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Real Estate News - February 2008
The following news stories are those which are most important for understanding the house price crash and the impact on house prices going forward...
Mortgage Strategy: UK house prices fell by 0.5% in February in a fourth consecutive monthly decline, says the latest Nationwide House Price Index.
FT: Australia’s troubled Centro Properties reported a $1.1bn first-half loss and said it received expressions of interest for two of its funds as it tries to raise cash to reduce a heavy debt load.
FT: Leveraged funds rush to sell debt.
FT: Some small US banks are likely to fail in the months ahead, Ben Bernanke said on Thursday, warning that his country faced a more difficult situation today than in the aftermath of the dotcom bust in 2001.
FT: Another German financial group fell victim to the US subprime mortgage crisis when DZ Bank, the country’s fifth-largest, revealed a writedown of more than €1.3bn ($2bn) in its securities portfolio and warned that 2008 would be a volatile year.
FT: The government-backed bailouts of German banks hit by last year’s credit crisis were called into question on Wednesday as the European Commission said it would investigate possible improper use of state aid.
Gold Money: Follow the trend.
Marketwatch: AIG reports $5.29 bln quarterly net loss on derivatives hit.
Reuters: Freddie Mac loss swells as mortgage crisis deepens.
FT: The dollar fell to a fresh record low against the euro on Wednesday as Ben Bernanke signalled that the Federal Reserve is likely to cut interest rates again next month.
Marketwatch: Despite a record drop in prices, sales of new U.S. homes fell by 2.8% in January, led by a drop of more than 10% in the Northeast, the Commerce Department reported Wednesday.
Marketwatch: Federal Reserve Chairman Ben Bernanke told Congress Wednesday that the central bank will remain on the course for additional rate cuts at least in the near term. Downside risks to growth remain the key focus of monetary policy, said Bernanke.
FT: London Scottish Bank on Tuesday threw in the towel on its consumer-lending business and said that it would look to sell assets after surging losses from the division pushed the company deep into the red.
Reuters: U.S. home foreclosures for January increased 57 percent from a year earlier, but the pace at least temporarily subsided in response to private and government efforts to help homeowners, RealtyTrac said.
Marketwatch: U.S. home values in 2007 posted the first yearly decline in 16 years, according to two home-price indexes released Tuesday, and analysts said more price drops are still in the offing.
Reuters: Sales of existing homes fell for a sixth straight month in January, while prices tumbled 4.6 percent amid swelling inventories, according to a report on Monday that offered no end in sight for the housing slump.
FT: New mortgage deals drop 31%.
FT: Prices of top-quality wheat jumped 25 per cent to a record high on Monday in their largest one-day increase as Kazakhstan, one of the largest grain exporters, said it would impose export tariffs to curb sales.
FT: US stocks staged their biggest rally this month after rating agency Standard & Poor’s reaffirmed the triple-A ratings of troubled bond insurers Ambac and MBIA. But for how long?
Marketwatch: Home resales slip 0.4% in January as inventories climb.
Wall Street Journal: Commercial-real-estate investors and Wall Street firms are finding their attention turned to a little-known credit-market index that is sending ominous signals about the outlook for their business.
FT: US hotel real estate sales set for slide.
Gold Money: More Solid Gains for the Precious Metals.
Wall Street Journal: As families struggle with a combination of high heating costs and a shaky economy, utilities say more customer accounts are falling delinquent.
Mortgage Strategy: The Banking (Special Provisions) Bill, which is required to nationalise Northern Rock, has become law.
Wall Street Journal: The global financial squeeze is spreading to investments linked to the corporate-debt market, slamming the value of contracts that provide insurance against defaults and marking one of the first times that the debt of major companies has been affected by the turmoil.
FT: Hundreds of buy-to-let investors are being questioned about undeclared income in a probe launched by Revenue & Customs this week.
Marketwatch: Dresdner Bank, a division of German insurer Allianz (DE:840400: news, chart, profile) , said Thursday that it will provide a support facility for its struggling $18.8 billion K2 structured investment vehicle, joining a growing list of banks that have bailed out funds as a result of the credit crisis.
FT: Credit markets were thrown into fresh turmoil on Wednesday as the cost of protecting the debt of US and European companies against default surged to all-time highs.
GMAC, the financial services group owned by Cerberus Capital Management and General Motors, on Wednesday said it would cut its North American automotive finance workforce by 15 per cent.
Reuters: Inflation gathers steam as housing slides.
Marketwatch: The underlying rate of U.S. inflation accelerated in January, the Labor Department said Wednesday. The consumer price index increased 0.4% in January, driven by 0.7% gains in both energy and food prices.
