Firstly there is clearly informed advanced information of much worse
economic news to be released this week by the Bank of England.
The slashed bank rate will hinder savings which in turn will drive up
borrowings leaving vast debts to be paid off later some day -
borrowings leaving vast debts to be paid off later some day -
when ?
- how? .
- how? .
This borrowing will drive down the pound and push up costs
of imports and thus unemployment. It all boils down to the fact that
all the government policies are merely making matters much worse.
Then there's Northern Rock. This bank started the whole financial
crash and is now nationalised. It would appear that it so over-lent
that there are are few mortgages on its books which do not represent
negative equity and that it will the source of a great number of loss-
making repossessions this year.
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========================
TELEGRAPH 9.2.09
Bank of England to warn recession will last far longer than
Government's forecast
The Bank of England will this week come into direct conflict with the
Treasury as it warns on recession.
By Edmund Conway and Angela Monaghan
In its quarterly Inflation Report, the Bank's Monetary Policy
Committee will slash its economic growth forecast to the lowest level
since it was granted independence in 1997, and will indicate that it
is now poised to start buying up securities directly in a bid to pump
extra money into the economy.
It comes after the MPC voted to cut borrowing costs to an all-time
low of 1pc, despite warnings from savings groups that such a move
would undermine incentives to save money.
The Bank is expected to cut its growth forecast from the already-
bearish projection that the economy would shrink by 1.3pc in 2009
made in November, to one which factors in a far steeper decline. It
undermines the Treasury's assessment in the pre-Budget report that
the economy would start growing again in the second half of the year.
The Inflation Report is the Bank's three-monthly opportunity to
indicate its outlook for the economy, and economists will be watching
the event closely on Wednesday to determine how much further it will
cut borrowing costs.
They expect further rate cuts towards zero, as well as quantitative
easing, whereby the Bank would increase the money supply by buying
assets like corporate and government bonds, complementing the £50bn
Asset Purchase Facility scheme already announced by the Treasury. The
Governor, Mervyn King, will also indicate how soon the Bank will
embark on this.
Despite better-than-expected data from the services sector last week,
more gloom is in store next week in the form of labour market
statistics, which could show that unemployment surpassed the two
million mark in December.
Figures from the Office for National Statistics are also likely to
show the number of people claiming unemployment benefits jumped in
January, after a series of high profile failures including Woolworths.
"We are looking for a nasty surge of 110,000, the largest increase
since March 1991," said Philip Shaw, economist at Investec. That
would take the number of claimants to about 1.27m.
========================
FINANCIAL TIMES 9.2.09
Repossession losses up eightfold at N Rock
By Jane Croft
Northern Rock has seen losses incurred from repossessed homes jump
eightfold since it was nationalised a year ago, according to new data
from its securitisation vehicle.
The state-controlled bank, which is expected to be lossmaking when it
reports 2008 results next month, has seen the stock of repossessed
homes spiral in its Granite securitisation vehicle, which funded much
of the bank's ambitious growth in mortgage lending.
The latest data show that losses from repossessed properties dating
back to 2001 - when Granite was formed - totalled £5.4m in February
2008.
However, by December Granite's total losses on repossessed homes had
swelled to £45.9m - a rise of 750 per cent - and it incurred losses
of £8.6m in December alone from the sale of repossessed properties.
Granite accounts for only a proportion of Northern Rock's mortgage
book but gives a snapshot into the deterioration of mortgage loans at
the UK's fifth-largest mortgage lender.
The bank has been criticised for its repossession record and it is
expected to account for about one in 10 of the estimated 45,000
repossessions in 2008.
In Granite, the number of repossessed properties held in the trust
jumped from 545 in February last year to 1,708 in December.
This is only a portion of the 4,201 repossessed homes that Northern
Rock had on its books at the end of September.
Arrears at Northern Rock also continued to worsen. About 6 per cent
of the mortgages held in Granite were in arrears of one month or more
in December compared to 2.09 per cent in February 2008.
Some 2.88 per cent were in arrears of three months or more compared
to 0.42 per cent last February.
Furthermore, the data for December show that 1.33 per cent of
homeowners - about 3,719 borrowers - within Granite are in negative
equity, with mortgage loans worth 100 per cent or more of the value
of their property.
A further 10.19 per cent of customers in the Granite programme have
mortgage loans which are between 95 and 100 per cent of the value of
their property, meaning they are at risk of tipping into negative
equity.
These home loans are potentially at risk of sliding into negative
equity because the securitisation data only includes the value of the
property when the borrower last re-mortgaged or took out the loan.
