Taken from the bdaily - 08.07.09
The North East's economy is "inching closer to stability", according to a regional business group.
The latest survey from the North East Chamber of Commerce (NECC) has shown the decline in domestic sales slowing and firms are more positive about plant investment and staff retention.
The North East Business Barometer showed respondents were much more confident that turnover and profitability will improve over the next 12 months.
James Ramsbotham, NECC chief executive, said: "Overall, our survey demonstrates increasing levels of confidence among businesses but this is more a case of companies being more confident of survival rather than being outright optimistic. We are most definitely not out of the woods yet.
"The economy is still contracting but the NEBB shows that the balance is starting to swing back towards equilibrium.
However Mr Ramsbotham cautioned against celebrating too early, saying that "dark clouds" still hung over the UK economy due to the high level of public debt.
"The Government will have to reduce that debt over the coming months and years and it will face frighteningly tough decisions," he said.
"What cannot be allowed to happen is for the bill to be dropped in the lap of businesses. The focus must be on setting out realistic priorities for public spending as opposed to damaging the private sector through excessive increases in taxation."
Wednesday, 8 July 2009
Friday, 26 June 2009
Home Ownership 'Aspirations Hit'
Taken From BBC News Online
Page last updated at 10:24 GMT, Monday, 15 June 2009 11:24 UK
Young people's aspirations of home ownership have shrunk as a result of the recession, according to a survey.
The proportion of UK youngsters who believed owning their own home was "the ideal living situation" dropped in the last year, the poll found.
The not-for-profit Chartered Institute of Housing (CIH) surveyed 2,028 people ahead of its annual conference.
It is calling for renting and ownership to be considered as equally viable alternative for the younger generation.
"We've driven too many people into unsustainable owner-occupation," said CIH chief executive Sarah Webb.
"A generation has grown up believing it has to own at any cost - in part because we have not provided them with decent information about the alternatives."
Findings
Historically, the poll has found that people aspire to owning their own home - a situation confirmed this time.
Some 70% of people asked said they thought that homeownership was a good long-term investment.
However, in the 25 to 34 age bracket, the proportion who believed that owning their own home was the ideal living situation fell from 83% a year ago to 69% now.
Those surveyed - who included homeowners, tenants and people living in social housing - pointed to negative equity as a source of concern.
Part of the project charted the concerns and support over homeownership from young members of a housing association board.
With the housing boom having pushed up prices and banks now squeezing their lending, it had become tough to get on the housing ladder, said Muhammod Akbur Hussain, 21, according to the report.
But Ruhul Alam, 22, said: "Ownership is an aspiration to most young people. Ownership gives you security, you can't be evicted. It gives you freedom and it is a status thing."
'Price Gap'
A separate survey for the CIH found that four in five said demand for rented accommodation had risen in the last 12 months, and demand for debt advice had also grown.
Figures from the Council of Mortgage Lenders (CML) show there were 11.6 million mortgage holders in the UK in 2008, including 1.15 million outstanding buy-to-let mortgage holders.
Meanwhile, a report by the Royal Institution of Chartered Surveyors (Rics) said the gap between asking and selling prices had narrowed.
Across the UK, houses were selling at an average of 11% below the asking price with sellers, although in some regions sellers were being forced to accept up to a 26% discount off their advertised price.
"The improvement in sentiment ... is reflected in a narrowing in the gap between asking and selling prices," said Rics chief economist Brigid O'Leary.
Page last updated at 10:24 GMT, Monday, 15 June 2009 11:24 UK
Young people's aspirations of home ownership have shrunk as a result of the recession, according to a survey.
The proportion of UK youngsters who believed owning their own home was "the ideal living situation" dropped in the last year, the poll found.
The not-for-profit Chartered Institute of Housing (CIH) surveyed 2,028 people ahead of its annual conference.
It is calling for renting and ownership to be considered as equally viable alternative for the younger generation.
"We've driven too many people into unsustainable owner-occupation," said CIH chief executive Sarah Webb.
"A generation has grown up believing it has to own at any cost - in part because we have not provided them with decent information about the alternatives."
