The UK's Q4 2023 banking crisis.

[No One]

On 16/07/2023 at 11:18, JoeDavola said:

I don't have a social circle any more. The pandemic has killed that; it never recovered. People moved away from the city centre to WFH and never moved back, social groups based on old workmates still working in town where we'd meet up once every month or two have also died. I understand; many of them have young families and WFH has been a godsend to them - get more time to spend with the kids and no commute.

No social interaction in the office either as there's either nobody in or the couple of people who are in are sat with headsets on like a call centre. No meetings happen in person at all. Of the two people in work I'd have went for coffee/lunch with, one has retired and the other is leaving the job soon but completely withdrew when the pandemic happened. So my choice in work is either sit in my own home office in silence or commute to another empty lifeless office.

I used to think I was quite an isolated person say 5 years ago, but I had a roaring social life compared to now, not socalizing as in "hitting the town" necessarily but just normal day to day in person human contact.

I basically have two close friends, one who I'm lucky to see 3 times a year and one maybe 6 times a year. That's it. Beyond meeting up for a chat with the folks a couple of times a week, and he occasional Teams call in work that's it.

I'm off work tomorrow so I reckon it'll be a solid 4 days without speaking to a single living soul. I know some people love living like that but I'm growing more and more unhappy with it, and having the occasional 'dark night of the soul' as I contemplate what the second half/final third depending on how long I live, of my life is going to pan out.

 

 

And yes, I'll buy a house when I'm good and ready

Mate this seems like quite an isolated existance. You need to find a new circle and pronto, beign alone is an aweful feeling.

Here are some pointers, sports clubs or hobbies. In my case, I'm a pistonhead and over the last two years entry into car clubs has opened a brand new social circle for me, I can say I have two decent new friends that could become good friends as a result.

Another thing is couchsurfing.com used to have social circles for meets and stuff, try your luck there. 

Volunteering might also work, never done it my self but give it a go. 

The worst thing you can do is stay at home looking at 4 walls and a ceiling. Try hitting the gym, or doing hiking. 

 

 

[King Penda]

6 minutes ago, No One said:

Mate this seems like quite an isolated existance. You need to find a new circle and pronto, beign alone is an aweful feeling.

Here are some pointers, sports clubs or hobbies. In my case, I'm a pistonhead and over the last two years entry into car clubs has opened a brand new social circle for me, I can say I have two decent new friends that could become good friends as a result.

Another thing is couchsurfing.com used to have social circles for meets and stuff, try your luck there. 

Volunteering might also work, never done it my self but give it a go. 

The worst thing you can do is stay at home looking at 4 walls and a ceiling. Try hitting the gym, or doing hiking. 

 

 

Sadly I thrive on sitting at home and talking filth to women whilst getting drunk .  On occasion I have to go out and prove im

 not all mouth and no trousers . That’s the fun bit I realy don’t care if im

honest .  I work have the kids and drink

 

[Harley]

On 18/08/2023 at 22:05, No One said:

Mate this seems like quite an isolated existance. You need to find a new circle and pronto, beign alone is an aweful feeling.

Here are some pointers, sports clubs or hobbies. In my case, I'm a pistonhead and over the last two years entry into car clubs has opened a brand new social circle for me, I can say I have two decent new friends that could become good friends as a result.

Another thing is couchsurfing.com used to have social circles for meets and stuff, try your luck there. 

Volunteering might also work, never done it my self but give it a go. 

The worst thing you can do is stay at home looking at 4 walls and a ceiling. Try hitting the gym, or doing hiking. 

 

 

Totally agree.  I'm a resilient soul who likes his own company but I lost it a bit once despite being very active.  Things changed just in the nick of time.  I could not see it at the time (apart from a sense) but it's very clear now.  I now have company, joined a club, do charity work, take my time on such things as shopping, spend more time listening to people, etc.  Most things on line are toxic these days making proper human interaction, just a bit, essential to maintain balance.

PS:  You see it all the time in the reality series "Alone".  Good people just tap for seemingly no reason other than needing company.

Edited August 22, 2023 by Harley

[sancho panza]

https://uk.finance.yahoo.com/news/sec-probes-major-lender-over-150327223.html

SEC Probes Major Lender Over Mortgage-Backed Securities Sold to Wall Street

(Bloomberg) -- The US Securities and Exchange Commission is probing The Change Company, a California lender that pledges to promote homeownership in underserved communities, over its mortgage-backed securities, according to people with direct knowledge of the matter.

