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Mortgage Scarcity to Worsen

Generali
Posts: 36,411 Forumite

Banks really, really don't want to hold mortgages on their books any more:
[FONT="]http://www.ft.com/intl/cms/s/0/6880df60-0412-11e2-b91b-00144feabdc0.html#axzz27Mb7xzUk
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This time it's sales of Commercial Property loans as Basle III looms and banks have to continue to divest themselves of lending, especially high LTV lending.
It's probably not a bad time to buy into a fund offering some of these mortgages as there are some real fire sale prices about but you would have to be very, extremely, especially careful as to which you bought into.
Basle III looks increasing like it's going to be an absolute disaster in the short-medium term for the world's economy. It's a classic piece of central planning: the regulation didn't work so obviously what we need is........more regulation!
[FONT="]http://www.ft.com/intl/cms/s/0/6880df60-0412-11e2-b91b-00144feabdc0.html#axzz27Mb7xzUk
[/FONT]
[FONT="]Europe’s banks are on track to dispose of €20bn worth of loans backed by offices, shops and hotels this year as lenders across the continent race to reduce exposure to the volatile real estate sector ahead of tough regulatory changes.[/FONT]
[FONT="]Banks, including Lloyds, Santander and the Bundesbank, have already sold portfolios worth €7.5bn during 2012. Activity is set to accelerate though, with lenders working on offloading another €11bn before the end of the year, according to data from CBRE, the property services group. [/FONT]
[FONT="]The run of deals shows the pressure on Europe’s banks to shrink the multibillion-euro debt pile amassed during the continent’s decade-long property boom. [/FONT]
[FONT="]Regulatory changes will increase the amount of capital that lenders are required to hold against loans secured on commercial property, adding urgency to banks’ divestment plans. [/FONT]
This time it's sales of Commercial Property loans as Basle III looms and banks have to continue to divest themselves of lending, especially high LTV lending.
It's probably not a bad time to buy into a fund offering some of these mortgages as there are some real fire sale prices about but you would have to be very, extremely, especially careful as to which you bought into.
Basle III looks increasing like it's going to be an absolute disaster in the short-medium term for the world's economy. It's a classic piece of central planning: the regulation didn't work so obviously what we need is........more regulation!
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Comments
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Who are they 'off-loading' to?0
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Eellogofusciouhipoppokunu wrote: »Who are they 'off-loading' to?
Ultimately it will be pension funds for the most part. A lot of this stuff ends up in Fixed Income or Balanced funds.
If you hunt around there will be hedge funds buying this up too and they are likely to be more discerning as they get a bigger success fee. Of course the big success fee destroys your returns but at least the hedge fund owner gets rich(er).0 -
...It's probably not a bad time to buy into a fund offering some of these mortgages as there are some real fire sale prices about but you would have to be very, extremely, especially careful as to which you bought into.
Well you have to question how 'good' these loans are, if they are having to be sold to improve balance sheets. And who is buying them? You suggest 'funds'. In other words, that presumably means the pension-investing, and ISA-investing public will be exposed to the risks while fund managers lounge in the background laughing all the way to the bank with their 1.5% per annum cut?
This smacks of the Lloyds of London debacle late 80's. Behind this lay the fundamental problem of 'hidden' and unquantified risks (asbestosis etc.) on top of an underlying 'normal' business with extremely thin, or non-existent margins. If this had been identified, assessed, and managed in secret, behind closed doors in smoke-filled rooms, it may well have been recoverable.
But in practice, it was incapable of proper assessment due to the propensity to take these "thin/unprofitable" risks, parcel them up, again re-parcel them, time and time again, and whiz them round and round the market [basically in the form of reinsurance]. Each time, however, some fat broker is taking yet another 5%/10% out of the pot as "commission". By the time the music stops (in this financial game of pass the parcel) several syndicates are left insolvent, and lack of confidence caused the rest to go belly up.
This one smells like rotting fish to me. I sense that if the holding mortgagee has loans that breach Basle III, then profitability is thin or non existent. I also sense that every pair of hands through which they travel will dilute them significantly further.0 -
Ultimately it will be pension funds for the most part. A lot of this stuff ends up in Fixed Income or Balanced funds.
As with all "investing" it is important to DYOR.