FT: Terrace Hill has reported that the end value of its property developments has dropped by about 15 per cent owing to the ongoing price correction in the market.
FT: Credit Suisse sent fresh tremors through the banking sector Tuesday when it revealed $2.85bn of mark-downs on structured credit positions caused in part by “pricing errors” by some of the Swiss investment bank’s traders.
Marketwatch: Latest credit-market trap could hit closed-end funds.
Marketwatch: Crude closes above $100 for first time ever.
Mortgage Strategy: Second lender scraps 125% LTV deal. Coventry has followed Alliance & Leicester and scrapped its 125% LTV range.
Mortgage Strategy: Alliance & Leicester is withdrawing its PlusMortgage range from close of business today. The product combined a mortgage of up to 95% LTV and an additional unsecured loan of either 5% or 30%, bringing the maximum allowable LTV up to 130%.
Wall Street Journal: U.S. and European
banks, already reeling from persistent losses on mortgage investments, are facing a new hit as the global financial crisis spreads to deteriorating corporatedebt.
Wall Street Journal: Turmoil in an obscure corner of the credit markets is expected to lead to a wave of refinancing by institutions that are in danger of finding themselves paying abnormally high interest rates on their bonds.
FT: US banks borrow $50bn via new Fed facility.
Real Estate Journal: Countrywide Financial Corp.'s January loan delinquency rate continued to climb last month as falling home values and the sagging economy hammered borrowers.
Mortgage Strategy: UBS could end up with a large stake in Paragon Group if shareholders shun a £287m rescue rights issue, reports have warned.
FT: Fury over Northern Rock nationalisation.
Marketwatch: The U.K. government said on Sunday that it will nationalize Northern Rock PLC after the mortgage lender almost collapsed last year as the subprime crisis turned into a global credit crunch.
Inman: California new-home sales fall 31% in 2007. Median price sinks 3.8% compared to 2006.
Marketwatch: Rent your way to good credit.
Real Estate Journal: Tracking Housing Prices - Why the Numbers Conflict.
FT: Property at heart of financial storm.
FT: Privately-held bond insurer Financial Guaranty Insurance Company (FGIC) on Friday asked regulators to approve a plan aimed at splitting the company in two. The move follows warnings by Eliot Spitzer, New York governor, who on Thursday gave bond insurers such as Ambac, MBIA and FGIC three to five business days to find enough fresh capital to maintain their triple-A ratings.
FT: Moody’s stripped FGIC, one of the largest bond insurers, of its
top-notch credit rating on Thursday, downgrading the company by six levels and warning further cuts could follow. FGIC is the first bond insurer to be to be downgraded from triple-A by all three of the major ratings agencies.
Marketwatch: Bernanke: Fed has been aggressive: stands ready to do more.
FT: Bradford & Bingley is not usually a bellwether for the UK banking sector. However, its results Wednesday shed light on how tough life is becoming for the UK mortgage lenders. B&B and other small lenders such as Alliance & Leicester and Paragon have worried investors recently.
FT: US banks braced for a battering in storm.
Reuters: Morgan Stanley will slash 1,000 jobs, scale back its U.S. home-lending business and shut down a British mortgage unit as new management takes a hard look at the continued deterioration in mortgage markets.
Marketwatch: As the Bush administration announced a fresh plan to aid homeowners overburdened by their mortgages, initial figures suggest much-touted earlier efforts have done little to help most troubled borrowers.
Mortgage Solutions: Morgan Stanley has confirmed it is to close Advantage Home Loans.
Property Week: The housing market has continued to deteriorate in 2008 as more estate agents report falling prices, Royal Institution of Chartered Surveyors has reported.
Mortgage Solutions: B&B shares slump following results announcement.
FT: Slowdown deepens as British house prices fall.
Marketwatch: Warren Buffett told CNBC TV on Tuesday that his firm, Berkshire Hathaway, last week made an offer under which it would assume liability for insurance on $800 billion worth of municipal bonds that three major bond insurers now cover.
FT: Buffett bond plan puts heat on banks.
Property Week: Commercial development activity has plunged by almost a quarter in the UK in January, according to a new survey.
Real Estate Journal: Why Your Nest Is Not Your Nest Egg.
New York Times: Mortgage Crisis Spreads Past Subprime Loans.
FT: American International Group sent tremors through the markets on Monday when the insurance company raised its estimate of losses in October and November from insuring mortgage-related instruments from about $1bn to nearly $5bn.
FT: AIG’s derivative woes hit confidence.
FT: Spanish banks’ reliance on ECB surges.