As part the investigation, the regulator is also looking into some of the actions of its chief executive officer, Steven Sugarman, said the people, who asked not to be identified discussing the investigation that hasn’t been made public. Buyers of instruments backed by The Change Company’s loans have included some of Wall Street’s largest money managers, according to data compiled by Bloomberg.

 

“Neither Change nor its leadership is aware of any SEC investigation,” the firm said in a statement. “Loans included in Change’s mortgage-backed securities have been vetted by third-party due diligence firms who have issued certifications attesting to the accuracy of the data and sufficiency of the scope of their reviews,” the company added, in addition to providing an Aug. 24 attestation letter from an outside lawyer.

The SEC, which hasn’t accused anyone of wrongdoing in the matter and whose investigations don’t always lead to enforcement actions, declined to comment.

Over the past few years, The Change Company has grown to be one of the US’s most active Community Development Financial Institutions, or CDFIs. That tag from the Treasury Department can let firms that work bolster historically neglected communities get special tax and financing support.

The lender says it has funded more than $20 billion in loans to more than 50,000 families as part of its mission to “level the playing field for diverse homeowners and small business owners.” Public mortgage records show it also lends avidly in tony California suburbs.

[sancho panza]

Just recording some transactions data

Transactions do appear top be trending down ,last three months seasonally adjusted are around the 83k level.

It does mean that price discovery in real estate will be affected and we could see it squeezed either way on low vol.

Dec 08 was the lowest pre the coof, at 51k.Bouncing around the 60's and 70's until finally moving clear into the 80's ++ in March 2013.

Wonder what happened then? @spygirl and @Democorruptcy

I'd never seen thsoe transactions figures in that context before

 

https://www.gov.uk/government/statistics/monthly-property-transactions-completed-in-the-uk-with-value-40000-or-above/uk-monthly-property-transactions-commentary

 

[Democorruptcy]

7 minutes ago, sancho panza said:

Just recording some transactions data

Transactions do appear top be trending down ,last three months seasonally adjusted are around the 83k level.

It does mean that price discovery in real estate will be affected and we could see it squeezed either way on low vol.

Dec 08 was the lowest pre the coof, at 51k.Bouncing around the 60's and 70's until finally moving clear into the 80's ++ in March 2013.

Wonder what happened then? @spygirl and @Democorruptcy

I'd never seen thsoe transactions figures in that context before

 

https://www.gov.uk/government/statistics/monthly-property-transactions-completed-in-the-uk-with-value-40000-or-above/uk-monthly-property-transactions-commentary

 

I could be thinking about mortgage approvals rather than transactions but a figure that comes to mind for one month in 2008 is 28k, which was very low. At the time it was discussed that anything under 40k was a crash. I don't think 1m transactions a year is crashy.

[sancho panza]

3 hours ago, Democorruptcy said:

I could be thinking about mortgage approvals rather than transactions but a figure that comes to mind for one month in 2008 is 28k, which was very low. At the time it was discussed that anything under 40k was a crash. I don't think 1m transactions a year is crashy.

I'd agree.and when you look at the historical data it's been much worse than currently.

The trend is the key here.If we're heading back to 2013 levels of transactions then it's more about potential isntability/volatility.Low vol marekts are awful to trade-look at polymetal.Anyone needing out in a hurry wont get bid.

But,like you,Im still in watch mode,nothing to short here as yet imho.

 

I think the 28k you remember may have been either the BBA(bankers) or BSA(buidling sco group figures).They used to issue separate figures.UK fiance now represents both I believe presnmting aggregate data for the two sectors.

https://en.wikipedia.org/wiki/British_Bankers'_Association

[Democorruptcy]

4 minutes ago, sancho panza said:

I'd agree.and when you look at the historical data it's been much worse than currently.

The trend is the key here.If we're heading back to 2013 levels of transactions then it's more about potential isntability/volatility.Low vol marekts are awful to trade-look at polymetal.Anyone needing out in a hurry wont get bid.

But,like you,Im still in watch mode,nothing to short here as yet imho.

 

I think the 28k you remember may have been either the BBA(bankers) or BSA(buidling sco group figures).They used to issue separate figures.UK fiance now represents both I believe presnmting aggregate data for the two sectors.

https://en.wikipedia.org/wiki/British_Bankers'_Association

Nov 2008 only had 17,773 mortgage approvals

https://www.theguardian.com/money/2008/dec/23/mortgage-approvals

[Kendo]

3 hours ago, Democorruptcy said:

Nov 2008 only had 17,773 mortgage approvals

https://www.theguardian.com/money/2008/dec/23/mortgage-approvals

BoE data shows 32,000 mortgages for Dec 2008, but 27,000 for Jan 2009, so good memory. Apparently, roughly 60% of mortgages covered by BBA data.