Fixed Income Funds do not only invest in Gilts & Bonds.'In nature, there are neither rewards nor punishments - there are Consequences.'0 -
Basle III looks increasing like it's going to be an absolute disaster in the short-medium term for the world's economy. It's a classic piece of central planning: the regulation didn't work so obviously what we need is........more regulation!
It certainly looks like we are in danger of chucking out the baby with the bath water.
The faster this 'forced' deleveraging happens, the deeper the damage to Europe's economy will be.'In nature, there are neither rewards nor punishments - there are Consequences.'0 -
As with all "investing" it is important to DYOR.
Fixed Income Funds do not only invest in Gilts & Bonds.
It's against the rules in Aus. There is no compulsion for funds to be specific about what they invest in.
I was asked to stop contributing to a meeting of my super (pension) fund when I told them that the reason they wouldn't tell me what they invested in was because they were a bunch of thieves and shysters like every other [rude word deleted] in the industry.
DYOR isn't possible in Aus unless you do your own investing.0 -
It certainly looks like we are in danger of chucking out the baby with the bath water.
The faster this 'forced' deleveraging happens, the deeper the damage to Europe's economy will be.
I agree. A lot of the policies are about beating up on the banks rather than trying to solve current or prevent future problems.0 -
.....I was asked to stop contributing to a meeting of my super (pension) fund when I told them that the reason they wouldn't tell me what they invested in was because they were a bunch of thieves and shysters like every other [rude word deleted] in the industry...
Well given how Australia was populated, that's a 'given' isn't it?
A bit ironic, looking back, that we transported all the sheep rustlers, and those that nicked a loaf of bread to feed the family.....
Now we have a large bunch of real criminals in our banks, and in government, and we can't forcibly transport them over there any more. I don't understand why we have all these colonies when we can't exploit them any more! Our Queen only has to issue some sort of 'requisition' to take over all the precious metals, mines, natural resources in Oz, and it might square the UK accounts again....0 -
Loughton_Monkey wrote: »Well given how Australia was populated, that's a 'given' isn't it?
Well the Aboriginals made their way 20-40,000 years ago in rafts and maybe even by swimming through shallow waters between Indonesia and what is now the Northern Territory IMHO. There are other theories.
If anything it was the British Government that were the thieves, narrowly beating the French to it. Terra Nullius is a load of crap when applied to Australia; a legal fig leaf to cover the theft of a continent. There are other theories there too but all of them are racist, wrong or both.Loughton_Monkey wrote: »A bit ironic, looking back, that we transported all the sheep rustlers, and those that nicked a loaf of bread to feed the family.....
Now we have a large bunch of real criminals in our banks, and in government, and we can't forcibly transport them over there any more. I don't understand why we have all these colonies when we can't exploit them any more! Our Queen only has to issue some sort of 'requisition' to take over all the precious metals, mines, natural resources in Oz, and it might square the UK accounts again....
Give them the Nullabor to farm IMHO.
Ironically enough, an Australian court found Lehmans to be guilty of lying about products sold to Australian local councils:
http://www.abc.net.au/lateline/content/2012/s3595779.htmEMMA ALBERICI, PRESENTER: The Federal Court has ruled that the Australian arm of the infamous Wall Street institution Lehman Brothers misled Australian councils, charities and churches into making high risk investments which resulted in heavy losses during the global financial crisis.
Lehman Brothers Australia, formerly known as Grange Securities, has been ordered to compensate 72 councils and charities led by the Wingecarribee and Parkes shires in New South Wales and city of Swan in Western Australia.0 -
......If anything it was the British Government that were the thieves...
I cannot for the life of me understand how you could believe that....
We are taught the truth in our schools. I can assure you that your country was discovered by Captain Hook. He, and others, then went on a mercy mission to pull everyone down from the trees and civilise them.
Eventually, having no use for the deserts, we withdrew but sent all our criminals there, to get them out of the way. Your Prime Minister, Julia Dullard, comes from the poor Welsh Valleys - which explains her lack of allegience to our wonderful Queen, who she wishes to kick into touch.
Please note, therefore, my expert knowledge of Australia.
But I can vouch personally for at least an ounce of 'civilisation' since in a visit to Brisbane, I was able to purchase a Pork Pie. Well done!0
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