Is the UK mortgage market going to recover in 2009?

The British government wants the mortgage lending market to recover in 2009 but is this going to happen? In an article for Money Marketing the Charcol technical manager Ray Boulger proposes that Northern Rock, the mortgage bank nationalised by the government, could suspend or reduce the repayments made on the loan made by the Bank of England. This loan stood at £26.9bn at the end of 2007. The move would reduce
the pressure, which is contracting the mortgage market in Britain.
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It is funny that the British government wants to have lending levels set at 2007 levels but it seems that it does not want to influence Northern Rock and Bradford & Bingley, which are under its control. I suppose the comment by B & B boss Richard Pym
that the buy-to-let market is dead can be viewed as not helpful.

I am a bit worried about the missus' B and B shares!

I am a bit worried about what to do with the shares held in British mortgage bank Bradford and Bingley by my spouse.
I suppose we could give the rights issue (capital raising) a miss. I could take financial advice from an independent financial adviser . We could spend the £184 (I think it was the sum last time I looked) on the hols instead.
I suppose the UK stock market will be spooked by the gory figures from the nationalised Northern Rock. Alot of customers are probably throwing in the towel with the change in economic circumstances. Those 125 pct mortgages are coming to haunt the Geordie bank in a big way. Gawd knows why I invested (and then sold) a modest sum in Northern Rock. Not that I am a big expert on UK bank shares. In the weekend FT the Scottish investment expert Colin McLean noted that Northern Rock had posted upward earnings per share for five years. Sounds like some dodgy regulation by the British regulators and this is probably a problem at Bradford and Bingley. Would there be a mercy killing? The banks will probably have their own problems and would want to wait until conditions improved. Perhaps there could be a joint bid.

Clive Briault trousers £528,000 from the FSA.

One of the few scapegoats of the Northern Rock affair, Mr Clive Briault, has trousered £528,000 from the UK's financial regulator Financial Services Authority (FSA). Mr Briault left the organisation in April 2008 by mutual consent. The mortgage bank had to be rescued by the UK government after being unable to borrow from the wholesale lending market.

MoneyMarketing also reports that the FSA boss, Callum McCarthy, who saw his pay go up by 10 per cent to £480,553 but did refuse a bonus. Amazing, the British government under the Reverend Gordon Brown, has called for pay restraint to help keep inflation at around 2 pct-3 pct, when quangocrats are getting a lot more.

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The Daily Telegraph reports that Northern Rock has appointed Rick Hunkin to reinforce risk control at the Newcastle-based bank. Mr Hunkin had a similar role at the U.S owned institution GE Money UK Home Lending. I suppose better late than never.
I suppose everybody is wondering if Bradford and Bingley is going the same way as its
northern rival.

British housing market bust?

Are we going to see a British housing market bust? The housing market has certainly frozen up with the lenders tightening their criteria. For instance, there are no more
100 pct plus loans and we have not really felt the knock-on effect of Northern Rock and Bradford & Bingley hitting trouble. The missus' share stake in B & B has such a forlorn value that I have to wonder when the shares will ever recover.
www.searchifa.co.ukFirst-time buyers should be helped by a reduction in stamp duty but a thoughtful article (sorry harrowing article) in the New Statesman says that nobody should be considering a property purchase at the moment. I suppose we just have to sit out the next two years but the Labour Government has always wanted a buoyant housing market for the feel-good factor during general elections, so 2010 anybody?
Northern Rock could hit a real financial mess if the housing market goes down and the Government now probably wished that it was not so picky about Lloyds TSB. Northern Rock is also undermining the stability of the housing market through its shrinking programme. It might make perfect sense to force customers to go elsewhere but not if there is not much of an elsewhere to go to.

Briault walks the plank at Financial Services Authority.

Managing director Clive Briault has walked the plank at the UK regulatory body
Financial Services Authority (FSA) following the Northern Rock debacle according
to Money Marketing. However, Mr Briault was the prime mover of the retail distribution review, which has yet to be finished. He leaves with a contractual
£380,000.