[Kendo]

Just to add context, 2007 mortgage approvals were well over 100,000 a month (peaking at 122,000 in late Jan) until Nov 2008, when still 96,000 - nuts!

[Kendo]

Just re-read my above post and I should be clearer and correct it. Mortgage approvals for nearly every month of 2007 were over 100,000, peaking at £122,000 for data released in late Jan 2007. Even in Nov 2007, there were still 96,000 approvals.

Edited August 29, 2023 by Kendo

[Democorruptcy]

46 minutes ago, Kendo said:

Just re-read my above post and I should be clearer and correct it. Mortgage approvals for nearly every month of 2007 were over 100,000, peaking at £122,000 for data released in late Jan 2007. Even in Nov 2007, there were still 96,000 approvals.

Yes it was slow to turn. We put our house on the market the day they started queuing outside Northern Crock in Sept 2007. No viewing for a month but then got one in Oct, who offered 96% of asking. We were happy to accept that, as it was 542% more than what we had paid for it. We expected them to back out but they completed. Next door told us we were giving it away, they got 77% of what we got, when they sold their larger house a couple of years later.

[sancho panza]

6 hours ago, Kendo said:

Just re-read my above post and I should be clearer and correct it. Mortgage approvals for nearly every month of 2007 were over 100,000, peaking at £122,000 for data released in late Jan 2007. Even in Nov 2007, there were still 96,000 approvals.

Approvals areone of the better leading indciators but struggle in times of stress due to people not excercising them

Heres teh data for compeltions by tax year.

Amazing to think a country with 5 or 10 milion more people has less transactions than 2007

It's really amazing what help to buy did for builders shares in terms of transactions...

Financial Year	UK	UK (seasonally adjusted)
2005 to 2006	1,444,120	1,444,100
2006 to 2007	1,702,710	1,710,160
2007 to 2008	1,492,810	1,473,950
2008 to 2009	796,060	792,880
2009 to 2010	896,980	892,930
2010 to 2011	878,720	876,400
2011 to 2012	920,960	915,970
2012 to 2013	928,350	928,400
2013 to 2014	1,133,820	1,138,940
2014 to 2015	1,201,740	1,199,350
2015 to 2016	1,328,510	1,324,290
2016 to 2017	1,158,330	1,152,430
2017 to 2018	1,208,010	1,206,730
2018 to 2019	1,189,620	1,190,730
2019 to 2020	1,174,370	1,169,780
2020 to 2021	1,184,690	1,186,890
2021 to 2022	1,370,350	1,377,630
2022 to 2023	1,216,830	1,208,460
End of worksheet

[Democorruptcy]

9 minutes ago, sancho panza said:

Approvals areone of the better leading indciators but struggle in times of stress due to people not excercising them

Heres teh data for compeltions by tax year.

Amazing to think a country with 5 or 10 milion more people has less transactions than 2007

It's really amazing what help to buy did for builders shares in terms of transactions...

Financial Year	UK	UK (seasonally adjusted)
2005 to 2006	1,444,120	1,444,100
2006 to 2007	1,702,710	1,710,160
2007 to 2008	1,492,810	1,473,950
2008 to 2009	796,060	792,880
2009 to 2010	896,980	892,930
2010 to 2011	878,720	876,400
2011 to 2012	920,960	915,970
2012 to 2013	928,350	928,400
2013 to 2014	1,133,820	1,138,940
2014 to 2015	1,201,740	1,199,350
2015 to 2016	1,328,510	1,324,290
2016 to 2017	1,158,330	1,152,430
2017 to 2018	1,208,010	1,206,730
2018 to 2019	1,189,620	1,190,730
2019 to 2020	1,174,370	1,169,780
2020 to 2021	1,184,690	1,186,890
2021 to 2022	1,370,350	1,377,630
2022 to 2023	1,216,830	1,208,460
End of worksheet

Approvals might be lower these days partly if there are more cash buyers.

[Austin Allegro]

On 18/08/2023 at 23:05, No One said:

Mate this seems like quite an isolated existance. You need to find a new circle and pronto, beign alone is an aweful feeling.

Here are some pointers, sports clubs or hobbies. In my case, I'm a pistonhead and over the last two years entry into car clubs has opened a brand new social circle for me, I can say I have two decent new friends that could become good friends as a result.

Another thing is couchsurfing.com used to have social circles for meets and stuff, try your luck there. 

Volunteering might also work, never done it my self but give it a go. 