Findings
Historically, the poll has found that people aspire to owning their own home - a situation confirmed this time.
Some 70% of people asked said they thought that homeownership was a good long-term investment.
However, in the 25 to 34 age bracket, the proportion who believed that owning their own home was the ideal living situation fell from 83% a year ago to 69% now.
Those surveyed - who included homeowners, tenants and people living in social housing - pointed to negative equity as a source of concern.
Part of the project charted the concerns and support over homeownership from young members of a housing association board.
With the housing boom having pushed up prices and banks now squeezing their lending, it had become tough to get on the housing ladder, said Muhammod Akbur Hussain, 21, according to the report.
But Ruhul Alam, 22, said: "Ownership is an aspiration to most young people. Ownership gives you security, you can't be evicted. It gives you freedom and it is a status thing."
'Price Gap'
A separate survey for the CIH found that four in five said demand for rented accommodation had risen in the last 12 months, and demand for debt advice had also grown.
Figures from the Council of Mortgage Lenders (CML) show there were 11.6 million mortgage holders in the UK in 2008, including 1.15 million outstanding buy-to-let mortgage holders.
Meanwhile, a report by the Royal Institution of Chartered Surveyors (Rics) said the gap between asking and selling prices had narrowed.
Across the UK, houses were selling at an average of 11% below the asking price with sellers, although in some regions sellers were being forced to accept up to a 26% discount off their advertised price.
"The improvement in sentiment ... is reflected in a narrowing in the gap between asking and selling prices," said Rics chief economist Brigid O'Leary.
Thursday, 14 May 2009
UK Recovery To Be Slow
Taken from the bdaily 14.05.09
The reluctance of banks to resume lending is hampering the UK's recovery from recession, the Bank of England has warned.
The painful process of repairing the finances of the sector increased the chances of a "relatively slow and protracted" recovery, bank governor Mervyn King said.
"It is likely that the supply of credit will continue to be restricted for some while, with banks being risk averse and aiming to raise capital ratios," he said.
The warning came as the bank predicted a deeper recession than in its last report in February, due to the worse than expected 1.9% fall in output during the first quarter of 2009.
It now forecasts that the annual decline in UK output could hit 4.5% at the peak of the recession this summer.
The governor said the pound's weakness, the impact of record low interest rates, government spending, and firms working through stockpiles offered hopes of recovery.
Sarah Green, Regional Director of CBI North East said: "It is clear from this report that the economic outlook remains highly uncertain and we can't bank on a swift route out of recession.
"Although there are signs that the pace of decline is starting to moderate, the big problem for many companies continues to be access to credit. From what businesses are telling us, the credit situation might not be getting any worse, but it isn't getting much better either.
"However, there are some reasons to hope that we will see some stabilising forces starting to kick in over the next six months, including the massive monetary boost from successive rate cuts and quantitative easing."
Thursday, 5 March 2009
Bank To Pump £75bn In To Economy
BBC News Online
Page last updated at 19:01 GMT, Thursday, 5 March 2009
The Bank of England is to create £75bn of new money in an attempt to revive lending and the battered economy.
Bank Governor Mervyn King said the policy - called quantitative easing - was about pumping money into the wider system rather than simply to the banks.
He said the approach would "eventually work" but admitted it was unknown how long it would take to have an effect.
The approach, untried in the UK, was unveiled as the Bank cut interest rates from 1% to 0.5% - a fresh all-time low.
Interest rates have now been reduced six times since October, and the latest cut was expected.
Mr King insisted that increasing the amount of money in circulation was not an "experiment".
"Nothing in life is ever certain, but these measures we think will work in the long-term," Mr King said.
"I don't know how long it will take, much depends on the situation in the rest of the world. But if countries work together, these measures will I believe eventually work."
Chancellor Alistair Darling said that increasing the supply of money was "absolutely essential" in order for the UK to recover from the recession.
He acknowledged that the latest rate cut would be a blow to savers who faced another drop in the return on their money but said "the key thing for each and every one of us is to ensure we get the economy moving to help people and to help businesses grow".
