Northern Rock going bust question

WTF?_2

HelpWhereIcan wrote: »

Funny how your description of an ad-hominem attack could be used to exactly describe your accusation that my posts were based in commercial self interest. If that is not attacking the person rather than the arguments, I am not sure what is.

Oh I see now! My pointing out that your job as a Mortgage Advisor might be affecting your take on the this subject - namely "Ignore the facts in front of your eyes folks, the market is in great shape so keep taking out expensive mortgages as per normal" (paraphrased) has touched a nerve and lead to your little outburst.


Oh well, never mind. I'm sure there will be lots of things that you can apply your undoubted skills to as the market for individuals taking on mountains of debt for overpriced houses turns sour in the coming months and years.

sikejsudjek

HelpWhereIcan wrote: »

:rotfl: :rotfl:

HPC strikes again.

The 'open for subprime business' banner is talking about the range they offer that is funded by Lehman Brothers - the range that is basically a whitelabel of SPML. It's not their money they are lending and the loans go straight to Lehman Brother - Northern Rock do not have to take the risk themselves or securitise them on.

The reason their shares have not fallen to the level where they have been suspended is the strength of their proposition. The mortgage book that they have retained as opposed to securitised on is thought to be value the company at 185p / share on it's own.

That ignores the commercial land it owns, the value of it's unsecured loan book, investment income etc etc.

The "spin" that you are so desperate to be there can be backed up - what have you other than picking up on the term sub prime?
From their interim accounts this year:



http://companyinfo.northernrock.co.uk/investorRelations/results/stockEx070725.asp

http://www.cml.org.uk/cml/statistics

Look at the accounts statement to see how reliant they are upon securitisation and bonds to raise funds to lend and then extrapolate the effect that a 'credit crunch' would have on their ability to raise funds to lend.

Look at the fact that they are still underwriting and offering cases and that the cases that are being done now have funding available - it's raising the money to fund the next round of lending that has been the issue not getting money to meet their current lending obligations.

Share price is bound to remain volatile posing a risk to anyone who invest now, but that is something that may change if/when a buyer comes along and/or the money markets being to ease.

The reason for the fall this morning was speculation that a deal is on the table at less than £2/ share - not a sign of collapse... Unless you believe that anyone looking to buy now will actually resist the urge to take advantage of the current situation to get a bargain they would not have go a week ago (or indeed if the facts had been better reported).



And did you?

The point is that the people N Rock would lend to would not generally not use the fast track facility to get more than they could afford. They profile their customers (through credit scoring etc) pretty well.

There will always be some who have applied fraudulently, but Northern Rock will be one of the lenders with fewer than some.

As I said, just cos you do not agree with Fast track etc and have no need for it yourself, does not mean that it is abused as often as you think.

I love HPC

Oh look the share price is going down again, and again, and again. Looks like the City doesn't rate all those 'assets' as highly as you do ! :rotfl::rotfl::rotfl::rotfl:

WTF?_2

ELIZA_D wrote: »

oh godddddddddd.........i have signed on the dotted line,the valuers are coming out on friday and every time i read and re read (and re read) this thread i get more and more confused......should i ,shouldnt i........to northern rock or not.................oh goddddddddddd

If you've already done your sums about affordability and you've got an offer you are happy with then go ahead with your plans.

What all this fuss means is simply that NR rates will almost certainly go up for new borrowers. After all, the money they are borrowing to lend to you is getting more expensive for them as they have to take 'penal' rates from the Bank of England.

Other companies may also raise their rates but few of them are as dependent upon getting 'cheap' money from credit markets as Northern Rock are.

Still, with the Bank of England apparently willing to underwrite any defective banking business model who knows what path events will take.

homer_j_3

!!!!!!? wrote: »

Oh I see now! My pointing out that your job as a Mortgage Advisor might be affecting your take on the this subject - namely "Ignore the facts in front of your eyes folks, the market is in great shape so keep taking out expensive mortgages as per normal" (paraphrased) has touched a nerve and lead to your little outburst.


Oh well, never mind. I'm sure there will be lots of things that you can apply your undoubted skills to as the market for individuals taking on mountains of debt for overpriced houses turns sour in the coming months and years.

Grow up will you!

The only mortgage advisers that are going to be affected by this are those that have limited panels and NR on it. The same people with these small panels will also have probably been affected by the sub-prime lenders changing criteria also. This issue will not turn the market upside down, as much as you are hoping and praying it will!