The worst thing you can do is stay at home looking at 4 walls and a ceiling. Try hitting the gym, or doing hiking. 

 

 

I second that. Best way to meet people is a hobby/sport, followed by things like Meetup, Internations etc but be a bit wary of those as they can sometimes be sausage-fests where thirsty men compete for a minority of attractive women under the guise of 'networking'.

If it's a sport, it usually filters out the time wasters because you have to put a bit of effort in (rather than just standing around with a drink in your hand).

[sancho panza]

Just bringing a few pieces together for psoterity

Interesting to see Help to buy responsible for 387,000 loans 2013-2023

Below transactions based onm HRMC data

https://www.gov.uk/government/statistics/monthly-property-transactions-completed-in-the-uk-with-value-40000-or-above/uk-monthly-property-transactions-commentary

Below FTbers

https://www.whatmortgage.co.uk/news/first-time-buyer-numbers-soar-to-highest-level-for-two-decades/

Below Help to buy data on completions

 

https://www.gov.uk/government/statistics/help-to-buy-equity-loan-scheme-data-to-31-march-2023

 

	Table 1: Number of legal completions, and value of equity loans (£m), England
		Completions ¹	Value of Equity Loans (£m) at completion ²	Total value of properties sold (£m) ³
	2013	14,023	566.15	2,840.37
	Q2	2,103	78.09	391.35
	Q3	3,944	156.24	784.31
	Q4	7,976	331.82	1,664.70
	2014	28,377	1,226.07	6,160.55
	Q1	5,581	235.21	1,181.89
	Q2	8,776	380.83	1,913.85
	Q3	5,846	252.67	1,269.99
	Q4	8,174	357.36	1,794.82
	2015	31,845	1,470.10	7,403.51
	Q1	4,932	215.96	1,085.88
	Q2	9,357	429.85	2,164.34
	Q3	6,903	319.52	1,609.78
	Q4	10,653	504.76	2,543.52
	2016	38,411	2,095.85	9,898.25
	Q1	6,817	330.83	1,660.95
	Q2	10,813	583.68	2,787.76
	Q3	8,541	473.96	2,209.69
	Q4	12,240	707.37	3,239.85
	2017	46,295	2,911.22	12,994.00
	Q1	8,212	504.31	2,226.81
	Q2	13,861	870.53	3,883.78
	Q3	10,233	659.66	2,921.47
	Q4	13,989	876.73	3,961.93
	2018	52,132	3,446.40	15,214.50
	Q1	10,093	659.93	2,910.88
	Q2	15,045	974.35	4,351.33
	Q3	11,273	770.93	3,370.23
	Q4	15,721	1,041.19	4,582.06
	2019	52,246	3,627.27	15,764.39
	Q1	10,398	743.66	3,122.54
	Q2	14,912	1,004.80	4,429.21
	Q3	11,886	863.94	3,689.61
	Q4	15,050	1,014.87	4,523.03
	2020	49,839	3,609.35	15,756.04
	Q1	9,527	707.74	3,003.18
	Q2	5,854	420.12	1,808.85
	Q3	13,352	957.98	4,172.98
	Q4	21,106	1,523.52	6,771.03
	2021 (R)	42,519	3,086.13	12,998.67
	Q1	15,353	1,158.48	5,054.81
	Q2	10,898	815.96	3,304.97
	Q3 (R)	7,317	503.75	2,083.29
	Q4	8,951	607.93	2,555.60
	2022 (R)	28,202	2,315.07	8,989.70
	Q1 (R)	5,401	448.66	1,728.84
	Q2 (R)	8,034	613.20	2,456.82
	Q3 (R)	6,558	564.69	2,153.03
	Q4 (R)	8,209	688.53	2,651.01
	2023 (P)	3,202	354.91	1,150.27
	Q1 (P)	3,202	354.91	1,150.27
	Total	387,091	24,708.51	109,170.24

 

 

 

Edited August 30, 2023 by sancho panza

[sancho panza]

Interesting to see that HTB drove marignal buyers into the market at sub 5% depoists

 

	Table 6: Cumulative number of legal completions to 31 March 2023, by purchaser deposit level and type of purchaser, England
	Deposit band1	Cumulative completions (non- First Time Buyers)	Cumulative completions (First Time Buyers)	Cumulative completions (Total)	Percentage (Total)
	Up to 5%	21,359	187,829	209,188	54%
	5.1% - 10%	12,701	80,161	92,862	24%
	10.1% - 15%	7,613	26,088	33,701	9%
	15.1% or more	17,176	34,163	51,339	13%
	All Properties²	58,849	328,241	387,090	100%
	1. The deposit level for each transaction is calculated by expressing the amount of purchaser deposit as a percentage of the purchase price, and rounding to one decimal place. 2. The total does not match other totals as a single incorrect data entry for the deposit amount has been excluded.

