Is the credit crunch really ending?

ianmr65

brit1234 wrote: »

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I know some people who are. It is widely known secret, the TV and Radio Media seem not to mention bank names incase it causes another Northern rock run but it occasionally slips out .

Mainly because Robert Peston the bbc economic editor, was widely and in my opinion accurately, blamed for helping to start the depositor run at NR.

This explains his frequent blog articles denying reposnsibility.

nollag2006

Vincenzo wrote: »

http://news.bbc.co.uk/1/hi/business/7375881.stm

I have said all along that the 'write-downs' were overly pessimistic. The problem is, unless confidence is restored in the market, or the banks decide not to profiteer, the market price remains as it is. I suspect this recent statement is to aid in that restoration of confidence.

My guess - the banks will report bumper profits next year, when these assets are re-valued. Add into the mix the capital the banks will have raised (by increasing margins on lending and share issues amongst others) and there will be plenty of money to lend. Don't forget this is the business of banking. The banks WANT to lend money.

I cannot see us returning to 100% plus mortgages and lacklustre underwriting though. At least not until the next generation of City Bankers take the reigns and all is forgotten.....

Best post on this thread.

We are likely to see a substantial rise in house prices later this year, as the benefits of the increased liquidity in the money markets and lower interest rates begin to make themselves felt

mr.broderick

nollag2006 wrote: »

Best post on this thread.

We are likely to see a substantial rise in house prices later this year, as the benefits of the increased liquidity in the money markets and lower interest rates begin to make themselves felt

As ridiculous as that sounds at this point in time i fear you may be right.

brit1234

nollag2006 wrote: »

Best post on this thread.

We are likely to see a substantial rise in house prices later this year, as the benefits of the increased liquidity in the money markets and lower interest rates begin to make themselves felt

Yeah right, where will the funding come from for these rises. Don't interest rates typically take 18 months to filter through and have an effect. Thats if they are even passed on.:D

Alliance & Leicester have already had their long term credit value dropped and it is likely to fall further as the buy to let collapse continues which they are heavily linked too.

http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSL1668878620080416



As for Bradford & Bingley, they are doing worse. Their credit rating was pulled down the month before and suffering higher buy to let loses.

Bradford & Bingley Reduces Lending as Bad Loans Rise (Update4)

April 22 (Bloomberg) -- Bradford & Bingley Plc, the U.K.'s biggest lender to landlords, took more credit writedowns in the first quarter and cut lending to limit bad loans. The Bingley, England-based firm reduced the number of home loans on offer, raised prices on mortgage products and lifted borrowers' minimum deposits, it said today in a statement. Losses on the bank's structured-finance portfolio rose by 38 million pounds ($75.4 million) in the year's first three months.
http://www.bloomberg.com/apps/news?pid=20601102&sid=acCsbLQfnnoM&refer=uk

BettiePage

There have been rumours about A&L since before Northern Rock.

Vincenzo

brit1234 wrote: »

Bradford & Bingley Reduces Lending as Bad Loans Rise (Update4)

April 22 (Bloomberg) -- Bradford & Bingley Plc, the U.K.'s biggest lender to landlords, took more credit writedowns in the first quarter and cut lending to limit bad loans. The Bingley, England-based firm reduced the number of home loans on offer, raised prices on mortgage products and lifted borrowers' minimum deposits, it said today in a statement. Losses on the bank's structured-finance portfolio rose by 38 million pounds ($75.4 million) in the year's first three months.
http://www.bloomberg.com/apps/news?pid=20601102&sid=acCsbLQfnnoM&refer=uk

I am not sure what this implies? The vast majority of lenders have taken the same action in terms of new lending.

The write-downs are just that. They can just as easily be re-valued up when it becomes clear that the defaults are nowhere near as high as first feared. The only reason the current valuations are so low is because of lack of confidence and uncertainty over who is exposed to what. This situation is already improving.

It is widely thought that NR would not have gone under if the situation had been managed better from the start and the panic had been avoided. I cannot see a repeat of that now.

Treadmill

If the news about Northern Rock going to BoE as lender of last resort had been kept in the bag they would still be going strong today.

MarkyMarkD

Plasticman wrote: »

I suspect the folk at A&L and B&B have had a bit of a stressful time lately though! A (slightly old) story here about A&L: http://www.guardian.co.uk/business/2007/nov/28/creditcrunch

Hopefully they have come through the worst still intact?

That Guardian article contains very little accurate information.

All of the rumours about A&L seeking emergency funds from the BoE were subsequently proved false.

ianmr65 wrote:

Mainly because Robert Peston the bbc economic editor, was widely and in my opinion accurately, blamed for helping to start the depositor run at NR.

This explains his frequent blog articles denying reposnsibility.

I wholeheartedly agree. Peston was an enormous factor in the NR debacle.

brit1234 wrote:

Alliance & Leicester have already had their long term credit value dropped and it is likely to fall further as the buy to let collapse continues which they are heavily linked too.

http://www.reuters.com/article/rbssF...68878620080416

Have you short-sold A&L shares or something, brit? A&L are not "heavily linked" to the "buy to let collapse" apart from people who are talking out of their elbows (or another part of their body that they can't distinguish from them). A&L only started selling BTL mortgages in April 2007.

B&B, on the other hand, have been a huge player in the BTL market for quite a few years.

Vincenzo I agree with you that write-downs may indeed prove excessive. They aren't realised losses, in many cases.

Treadmill If it had been possible for some more discreet funding to have been advanced to NR, I believe they could have been successfully sold off to a stronger bank. I don't believe, however, that they could still be operating as a standalone business, simply because I don't think the money could have been advanced discreetly for long enough.

fc123

merlinthehappypig wrote: »

[FONT=Verdana, Arial, Helvetica, sans-serif]An interesting article from Moneyweek[/FONT]

[FONT=Verdana, Arial, Helvetica, sans-serif]Is the credit crunch really ending?[/FONT]

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No, in retail it's just beginning to kick in big time.

nollag2006

Yup -seems to be an emerging consensus that the credit crunch is over, and that service as usual in terms of rising house prices will (quite rightly) be resumed