The demand for our services won't suddenly disappear because of this. If house prices start to drop because of the credit crunch, it will probably boost our business as more people will be able to buy!

All of this is getting very tiring you know! - yawn

dunstonh

When I used to do mortgages, that was back in the 90s when property prices crashed. Whilst movers dried up and remortgaging wasnt really considered then, they were replaced with first time buyers and we were just as busy. One persons misfortune is another persons advantage.

WTF?_2

homer_j wrote: »

Grow up will you!

The only mortgage advisers that are going to be affected by this are those that have limited panels and NR on it. The same people with these small panels will also have probably been affected by the sub-prime lenders changing criteria also. This issue will not turn the market upside down, as much as you are hoping and praying it will!

The demand for our services won't suddenly disappear because of this. If house prices start to drop because of the credit crunch, it will probably boost our business as more people will be able to buy!

All of this is getting very tiring you know! - yawn

It's the attack of the 'Mortgage Advisors' :-)

You know - pointing out facts about what is happening in the world of finance isn't about bashing mortgage advisors. Perhaps you should try to approach the discussion on Northern Rock dispassionately instead of letting your own personal interests cloud your judgement.


I'm not 'hoping and praying that the market is turned upside down'. I'm participating in a debate where some people seem to be determined to deny basic facts about what is now happening. Perhaps not surprisingly, those most obviously in denial seem to be those with vested interests in pretending everything is hunky dory.

By all means delude yourselves that NR was a well-run, sound business proposition and that there are no 'sub-prime' type issues with the mortgage market in Britain but if you try to foist this spin on the wider membership of this board, prepare for a counter view more grounded in the reality of what is happening out there.

HelpWhereIcan

!!!!!!? wrote: »

Oh I see now! My pointing out that your job as a Mortgage Advisor might be affecting your take on the this subject - namely "Ignore the facts in front of your eyes folks, the market is in great shape so keep taking out expensive mortgages as per normal" (paraphrased) has touched a nerve and lead to your little outburst.

No more than me pointing out that you are obviously a hpc believer who has a vested interest in making any issue sound like Armageddon to try and convince others you have been right since 2003 when you advised anyone who would listen to STR or put off buying would touch a nerve with you. :rotfl:

!!!!!!? wrote: »

Oh well, never mind. I'm sure there will be lots of things that you can apply your undoubted skills to as the market for individuals taking on mountains of debt for overpriced houses turns sour in the coming months and years.

Oh goody, the old "You'll soon be out a job you parasite" line. :rolleyes:

I have been in financial services since 1995 and have been told every now and then that I would soon be out of a job cos of the housing bust, the booming stock market means everyone can be their own fund manager, the dot com bust means no-one will invest, online comparison sites means no-one wants financial advice, Virgin One Acount has ended the remortgage every few years mentality etc etc

If the market goes sour, there will be more people looking for help to get out of a mess. The difference between you and I is that I do not wish it upon people - even though I will benefit financially.

Again I thank you for your concern, but still find it a shame that you are unwilling to re-educate me and the fiscally ignorant masses I prey upon using facts.

Surely if you have formed an opinion of your own rather than regurgitated an opinion you read on a website somewhere you should find my pathetic attempts to save my own behind easy to counter.

While we're at it, I'll admit another thing that could be good for me in a collapse of Norther Rock. It may help the AIFA argue that the FSA should not let Banks dominate the financial advice market as would be allowed by the RDR in it's current form. Now that's where my real self interest lies.

HelpWhereIcan

sikejsudjek wrote: »

Oh look the share price is going down again, and again, and again. Looks like the City doesn't rate all those 'assets' as highly as you do ! :rotfl::rotfl::rotfl::rotfl:

Oh dear, I said in this very thread on Monday

HelpWhereIcan wrote: »

An analyst report I saw valued the company at 185 assuming that the mortgage book was carved up/allowed to run down and no buyer came in for it.

Hence the risk in buying hoping for a takeover, but this is offset by an expectation of 400 plus for the company being bought out.

You seem to forget that I have never argued whether the Northern Rock would continue in it's current form, just whether it would actually go bust - look at the title of the thread

homer_j_3

!!!!!!? wrote: »

It's the attack of the 'Mortgage Advisors' :-)

You know - pointing out facts about what is happening in the world of finance isn't about bashing mortgage advisors. Perhaps you should try to approach the discussion on Northern Rock dispassionately instead of letting your own personal interests cloud your judgement.

