Real Estate News - July 2007

The following news stories are those which are most important for understanding the house price crash and the impact on house prices going forward...

July 30

Corporate Bond Risk Soars as Subprime Mortgage Losses Spread

American Home Mortgage Investment shares plunge 45% following the mortgage lender’s revelation that banks had requested it put up more cash after writing down the value of its loan and security portfolios significantly

The credit crunch starts to bite

July 26

Credit crisis hits Chrysler buyout

Houses now make up three fifths of Britain's wealth, the highest proportion recorded, demonstrating our increasing reliance on the value of our properties

July 24

Largest US mortgage lender rocks credit markets as high-risk "subprime" problems spread to its "prime" loan book

60% of UK wealth is tied up in house prices

The UK money supply has now swollen by £1.03 trillion since June 2002. That's a greater expansion in cash and credit than the previous 15 years put together

July 22

Toxic CDOs are being auctioned but there are no bids. No bids means that $1.4 trillion of shaky investments have no discernable market-value. They're effectively worthless.

July 20

Commercial property investors rush for the exit

House prices hit by rate rises

July 19

"Apocalyptically, the CDO crisis could erode the entire $1,000bn capital base of the US banking system. Less dramatically, it could cause a serious drop in the banking system's ability and willingness to lend."

Here comes the credit crunch!

July 18

Bear Stearns admits that its collapsed hedge funds are worthless

Renting currently superior to buying?

July 14

Rising mortgage delinquencies are likely to be followed by rising consumer bankruptcies and, with them, the first big test of the federal bankruptcy reform law of 2005. Early indications are that low- to middle-income borrowers will be unduly punished

Homeowners feel squeeze as some rates top 8%

July 13

This week could mark the turning point of the investor love affair with commercial property after up to 6 per cent was wiped off the prices of more than £20bn of UK property funds. There price cuts spark fears of mass withdrawals

July 11

The news that two of the largest property funds have slashed the value of their units will have sent shivers down the spines of investors

July 10

S&P finally says subprime is mostly junk

The surge in credit card debt reflects the fact that it is getting harder to get home equity loans with banks tightening up on standards and home values not soaring as they did during the housing boom

July 8

Bonds are meant to be safe, predictable and boring. Yet the earthquake in the debt markets which has sent bond yields shooting up over the past month will be felt around the world, from Britain's teetering housing market to the pockets of private equity barons. Cut-price borrowing has fuelled a multitude of booms; and as the price of debt rises, investors everywhere are vulnerable

The yen carry trade is continuously flooding the world with cheap money. It works by borrowing money at a half a point from the Bank of Japan and re-lending that money at a higher rate through some other instrument. But at some point, the Bank of Japan is going to have to raise rates and the supply of credit will contract.

July 7

460,000 mortgage payments missed in the past six months as interest rates bite

July 6

Homeowners bear brunt of latest interest rate increase

Banks 'set to call in a swathe of loans'

Self cert buy to let mortgage launched by Kensington - just when lenders should be cutting back and focussing on higher quality lending

"Dream" home out of reach of majority

U.S. hedge fund faces billions in losses on natural gas bet

July 5

More firms collapse

Bankruptcies hit record level as consumer debt reaches crisis point

Investment column: Shifting funds into overseas property could be a mistake

July 3

John Moulton managing partner of Alchemy and a leading UK private equity executive believes that the industry is at the top of the market and is likely to face a crisis similar to that being experienced by the sub-prime debt market in the United States

UK Personal Rate of Saving at 50 Year Low