Buying Assets
Quantitative easing is the process of increasing the amount of money in circulation in an attempt to revive the economy.
While the Bank will initially add £75bn, Chancellor Alistair Darling has given it permission to extend this to up to £150bn.
The idea is that if the amount of money in the system is boosted, commercial banks will find it easier to lend.
Quantitative easing is sometimes incorrectly referred to as printing money, but the Bank will not expand the supply of money by making new banknotes.
Instead, it will buy assets - such as government securities (gilts) and corporate bonds.
Similar measures were implemented in Japan at the beginning of the decade and are considered to have had limited success.
BBC economics editor Stephanie Flanders said that while the initial size of the quantitative easing scheme was smaller than some analysts had expected, "it's a lot more than dipping their toes in the water".
"Those who feared that the Bank would defeat the purpose of the policy by doing it only half-heartedly may be pleasantly surprised," she said.
Philip Shaw, chief economist at Investec, said that quantitative easing "should in principle encourage the banks to lend to private sector agents such as households and businesses, stocking monetary growth and stimulating activity".
Mr King sought permission from the Chancellor to start quantitative easing in a letter on 17 February.
In his reply, Mr Darling said that in the "current circumstances" the measures were now "appropriate". Both letters were released on Thursday.
Meanwhile, Shadow chancellor George Osborne said about the measures: "I don't think anyone should be pleased we have reached this point. It is an admission of failure."
Liberal Democrat Treasury spokesman Vince Cable said that increasing the amount of money flowing into the economy was now the "only clear option".
"The Government must be careful that this kind of radical action doesn't quickly turn deflation into high inflation," Mr Cable said.
Rate Cuts Attacked
Business groups have attacked the recent cuts in interest rates, saying they have done little to encourage banks to lend more.
Others argue that they are unfairly hurting the returns of savers.
"Today's decision is a kick in the teeth for savers who will see their already diminished interest payments fall even further," said Adrian Coles, director general of the Building Societies Association.
The Council of Mortgage Lenders (CML) said the latest cut would be a "double whammy for prospective mortgage borrowers".
"This latest cut presents immense challenges for lenders whose margins are already squeezed as a result of previous reductions, leaving little scope to lower discretionary mortgage rates further," said CML director general Michael Coogan.
"Savings are the lifeblood of mortgage lending, and unless lenders can offer competitive rates to savers their ability to offer new mortgages is restricted."
Ian McCafferty, CBI chief economist, said the continuing rate cuts were "becoming less and less effective as a means of stimulating the economy".
"Though this latest cut will help support business and consumer confidence, it is unlikely to have a dramatic impact on the cost or availability of credit," he said.
The Bank has had the room to cut interest rates because inflation has fallen on the back of reduced energy costs.
The most recent official figures showed that consumer prices index (CPI) inflation fell for the fourth month in succession in January to 3%, from December's 3.1%.
However, CPI inflation still remains above the government's 2% target.
More Falls Predicted Before Property Investment Recovers
Taken From Residential Landlord - 03.03.09
Residential Landlords could see the value of their properties all even further before they start to bounce back according to Jones Lang La Salle.
The agent’s latest residential market forecast predicts that house prices in the UK are set to decline on average 13-15 percent during 2009 and by a further 1-3 percent in 2010, with the bottom of the market due to be Q3 or Q4 of that year before recovering by 4-6 percent in 2011.
During 2012 and 2013 Jones Lang LaSalle expects growth to accelerate by a further 8-10 percent, while peak Q3 2007 levels will not recover until the end of 2015.
James Thomas, Head of Jones Lang LaSalle’s residential investment team, said: “There are however some signs that the market is improving, with the Halifax reporting that prices rose in January and with the RICS claiming that buyer enquiries are increasing.
“The cut in interest rates and the consequential benefit for affordability will also have played their part in improving perceived market conditions. However we do not believe these traits will be sustained or sufficiently outweigh the increasing burden of higher unemployment, the greater financial caution by consumers, the difficulties in borrowing and the inevitable increase in housing availability.”