Northern Rock has already said it will let Granite, its £35.5bn
securitisation programme or master trust, go into run-off, meaning
that Northern Rock will no longer supply it with fresh mortgages and
bondholders will be repaid as old mortgages expire.
of imports and thus unemployment. It all boils down to the fact that
all the government policies are merely making matters much worse.
Then there's Northern Rock. This bank started the whole financial
crash and is now nationalised. It would appear that it so over-lent
that there are are few mortgages on its books which do not represent
negative equity and that it will the source of a great number of loss-
making repossessions this year.
xxxxxxxxx cs
========================
TELEGRAPH 9.2.09
Bank of England to warn recession will last far longer than
Government's forecast
The Bank of England will this week come into direct conflict with the
Treasury as it warns on recession.
By Edmund Conway and Angela Monaghan
In its quarterly Inflation Report, the Bank's Monetary Policy
Committee will slash its economic growth forecast to the lowest level
since it was granted independence in 1997, and will indicate that it
is now poised to start buying up securities directly in a bid to pump
extra money into the economy.
It comes after the MPC voted to cut borrowing costs to an all-time
low of 1pc, despite warnings from savings groups that such a move
would undermine incentives to save money.
The Bank is expected to cut its growth forecast from the already-
bearish projection that the economy would shrink by 1.3pc in 2009
made in November, to one which factors in a far steeper decline. It
undermines the Treasury's assessment in the pre-Budget report that
the economy would start growing again in the second half of the year.
The Inflation Report is the Bank's three-monthly opportunity to
indicate its outlook for the economy, and economists will be watching
the event closely on Wednesday to determine how much further it will
cut borrowing costs.
They expect further rate cuts towards zero, as well as quantitative
easing, whereby the Bank would increase the money supply by buying
assets like corporate and government bonds, complementing the £50bn
Asset Purchase Facility scheme already announced by the Treasury. The
Governor, Mervyn King, will also indicate how soon the Bank will
embark on this.
Despite better-than-expected data from the services sector last week,
more gloom is in store next week in the form of labour market
statistics, which could show that unemployment surpassed the two
million mark in December.
Figures from the Office for National Statistics are also likely to
show the number of people claiming unemployment benefits jumped in
January, after a series of high profile failures including Woolworths.
"We are looking for a nasty surge of 110,000, the largest increase
since March 1991," said Philip Shaw, economist at Investec. That
would take the number of claimants to about 1.27m.
========================
FINANCIAL TIMES 9.2.09
Repossession losses up eightfold at N Rock
By Jane Croft
Northern Rock has seen losses incurred from repossessed homes jump
eightfold since it was nationalised a year ago, according to new data
from its securitisation vehicle.
The state-controlled bank, which is expected to be lossmaking when it
reports 2008 results next month, has seen the stock of repossessed
homes spiral in its Granite securitisation vehicle, which funded much
of the bank's ambitious growth in mortgage lending.
The latest data show that losses from repossessed properties dating
back to 2001 - when Granite was formed - totalled £5.4m in February
2008.
However, by December Granite's total losses on repossessed homes had
swelled to £45.9m - a rise of 750 per cent - and it incurred losses
of £8.6m in December alone from the sale of repossessed properties.
Granite accounts for only a proportion of Northern Rock's mortgage
book but gives a snapshot into the deterioration of mortgage loans at
the UK's fifth-largest mortgage lender.
The bank has been criticised for its repossession record and it is
expected to account for about one in 10 of the estimated 45,000
repossessions in 2008.
In Granite, the number of repossessed properties held in the trust
jumped from 545 in February last year to 1,708 in December.
This is only a portion of the 4,201 repossessed homes that Northern
Rock had on its books at the end of September.
Arrears at Northern Rock also continued to worsen. About 6 per cent
of the mortgages held in Granite were in arrears of one month or more
in December compared to 2.09 per cent in February 2008.
Some 2.88 per cent were in arrears of three months or more compared
to 0.42 per cent last February.
Furthermore, the data for December show that 1.33 per cent of
homeowners - about 3,719 borrowers - within Granite are in negative
equity, with mortgage loans worth 100 per cent or more of the value
of their property.
A further 10.19 per cent of customers in the Granite programme have
mortgage loans which are between 95 and 100 per cent of the value of
their property, meaning they are at risk of tipping into negative
equity.
These home loans are potentially at risk of sliding into negative
equity because the securitisation data only includes the value of the
property when the borrower last re-mortgaged or took out the loan.
Northern Rock has already said it will let Granite, its £35.5bn
securitisation programme or master trust, go into run-off, meaning
that Northern Rock will no longer supply it with fresh mortgages and
bondholders will be repaid as old mortgages expire.
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