Elsewhere, I read that the actual FSA staff supervising the UK mortgage bank were insurance rather than banking experts. The organisation's internal report has pointed to failings in the supervision of Northern Rock but I think the main structural flaw was the tripartite responsibility of the FSA, the Bank of England and the Treasury.

Bank of England governor Mervyn King still seems to want to punish banks for their mistakes but he lost the opportunity to do that some time ago. In a perfect world
the banks' shareholders would lose their shirts for their poor lending decisions
but this would be too damaging for all concerned.

It is official FSA can't regulate banks.

The Financial Services Authority (FSA) has admitted regulatory failings over the UK
mortgage bank Northern Rock. Apparently, the FSA thought that the Bank of England would do more to support banks, when interbank lending froze up during the summer of
2007.

The small fry have been toasted with five of the seven member team directly supervising Northern Rock leaving. However, other main factors were the dithering of the UK Treasury and the Bank of England governor worrying about moral hazard.

Merry Xmas and Happy Year to all my readers!!

A Merry Christmas and a Happy New Year to all my readers. Looking back on the blogs for the year one popular subject has been Northern Rock, the British mortgage lender, which needed rescuing by Her Majesty's Government. There has been some recent comment that a "market solution" should have been applied, ie let the Newcastle-based bank go bust in September. Northern Rock was quite close to me because I lost a few bob on the shares, when I actually sold them.

I think Alistair Darling did the right thing of safeguarding the deposits and perhaps a temporary nationalisation will help right Northern Rock although some deluded shareholders want £4.10 a share. However the cookie crumbles, it does not look good for the reputation of the City. Darling's reputation as Chancellor has not been helped by the Northern Rock debacle. It is thought that he is just a cipher for UK prime minister Gordon Brown. The same Brown who says he just taking Xmas day off for his Christmas holidays and then spends a couple of weeks in Scotland.

UK bank stocks can go up and they can go down!!

UK stocks can go up and they can go down as shareholders of Barclays can testify
with their recent bumpy ride. A mate of mine bought them at six
something and now the bank stock is five something after reaching four
something and he is not a happy bunny.

British bank stocks have been one of the pillars of UK income funds, both unit
trusts and investment trusts. The banks were used to provide the income but this
strategy has truly unstuck with the collapse of Northern Rock. I am no expert in shares but I think the advice of being able to lose your investment, if it came to it, is a sound one.

I suppose shareholders in Royal Bank of Scotland were hoping for a more
robust performance than they got recently. What as Fred the Shred Goodwin got to
to say to his institutional investors?

(Now that we are in January 2009 we know how it has panned out for Fred the Shred.
In addition, investors can only dream of £5 for Barclays.)

Will mortgage market absorb Northern Rock slack?

Will the British market absorb the residential mortgages, that should
have been written by the tottering UK bank Northern Rock? At the beginning
of November Money Marketing cites John Malone, who says that the
market will struggle to cover the £20bn to £25bn handled by the
Newcastle-based lender. Mr Malone, who is managing director of
Premier Mortgage Service, comments that he is hard put to think of
lenders, who could handle the business.
However, Phil Jenks is more positive since most of Northern Rock's
business is straightforward two year remortgage business. Mr Jenks is
head of mainstream mortgages at Halifax Bank of Scotland (HBOS).

Ros Altmann is my hero!!

British pensions guru Ros Altmann is my hero!!! She seems to be combatting the UK government's lack of concern for pensions in a solo campaign. A recent edition of Money Marketing quoted her views that private pensions are no longer suitable for the vast majority of people.
I have been thinking of perhaps investing some more in pension provision
only because I have relatively got not long to go to retirement. Maybe with
Ms Altmann's views, I should
reconsider.
The tax relief is tempting on SIPPs and there is a lot more scope for different
investment strategies. However, there is no guarantee that pensioners will not be
taxed heavily when they have saved relatively large sums only through frugal
lifestyles and cautious investment.

Ms Altmann is a pensions personality of the year for 2007. She has contrasted the
bailout for Northern Rock depositors with the lack of response for investors
in company occupational pension schemes where the sponsor has gone bust.