During 2009 prime central London prices are expected to be hit sharply with declines of between 16-20 percent. The first half of the year will prove particularly weak as annual price falls approach 25 percent, however declines will start to ease towards the end of the year.
Greater London witnessed among the highest falls in price across the UK during Q4 2008 (6 percent compared to the 5.1 percent average) and they will continue to decline faster during 2009, with annual falls of up to 17 percent. However, during 2010 house prices will start to rise again from Q3 in both prime central and greater London, and by the year end could increase by 2 percent.
Thomas concluded: “We had already built in a very weak housing market in 2009 but the deeper recession this year than previously anticipated does not imply that the housing market will be overly sensitive and fall at an even faster rate.
“We maintain our view that the housing market’s biggest hit will have been 2008 rather than 2009, both in terms of price falls and turnover. However, we still expect 2009 to be a very poor and troublesome one for the UK housing market.
“On a more positive note, the three monthly trend in house price falls has already begun to ease and when this becomes a more established trend over the next few months it should signal that the bottom of the market is in sight.”
Residential Landlords could see the value of their properties all even further before they start to bounce back according to Jones Lang La Salle.
The agent’s latest residential market forecast predicts that house prices in the UK are set to decline on average 13-15 percent during 2009 and by a further 1-3 percent in 2010, with the bottom of the market due to be Q3 or Q4 of that year before recovering by 4-6 percent in 2011.
During 2012 and 2013 Jones Lang LaSalle expects growth to accelerate by a further 8-10 percent, while peak Q3 2007 levels will not recover until the end of 2015.
James Thomas, Head of Jones Lang LaSalle’s residential investment team, said: “There are however some signs that the market is improving, with the Halifax reporting that prices rose in January and with the RICS claiming that buyer enquiries are increasing.
“The cut in interest rates and the consequential benefit for affordability will also have played their part in improving perceived market conditions. However we do not believe these traits will be sustained or sufficiently outweigh the increasing burden of higher unemployment, the greater financial caution by consumers, the difficulties in borrowing and the inevitable increase in housing availability.”
During 2009 prime central London prices are expected to be hit sharply with declines of between 16-20 percent. The first half of the year will prove particularly weak as annual price falls approach 25 percent, however declines will start to ease towards the end of the year.
Greater London witnessed among the highest falls in price across the UK during Q4 2008 (6 percent compared to the 5.1 percent average) and they will continue to decline faster during 2009, with annual falls of up to 17 percent. However, during 2010 house prices will start to rise again from Q3 in both prime central and greater London, and by the year end could increase by 2 percent.
Thomas concluded: “We had already built in a very weak housing market in 2009 but the deeper recession this year than previously anticipated does not imply that the housing market will be overly sensitive and fall at an even faster rate.
“We maintain our view that the housing market’s biggest hit will have been 2008 rather than 2009, both in terms of price falls and turnover. However, we still expect 2009 to be a very poor and troublesome one for the UK housing market.
“On a more positive note, the three monthly trend in house price falls has already begun to ease and when this becomes a more established trend over the next few months it should signal that the bottom of the market is in sight.”
Sunday, 1 March 2009
Northern Rock Boost Investment Expectations
Taken From Residential Landlord - 26.02.09
Resumption of new mortgage lending by Northern Rock will help ease property finance crisis says the Council of Mortgage Lenders.
Northern Rock has announced that it is to increase mortgage lending by up to £14 billion over the next two years.
A new business strategy has been agreed that will see around £5billion of new mortgage lending for 2009 and between £3 and £9 billion from 2010 onwards, subject to market demand.
The new lending will be made on commercial terms to ensure that it represents good value for money for the taxpayer. It will allow Northern Rock to return to the mortgage market with a wide product range.
Northern Rock was a significant lender before nationalisation, and its previous strategy of balance sheet reduction inevitably meant that in having to absorb business from borrowers remortgaging away from Northern Rock, other lenders had less funding available for other lending.