FT: Daniel Bouton, the Société Générale chief, insisted the French bank had an independent future as it launched a €5.5bn ($7.97bn) rights issue to repair the damage done by the financial industry’s biggest rogue trading scandal.
Real Estate Journal: Fitch Ratings, while telling investors last Friday to expect additional "widespread and significant downgrades" on $139 billion worth of subprime loans, has cited a new factor in their "worsening performance." "The apparent willingness of borrowers to 'walk away' from mortgage debt," the analysts noted, "has contributed to extraordinary high levels of early default" on loans issued during the 18 months before the mortgage bubble burst.
Real Estate Journal: Homebuilder D.R. Horton Inc. swung to a fiscal first-quarter loss amid a further $245.5 million in inventory and land charges, and the company expects the"challenging" environment to continue.
FT: Subprime losses could rise to $400bn.
Marketwatch: The Reserve Bank of Australia lifted its 2008 forecast for underlying inflation Monday and warned further interest-rate hikes may be forthcoming.
FT: House price weakness spreads to London.
FT: Small business owners may be storing up debt problems for the future with a significant number of companies still accepting loans that were effectively on sub-prime terms, business advisers have warned.
FT: Sub-prime writedowns continue to pile up at some of the world’s biggest banks and the world was stunned by the huge losses at Société Générale. Meanwhile the credit markets remain all but closed. So who is to blame for the crisis in banking and what can be done to prevent future ones?
FT: Lenders impose more stringent checks on borrowers.
FT: WestLB’s top shareholders have agreed on a €5bn ($7.25bn) bail-out plan for the bank, and pledged to slash up to 1,500 jobs over the next two years, in an attempt to restore stability after a trading scandal last year and subprime mortgage-related losses.
FT: Mortgage fraud spirals out of control.
FT: Fears about corporate and commercial property debt reached new heights in the US and Europe on Friday as investors liquidated holdings in a sign of spreading credit turmoil.
Gold Money: Silver is leading.
FT: Investors are predicting interest rates will fall to 4.5 per cent by the end of the year, after the Bank of England on Thursday announced a quarter-point rate cut, its second in nine weeks.
FT: ECB chief opens door to rate cuts.
FT: Subprime-related losses at major banks.
FT: Northern Rock debt put on government books.
Marketwatch: Sales contracts on previously owned U.S. homes fell 1.5% in December, a sign that home sales will continue to decline, the National Association of Realtors reported Thursday. The pending home sales index, based on contracts signed but not closed in December, was down 24.2% from the prior year's period.
Marketwatch: BOE cuts key rate a quarter-point to 5.25%.
Property Week: British Land revealed a 17% drop in net asset value this morning.
FT: Robert Toll, outspoken founder of US luxury builder Toll Brothers, warned on Wednesday that “we are not seeing much light at the end of the tunnel” in spite of the raft of interest rate cuts this year, setting a grim tone as the homebuilding industry heads into the vital spring selling season.
FT: MBIA, the world’s largest bond insurer, on Thursday raised $1bn in equity in an effort to stave off cuts to its triple A credit ratings.
Mortgage Strategy: The Nationwide Consumer Confidence Index has plunged to its lowest level since the survey began, reflecting rising gloom over the economy this year.
FT: Risk of rise in distressed property sales.
FT: Investors pull £1.6bn from property funds.
Real Estate Journal: Credit-Card Crunch Crimps Home-Equity Loans.
Real Estate Journal: Is a Mortgage the Best Home For a Year-end Bonus?
FT: Credit squeeze threatens to crush buy-outs.
FT: Olivant abandons Northern Rock at 11th hour.
Reuters: Fed says bank loan standards now tighter.
Marketwatch: Fed cuts by half-point, hinting at more to come.
Inman: Beazer exiting five markets, closing mortgage unit.
Marketwatch: Builders slash prices 10%, but sales fall anyway. December's 5% decline caps record 26% drop in U.S. new-home sales for 2007.
Marketwatch: Home prices falling at record rate in November. Prices down record 7.7% in the past year in 20 major cities: Case-Shiller
Marketwatch: Foreclosure Filings Surged 75% In '07 as Subprime Mess Grew.
Marketwatch: Mortgage rates could rise, not fall, after Fed move.
Real Estate Journal: After racking up more than $100 billion in mortgage-related losses in recent months, banks and their investors had hoped they were out of the woods. They aren't.
FT: US banks warned on housing market risks.
FT: Eurozone inflation soars to 14-year high.
FT: House prices declined for a third consecutive month in January taking the annual rate of price inflation to its lowest in two years, according to the Nationwide.
Gold Money: The flight from the dollar.