Banking Crisis - Bear Stearns (US's Northern Rock Scenario) impact on UK

UK007BullDog

I have seen prices pull up again in my neighbourhood. When there is a reduction it is very slight.

The car market is also a good indicator. The more 0% deals are offered the worse the economy is getting.

ManAtHome

Did hear something last week - spokesman for B*** S***** or B***S***, went something like "our stability is well placed to remain more stable than a firmly-bolted (whoops sorry, firmly-closed) stable door. This year we will increase our net borrowings by 25% or so, but within 2 years this will reduce by 80%". Was it Ali-McD&G or Ali-Sz (never seen them in the same room) - maybe "they both" bought their speeches from bulldungisus.com..?

dwsjarcmcd

The Bear Stearns situation will spook an already spooked market even further. I think that this will stifle liquidity further and probably increase the inter bank lending rates. This will feed through to the market as even tighter criteria and the prices of tracker mortgages increasing.

Good(ish) news for savers as rates are raised to get some funds in but more bad news for mortgage holders.

This has got a long way to go IMHO with further casulties to come.

David

MortgageMamma

I agree with what you are saying David, I think this will get much much worse before it gets better. Things are really bad in the mortgage markets, we have next to no high loan to value deals left and self certs are now being pulled really quickly together with reductions in LTVs to below 75% with some lenders. Just the other day we saw BM solutions withdraw from the adverse self cert market completely, Mortgage express won't lend above 85%, Amber has closed its doors to new business and Woolwich won't take registratoins for new brokers to submit business to them.

SouthCoast

I would guess that this sums up the current market:

HBOS has raised £750m of new capital at a staggering interest rate of almost 9.5%, in a clear sign of the funding crisis facing the world’s banks.

From:

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3558310.ece

george_2

SouthCoast wrote: »

I would guess that this sums up the current market:




From:

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3558310.ece

That is a shock, if a bank the size of HBOS in the UK has to borrow at such a punitive rate, there must be some serious questions. As the comments at ToL say, be interesting to watch their shares on Monday morning

worldtraveller

It's going to be interesting to see what happens to interest rates over the coming year. The FOMC is likely to slash rates by 0.75-1%, possibly even more, at it's next meeting as a last ditch attempt to avoid recession in the U.S. (if they are not in one already!). This will bring the possibility of actual negative interest rates in the money markets closer. With these further moves, it will also signal that interest rates will also need to be cut across the world, at least in the short-term, to prevent the crisis getting worse. "OK, but what about inflation?" people will say. Well, it is certainly on the rise, but a worldwide recession would be much worse and one that all Governments will want to resist at every cost.

IMHO we will see significantly lower rates in the U.K. later this year.

UK007BullDog

Worldtraveller, but if lenders have to borrow at really high rates there is NO WAY that the rates here will fall. The last BoE cut were not even passed on to the customers or at a very reduced rate.

With oil going up and costs increasing world wide, food costs and all the other bills increasing I see the rates going up. But then I am not a trained economist/analyst, I am just going by what happened in the past.

UK007BullDog

Good discussion, thanks for all taking part. Some very valuable insights and opinions voiced.

Any more?

globalds

We Have China with the worlds largest foreign currency resereves
http://news.bbc.co.uk/1/hi/business/6106280.stm
And the Middle East and Russia awash with Oil revenues ..
This won't be a global recession ..It looks to me like a few countries ..Mainly the USA are living beyond their means ...And are going to end up having to sell the family silver to pay for it .