CML director general Michael Coogan said: “While other lenders will no doubt be watching carefully to assess the competitive impacts of Northern Rock returning to the market as an active mortgage lender, in overall market terms anything that improves the supply of lending is a positive.
“Mortgage redemptions funded nearly all the £18 billion of the loan that Northern Rock repaid to the government.
This was £18 billion that had to be absorbed by the rest of the other mortgage lenders. By removing this market pressure, other lenders as well as Northern Rock should experience an increased capacity to lend to other borrowers.”
On the other topical question of 100%+ mortgages in the wake of the Prime Minister's article in yesterday's Observer, the CML says there are side issues to consider that should not get lost, despite the inherent appeal of a simple policy such as this to mitigate risk and encourage responsible borrowing.
In particular, what about negative equity products for borrowers who want to move house but whose own house price has fallen? What about shared equity loans made to the affordable housing sector, where borrowers are not asked to pay a deposit? And what about the fact that people may simply ‘top up’ their borrowing with second mortgages or other unsecured loans on more expensive terms?
These issues, says the CML, all need to be considered in deciding the right regulatory approach to 100%+ mortgages in the future.
Resumption of new mortgage lending by Northern Rock will help ease property finance crisis says the Council of Mortgage Lenders.
Northern Rock has announced that it is to increase mortgage lending by up to £14 billion over the next two years.
A new business strategy has been agreed that will see around £5billion of new mortgage lending for 2009 and between £3 and £9 billion from 2010 onwards, subject to market demand.
The new lending will be made on commercial terms to ensure that it represents good value for money for the taxpayer. It will allow Northern Rock to return to the mortgage market with a wide product range.
Northern Rock was a significant lender before nationalisation, and its previous strategy of balance sheet reduction inevitably meant that in having to absorb business from borrowers remortgaging away from Northern Rock, other lenders had less funding available for other lending.
CML director general Michael Coogan said: “While other lenders will no doubt be watching carefully to assess the competitive impacts of Northern Rock returning to the market as an active mortgage lender, in overall market terms anything that improves the supply of lending is a positive.
“Mortgage redemptions funded nearly all the £18 billion of the loan that Northern Rock repaid to the government.
This was £18 billion that had to be absorbed by the rest of the other mortgage lenders. By removing this market pressure, other lenders as well as Northern Rock should experience an increased capacity to lend to other borrowers.”
On the other topical question of 100%+ mortgages in the wake of the Prime Minister's article in yesterday's Observer, the CML says there are side issues to consider that should not get lost, despite the inherent appeal of a simple policy such as this to mitigate risk and encourage responsible borrowing.
In particular, what about negative equity products for borrowers who want to move house but whose own house price has fallen? What about shared equity loans made to the affordable housing sector, where borrowers are not asked to pay a deposit? And what about the fact that people may simply ‘top up’ their borrowing with second mortgages or other unsecured loans on more expensive terms?
These issues, says the CML, all need to be considered in deciding the right regulatory approach to 100%+ mortgages in the future.
Thursday, 12 February 2009
Mortgage Lending At 34-Year Low
BBC News Online
Page last updated at 13:59 GMT, Thursday, 12 February 2009
The number of mortgages lent to house buyers fell last year to its lowest level since 1974, the Council of Mortgage Lenders (CML) has said.
There were just 516,000 mortgages granted to house buyers, down 49% from the level seen in 2007.
The squeeze on mortgage funds has seen widespread rationing by lenders, which meant that first-time buyers had to put down an average deposit of 22%.
The CML believes that lending is likely to fall even further this year.
"The shortage of mortgage funding and reduction in the number of active lenders has reshaped the mortgage landscape in the space of a year," said Michael Coogan, the CML's director general.
"This low level of transactions is insufficient for the functioning of an efficient market," he added.
Action Needed
The slump in lending and sales has been directly responsible for the sudden collapse of house prices seen since the credit crunch started in the summer of 2007.
Last year the number of loans to first-time buyers fell by 46% to just 194,200, which was the lowest figure since the CML's records started in 1974.
And mortgages granted to people moving house dropped by more than half to 322,200.
