Moody's have downgraded UK from AAA to Aa1

ColdIron

Ed Balls was almost sincere on TV this morning but he just can't contain his glee

spacey2012

What it does do is take your mortgages which are the bonds the lending is secured on and move them one tray nearer to to the selling tray.
Downgrading had a big impact on the USA mortgage market with lenders under pressure to close loans and liquidate the assets as interest rates strip out the mortgage rate.

Thrugelmir

ColdIron wrote: »

Ed Balls was almost sincere on TV this morning but he just can't contain his glee

Given he was the architect of many of our current problems.

Cannot wait until he actually appears on Question Time.

Facing the General Public.

talexuser

xylophone wrote: »

http://www.zerohedge.com/news/2013-02-22/uks-george-osborne-responds-moodys-downgrade

the best post there was by "fuu"

We shall print on the beaches, we shall print on the landing grounds, we shall print in the fields and in the streets, we shall print in the hills; we shall never surrender.

guitarman001

This is a real bummer for me - saved for yonks for a house deposit / emigration fund. Lost £20k on AIM gamble. Keeping the rest in cash for now, but it looks (to me) likely to be seriously devalued. Considering chucking the lot into S&S ISA American/Asian trackers.

NPowerUser

I think Fitch is the ratings agency most people take notice of.

My biggest concern is that the USA bounced back, look how robust their housing market is getting now, in fact it looks like another housing price bubble is starting to inflate again.

It will inevitably lead to the likes of Santander, that has already has its balls bust in Spain, paying more on the open market to borrow and then lend to us.

Santander's 4.74% SVR mortgage rate will come under pressure in the weeks and months ahead. So self employed, interest only and self cert mortgagees beware, along with those working less hours or might have difficulty porting their mortgage elsewhere due to changes in circumstances.

In the USA, who lost the AAA rating, may actually have paid less interest in the short term after the downgrade but they actually manufacture products whereas our economy is built around the service industry or blue slipper clay or sand as I like to call it.

grey_gym_sock

guitarman001 wrote: »

Yeah, but the US let their house price bubble burst. I think it's not going to be good news for us - look at how much sterling has devalued against other currencies already. A COMPLETE bummer because for ages now I've thought the market was insane, so stayed out of the FTSE rally. I gave in just last week and lo and behold - this news comes out. !!!!!!.......

it's not obvious that this will be bad for share prices. it doesn't tell the markets anything they didn't already know about UK public finances. and of course, many big companies' finances are in a better state than the public sector.

So - MY big question - how to preserve the value of my savings against a sterling decline? I may roll over my NS&I certs in June... gold is a funny one right now... convert to other currencies or buy international shares? The dollar seems to be having quite a rally!

if the NS&I certs are index-linked, they're a good low-risk option.

international shares are a good higher-risk, long-term option - if you can live with higher risk and longer term. and depending how much you've already got in shares in each world region; best not to go massively overweight in any region unless you're sure.

predicting currency movements, or the gold price, is too hard - i wouldn't even try ... on currencies, it's almost a case of all countries trying to devalue their own currency at the moment ...

grey_gym_sock

NPowerUser wrote: »

It will inevitably lead to the likes of Santander, that has already has its balls bust in Spain, paying more on the open market to borrow and then lend to us.

Santander's 4.74% SVR mortgage rate will come under pressure in the weeks and months ahead. So self employed, interest only and self cert mortgagees beware, along with those working less hours or might have difficulty porting their mortgage elsewhere due to changes in circumstances.

if UK interest rates rise - it remains uncertain whether they will soon - santander UK will be affected, of course. i'm not sure whether santander's international position really comes into it. though spain is their "home" country, i think their largest business in in brazil ...

for a while, it been the case that SVRs are significantly higher than the rates available to ppl who can remortgage (i.e. who have high enough provable income, and low enough LTV). so no change there.

In the USA, who lost the AAA rating, may actually have paid less interest in the short term after the downgrade but they actually manufacture products whereas our economy is built around the service industry or blue slipper clay or sand as I like to call it.

i agree that's a fundamental long-term problem. not so sure it will affect short-term interest rates, though.

Thrugelmir

grey_gym_sock wrote: »

if UK interest rates rise - it remains uncertain whether they will soon - santander UK will be affected, of course. i'm not sure whether santander's international position really comes into it. though spain is their "home" country, i think their largest business in in brazil ...

.

CEO of Santander UK has said capital is better used lending to business at a higher margin than for mortgages.

Suspect that is in order to send capital back home to shore up Head Office. The UK operation is ring fenced.

Just another step towards deglobalisation of the banks.

Glen_Clark

Can't compare Britain with America because America have had their house price correction.
Now they have got their own pension fund in index linked bonds, The BoE seem determined to maintain Britains house prices at all costs.