT I do hope the Bank knows what is happening & is "Kicking As..." and gets this mess restructured by Christmas. I don't see why my taxes as well as my savings should be at risk, to bail out dodgy mortgages on both sides of the Atlantic.
Don't panic, the sun will rise tomorrow.
Harry.
(The Bank of England had to set up a "lifeboat" in the 1970's - different problem caused by uncompetitive UK, big balance of payment deficit, high taxes and high oil prices - come to think of it not that much different. The bosses of the secondary banks were locked into the basement on a Friday night, with a few curly sandwiches and told they would not be let out until they signed on the dotted line, that was before cell phones had been invented.).
Sorry to repeat all this, but what a difference three months makes;)
I have been invited to a meeting at NR with an opportunity to vote for a bunch of directors who have mainly been elected to the board since the run or support the nice hedge fund people. As I read it, these newbie directors want me to confirm that they are the men for the job and they want a free hand, while the hedge fund people expect every proposed change in the current status quo to be brought back for their approval.
I think this situation mirrors today's government proposal giving it rights to take over a struggling bank "in the interests of the depositors".
So, unlike the majority of depositors, I still have a tiny vote. Should I trust the "professionals" of the city - the same Mafia that, 300 years ago, bought "Scotland for the United Kingdom" (I will rephrase that "Rescued a Bankrupt Nation") or our wonderful politicians who always act quickly decisively and put the national interest ahead of their own.
:rolleyes: What choice should I make?
Harry
Some how I've got a feeling that banking, since the days of Jewish goldsmiths, has been something of a magic trick, best performed in low light conditions and not fit to be argued about in the glare of political posturing. We seem to be heading back towards a ham-strung Bank of England?0 -
Northern Rock must have spent a fortune getting an agency to try to telephone all it s shareholders to remind then to vote!
Well I finally decided to lodge a protest vote by voting for the Hedge Fund people, because we, the owners, have been told sweet FA.
I also had a chat with the nice young (?) woman who phoned me - perhaps I was the first person who could see the funny side of loosing thousands:D.
It seems I was the first to mention GRANITE ??????????????
Anyway the ability to vote on line has been closed early!!!!!!!!!!!!!!
You may no longer vote. The deadline for voting has expired. You were entitled to vote until 10:00 13 January 2008 (being 48 hours before the meeting)0 -
Sorry for the break but I wanted to prove that my posting pre-dated the deadline.
My attempt to cast my 500 votes, started at 09:00, but the registrar's site, probably, could not cope with the volume of transactions, issuing one of those please try later, types of messages. I finally got to the voting part at about 09:53 !!
So what happens now:
Here is my guess:
Sack the programmer.
The Hedge-funds go to the High Court, demanding a re-run.
(Something like this happened at the take-over of an Insurance Company called London Life - where the directors completely under estimated the numbers wanting to vote). In the case of LL the High Court gave a re-run - so the process was drawn out over many more damaging weeks.
A media circus descends on Tyne-side for the EGM on Tuesday - I'm very tempted to hitch hike up there myself, for the opportunity to have my say.
Do we have a technically savvy MSE member attending to report back - like the member who kept us posted on the length of the Q in Moorgate in the City of London, during the run?
(Anyone going to offer me a lift - it could be a laff).
Gordon Brown and Alistair Darling panic (woops take a statesman like decision) to nationalise Northern Wreck in an attempt to stifle the criticism (woops protect the depositors funds and the tax payer's guarantees).
Some sop will be offered to shareholders as hush money, but will it be enough to prevent ongoing damaging publicity?
By that I mean damaging to the whole financial fabric of the country and the wallet of every citizen. (I can hear the sound or rubbing hands in Frankfurt, Switzerland Dubai and other wannabe world financial centres).
Railtrack shareholders deserved what they got, as any user of the railways could see the major stations being turned into shopping centres while the trains kept falling off the tracks.
Northern Rock is not in quite the same league BUT I can see a similar chaotic mess.
Nasty news tends to leak out on Christmas Eve and during the summer. Hence "sell in May and go away........". We the voters did not pay members of the tripartite regulators to be asleep on the job, as the dollar slid revealing rotten toxic mortgages, sold by virtual crooks to chancers and the very stupid.
Do we really want this government and its so called democracy, making decisions in similar situations in the future. When it comes to the ownership of money, it is not one man one vote, but one pound one vote. "Put your money where your mouth is".
The Bank of England was given power over the money supply , give it more power not less, to take action to nip these problems in the bud. Quite frankly I would rather wake up to find my mortgage company rescued by The Bank of China and quoted in Hong Kong, than be deafened for months by the sound of politicians grinding their own axes. I'm pretty sure that the majority of worldwide customers of our financial institutions, would agree with me. Not to mention the millions in China looking to buy a 70 year lease on their 40 sq meter flats.
Here endeth the Sunday rant.
Harry.0 -
harryhound wrote: »Northern Rock must have spent a fortune getting an agency to try to telephone all it s shareholders to remind then to vote!
NR are also paying all of virgins expenses as well _pale_ ( at least in the event that virgins attempts to takeover NR are unsuccessfull, so virgin stand to lose nothing)0 -
Just like a city centre developer offering to pay the buyer's "legals".
I bet the directors are still living like the pigs in Animal Farm at my expense too.
I'm really tempted to buy a 24 GBP ticket on megabus, sleep on the coach, just for the satisfaction of telling them what I think.
Beware of a gang of cowboys, like the crew that ran Longbridge into the ground, while paying themselves fancy salaries and then sold out to the Chinese, when there was nothing left in the kitty.0 -
-
Just a thought:
Do the staff at Northern Rock qualify for cheap mortgages? If so, what is the deal?
When I was struggling to pay our first mortgage in the early 1970's, most white collar employees dreamt of getting a company car BUT the real perk, if you worked for a large financial institution, was the opportunity to get an oversized mortgage costing about 2%. Ordinary mortals got 3x salary plus 1/2x the partner's salary and paid 8% for the privilege. The company car perk has been devalued by taxation and the lower cost and increased reliability of cars, it is now largely a tool of the trade for those who really need them. What has become of having a mortgage on the firm?0 -
Its outrageous that the website closed early - dont know exactly how early--, I tried at 9.50 on sun am and it told me I was too late .On Mon first thing I rang first Geogesons who were alledgedly there to offer advice on the voting procedure - they said nothing to do with them and gave me a NR no. I rang that, and was given a further number. That department couldnt care less and passed me another number. That number said it wasnt them and gave me the general enquiries no. for NR!! I didnt fancy sitting in their queue so I took it no further. I just hope the vote isnt so close that our votes would have made a difference. Wonder how many other people couldnt cast theirs?0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 350.6K Banking & Borrowing
- 253K Reduce Debt & Boost Income
- 453.4K Spending & Discounts
- 243.6K Work, Benefits & Business
- 598.3K Mortgages, Homes & Bills
- 176.7K Life & Family
- 256.8K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.6K Read-Only Boards