Bradford and Bingley

ad44downey

Phew!! I'm glad I sold these turkeys a few months ago. They'll be penny shares soon!!

napoleon

Down again today, what's going on with these? Are they the next Northern Rock?

BettiePage

napoleon wrote: »

Down again today, what's going on with these? Are they the next Northern Rock?

When the rumours first started lasted year that turned out to be about NR, many people thought it would be either B&B or A&L instead. They have (allegedly) been wobbly for quite a while.

Generali

BettiePage wrote: »

When the rumours first started lasted year that turned out to be about NR, many people thought it would be either B&B or A&L instead. They have (allegedly) been wobbly for quite a while.

BB have reasonable (although not great) reserves. They are highly exposed to BTL but from a bank risk perspective that may not be such a bad thing:

- The BTL place is, in effect, secured against the BTL property and also against the PPR of the owner
- There are 2 people to put money up for the mortgage (the tenant and the owner from income/asset sales)
- BTLs are most often owned by older people who are more likely than someone younger to feel that there is shame in bankruptcy, may have access to 2 incomes (pension and carrying on working) and are more likely to have significant savings

The market clearly feels there is significant risk attached to the shares hence the yield. I am starting to think that there is a possibility that a lot of financial shares have been oversold. That doesn't make me a buyer of them though.

brit1234

One of the big differences between a buy to let property and a owner occupier property is the latter has a greater emotional attachment. So it is thought they are less likely to sell and more likely to fight to keep their property.

As the downturn continues it will be interesting to see the breakdown of distressed sellers in these terms. It is already well known there is a rapidly growing and significant proportion of buy to let properties at auctions at the moment.

dopester

Generali wrote: »

BB have reasonable (although not great) reserves. They are highly exposed to BTL but from a bank risk perspective that may not be such a bad thing:

I don't like the risk perspective of having so much of a bank exposed to one particular sector. It might allow them to be the market leader and profit better than other providers, but when things tank, it doesn't seem to leave them many options for balance from other revenue sources.

Bradford & Bingley boss has nowhere left to U-turn

One large investor said he had raised fears about B&B being a "monoline" well before the banking sector came under pressure owing to funding problems and fears over house prices.

Monoline: A business that focuses on operating in one specific financial area. The main advantage of monolines is that these companies have specialized skills and provide expertise beyond what can usually be expected from companies that businesses are spread across many different financial areas.

I know my savings are with a bank which has massive world-wide operations and diversity, not just to real estate, but to commodities, technologies, emerging markets ect.

kunekune

My bus goes past one of the B&B head office buildings every night. The week before last they had a massive recruitment banner heading saying -

"Bradford and Bingley - where every day is a bonus"

It vanished in 24 hours or so. Presumably someone pointed out what their marketing/advertising people hadn't noticed ...

Generali

It's funny really - everyone is down on BTL yet that is the only sector of the mortgage market that is holding up, in terms of number of loans there's been a small YoY rise (7k mar 07 - 7.2k Mar 08) although there has been a drop in the total amount of cash advanced for BTL lending of over 20%.

The number of mortgages for purchases have dropped by 47% over the period with a drop of 30% in the amount of cash advanced.

danm

Generali wrote: »

It's funny really - everyone is down on BTL yet that is the only sector of the mortgage market that is holding up, in terms of number of loans there's been a small YoY rise (7k mar 07 - 7.2k Mar 08) although there has been a drop in the total amount of cash advanced for BTL lending of over 20%.

The number of mortgages for purchases have dropped by 47% over the period with a drop of 30% in the amount of cash advanced.

I think the BTL market proper will be very resillient. When i say proper, i mean the professional landlords or semi pro's not the single property pension brigade.

BTL on a professional scale is like any business. If the rental yeild is strong enough, then you should invest. I recall seeing a post a couple of days ago saying that rents were again on the rise.

That said, the problem is that the specialists who the Pro's deal with (B&B; Paragon etc etc) are the ones heavily reliant on wholesale funds which as we know have dried up.

MissMoneypenny

danm wrote: »

I recall seeing a post a couple of days ago saying that rents were again on the rise.

That article said that rents would go up by 10 - 11% over 2008/9 but that the value of properties would drop 20% in 2008/9. That people would then buy the cheaper houses and rents would drop again as demand had gone.

So by 2009 they predicted that rents would be cheaper again and the value of houses would be down by 20%. IMO, houses are going to drop by more than 20%