The government has launched a number of initiatives to stimulate bank lending, which it is widely hoped will feed through into greater lending to home buyers.
But the CML expects that in 2009 new lending will fall to a level where it will be outstripped by people repaying their mortgages.
"Measures are now in place to seek to restore the flow of funding to the mortgage market, but this will take time to feed through," said Mr Coogan.
"Further action may still be necessary to increase transactions, stabilise prices and restore confidence," he added.
Choked Off
Despite the Bank of England cutting the Bank Rate in recent months to just 1%, the dramatically lower cost of repaying a mortgage has not led to a revival in buying and selling houses.
Lenders have increased the level of deposits they demand from borrowers, choking off the supply of potential buyers.
About two-thirds of all new mortgage deals currently require at least a 25% down payment from the borrower.
And the average 22% deposit currently being put down by first-time buyers is the highest since the CML's records started back in 1974.
Until the end of 2007 a 10% deposit was the norm.
Andrew Montlake, at mortgage brokers Cobalt Capital, said business was now dire.
"The CML data crystallises what we already knew, namely that from a mortgage perspective, 2008 was a massacre - the entire market is barely recognisable from what it was two years ago."
Peter Bolton King, chief executive of the National Association of Estate Agents (NAEA), said there was now a lot of pent up demand.
"NAEA figures show that there is a huge demand for property from first-time buyers, who are increasingly visiting estate agents, registering their interest and searching for property," he said.
"These figures demonstrate that they are being frustrated at the final hurdle because lenders are not making mortgages available."
Page last updated at 13:59 GMT, Thursday, 12 February 2009
The number of mortgages lent to house buyers fell last year to its lowest level since 1974, the Council of Mortgage Lenders (CML) has said.
There were just 516,000 mortgages granted to house buyers, down 49% from the level seen in 2007.
The squeeze on mortgage funds has seen widespread rationing by lenders, which meant that first-time buyers had to put down an average deposit of 22%.
The CML believes that lending is likely to fall even further this year.
"The shortage of mortgage funding and reduction in the number of active lenders has reshaped the mortgage landscape in the space of a year," said Michael Coogan, the CML's director general.
"This low level of transactions is insufficient for the functioning of an efficient market," he added.
Action Needed
The slump in lending and sales has been directly responsible for the sudden collapse of house prices seen since the credit crunch started in the summer of 2007.
Last year the number of loans to first-time buyers fell by 46% to just 194,200, which was the lowest figure since the CML's records started in 1974.
And mortgages granted to people moving house dropped by more than half to 322,200.
The government has launched a number of initiatives to stimulate bank lending, which it is widely hoped will feed through into greater lending to home buyers.
But the CML expects that in 2009 new lending will fall to a level where it will be outstripped by people repaying their mortgages.
"Measures are now in place to seek to restore the flow of funding to the mortgage market, but this will take time to feed through," said Mr Coogan.
"Further action may still be necessary to increase transactions, stabilise prices and restore confidence," he added.
Choked Off
Despite the Bank of England cutting the Bank Rate in recent months to just 1%, the dramatically lower cost of repaying a mortgage has not led to a revival in buying and selling houses.
Lenders have increased the level of deposits they demand from borrowers, choking off the supply of potential buyers.
About two-thirds of all new mortgage deals currently require at least a 25% down payment from the borrower.
And the average 22% deposit currently being put down by first-time buyers is the highest since the CML's records started back in 1974.
Until the end of 2007 a 10% deposit was the norm.
Andrew Montlake, at mortgage brokers Cobalt Capital, said business was now dire.
"The CML data crystallises what we already knew, namely that from a mortgage perspective, 2008 was a massacre - the entire market is barely recognisable from what it was two years ago."
Peter Bolton King, chief executive of the National Association of Estate Agents (NAEA), said there was now a lot of pent up demand.
"NAEA figures show that there is a huge demand for property from first-time buyers, who are increasingly visiting estate agents, registering their interest and searching for property," he said.
"These figures demonstrate that they are being frustrated at the final hurdle because lenders are not making mortgages available."
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