I am not letting my own interests cloud my judgement and I fail to see how you could conclude this from my post. The company is operating solvently, it is operating within the rules of the FSA and it has the full backing of the BOE SHOULD it need it. These are FACTS as at this very moment in time. My comments surrounding how Mortgage Advisers will be affected is FACT as it happened in the last crash as Dunston has stated. People who want to get on th ladder will do so when it becomes affordable. There is a huge world outside this forum and HPC forums you know.

I'm not 'hoping and praying that the market is turned upside down'. I'm participating in a debate where some people seem to be determined to deny basic facts about what is now happening. Perhaps not surprisingly, those most obviously in denial seem to be those with vested interests in pretending everything is hunky dory.

Once again, I fail to see this - The only interest I have in NR is with my mortgage, I love their flexibility. I very rarely recommend them to clients as they are often not right or their are better options out there for them.

By all means delude yourselves that NR was a well-run, sound business proposition and that there are no 'sub-prime' type issues with the mortgage market in Britain but if you try to foist this spin on the wider membership of this board, prepare for a counter view more grounded in the reality of what is happening out there.

I am not deluding myself - I watch what is going on and as far as peoples money is concerned, it is safe. As far as peoples mortgages are concerned, its business as usual. Northern Rock have admitted that their business model cannot work in todays financial climate and are changing this but this should not bring on the mass histeria that it has AND if worst comes to worst and NR sell up then so what - people pay their mortgages to a different company, their products and terms and conditions remain the same.

Our subprime market is suffering at the moment as lending is being tightened up. This is due to the backing of the americans and no doubt there will be some casulties along the way - most likely the lying clients who earned £30k as a dinnerlady on that all important self cert deals with a variable libor rate product. You may see an odd small niche lender stop doing business because of there position of offering last resort deals and not getting the funding. However, the result of this will be reposessions on the up and these houses going back in to the demand and supply game.

WTF?_2

homer_j wrote: »

I am not letting my own interests cloud my judgement and I fail to see how you could conclude this from my post. The company is operating solvently, it is operating within the rules of the FSA and it has the full backing of the BOE SHOULD it need it. These are FACTS as at this very moment in time. My comments surrounding how Mortgage Advisers will be affected is FACT as it happened in the last crash as Dunston has stated. People who want to get on th ladder will do so when it becomes affordable. There is a huge world outside this forum and HPC forums you know.

Their business model has proven to be unworkable except in a very specific set of market circumstances.

The stock market knows that - NRs share price was sliding rapidly long before the events of last Thursday.

NR knew it - they tried to sell themselves off to another bank before those events.


The notion that somehow they are just unfortunate victims of bad circumstances is bunkum. They chose a business model that relied on super-cheap, super-lax money market credit and a market that would happily gobble up mortgage based security products and embarked on a course of rapid expansion on this premise.

They failed to hedge adequately against the possibility that those conditions would not prevail and are now hoist by their own petard.

homer_j wrote: »

I am not deluding myself - I watch what is going on and as far as peoples money is concerned, it is safe. As far as peoples mortgages are concerned, its business as usual. Northern Rock have admitted that their business model cannot work in todays financial climate and are changing this but this should not bring on the mass histeria that it has AND if worst comes to worst and NR sell up then so what - people pay their mortgages to a different company, their products and terms and conditions remain the same.

That's all very well but if my money was in a bank that had just had to go to the BoE because it faced collapse if it didn't get emergency funding from them I would most certainly seek to withdraw it.

Even if I was inclined to accept what incomplete protection the FSA scheme offered, I would most certainly have sought to withdraw the money once the run on the bank started.

That's not panic, that's a logical and rational course of action to protect my savings.

homer_j wrote: »

Our subprime market is suffering at the moment as lending is being tightened up. This is due to the backing of the americans and no doubt there will be some casulties along the way - most likely the lying clients who earned £30k as a dinnerlady on that all important self cert deals with a variable libor rate product. You may see an odd small niche lender stop doing business because of there position of offering last resort deals and not getting the funding. However, the result of this will be reposessions on the up and these houses going back in to the demand and supply game.

Well kudos to you for being the first vested interest I've seen to openly admit that there is a sub-prime market in GB. That definitely deserves respect.

The official line so far has been that sub-prime is purely a US issue, our regulation system doesn't allow it etc. etc.

I'm guessing that the extraordinary measures taken by the BoE are a pre-emptive attempt to head off a US style sub-prime implosion in the UK. Such is the extent of 'buy to lie' self-cert mortgages, massive salary multiples and >90% LTV products that there are going to be a very large number of people indeed who find themselves in over their heads, in my opinion..