 

 

 

[reformed nice guy]

37 minutes ago, sancho panza said:

Just bringing a few pieces together for psoterity

Interesting to see Help to buy responsible for 387,000 loans 2013-2023

Below transactions based onm HRMC data

https://www.gov.uk/government/statistics/monthly-property-transactions-completed-in-the-uk-with-value-40000-or-above/uk-monthly-property-transactions-commentary

Below FTbers

https://www.whatmortgage.co.uk/news/first-time-buyer-numbers-soar-to-highest-level-for-two-decades/

Below Help to buy data on completions

 

https://www.gov.uk/government/statistics/help-to-buy-equity-loan-scheme-data-to-31-march-2023

  Reveal hidden contents

	Table 1: Number of legal completions, and value of equity loans (£m), England
		Completions ¹	Value of Equity Loans (£m) at completion ²	Total value of properties sold (£m) ³
	2013	14,023	566.15	2,840.37
	Q2	2,103	78.09	391.35
	Q3	3,944	156.24	784.31
	Q4	7,976	331.82	1,664.70
	2014	28,377	1,226.07	6,160.55
	Q1	5,581	235.21	1,181.89
	Q2	8,776	380.83	1,913.85
	Q3	5,846	252.67	1,269.99
	Q4	8,174	357.36	1,794.82
	2015	31,845	1,470.10	7,403.51
	Q1	4,932	215.96	1,085.88
	Q2	9,357	429.85	2,164.34
	Q3	6,903	319.52	1,609.78
	Q4	10,653	504.76	2,543.52
	2016	38,411	2,095.85	9,898.25
	Q1	6,817	330.83	1,660.95
	Q2	10,813	583.68	2,787.76
	Q3	8,541	473.96	2,209.69
	Q4	12,240	707.37	3,239.85
	2017	46,295	2,911.22	12,994.00
	Q1	8,212	504.31	2,226.81
	Q2	13,861	870.53	3,883.78
	Q3	10,233	659.66	2,921.47
	Q4	13,989	876.73	3,961.93
	2018	52,132	3,446.40	15,214.50
	Q1	10,093	659.93	2,910.88
	Q2	15,045	974.35	4,351.33
	Q3	11,273	770.93	3,370.23
	Q4	15,721	1,041.19	4,582.06
	2019	52,246	3,627.27	15,764.39
	Q1	10,398	743.66	3,122.54
	Q2	14,912	1,004.80	4,429.21
	Q3	11,886	863.94	3,689.61
	Q4	15,050	1,014.87	4,523.03
	2020	49,839	3,609.35	15,756.04
	Q1	9,527	707.74	3,003.18
	Q2	5,854	420.12	1,808.85
	Q3	13,352	957.98	4,172.98
	Q4	21,106	1,523.52	6,771.03
	2021 (R)	42,519	3,086.13	12,998.67
	Q1	15,353	1,158.48	5,054.81
	Q2	10,898	815.96	3,304.97
	Q3 (R)	7,317	503.75	2,083.29
	Q4	8,951	607.93	2,555.60
	2022 (R)	28,202	2,315.07	8,989.70
	Q1 (R)	5,401	448.66	1,728.84
	Q2 (R)	8,034	613.20	2,456.82
	Q3 (R)	6,558	564.69	2,153.03
	Q4 (R)	8,209	688.53	2,651.01
	2023 (P)	3,202	354.91	1,150.27
	Q1 (P)	3,202	354.91	1,150.27
	Total	387,091	24,708.51	109,170.24

 

 

 

Looks like 2023 was a very weak q1 despite the massive population increase

[sancho panza]

18 minutes ago, reformed nice guy said:

Looks like 2023 was a very weak q1 despite the massive population increase

 

Yeah Q2 data as below down from 300k to 236k.

the post coof peak was 400k but obviously anomaly.

HTB got canned end Q1 so I suspect it was eitehr winding down in the year before or jsut ran out of suckers

[sancho panza]

Londinium-the achilles Heel of the UK Banks/BS's.

worth reminding oruselves that a lot of BS's haev disproportionately lent intot eh SE and London

https://uk.finance.yahoo.com/news/london-19-uk-top-20-124726259.html

London has 19 of UK’s top 20 ‘risky mortgage’ postcodes

London dominates the list of postcodes with the most “risky mortgages” in the UK, with five South West London postcodes at the top, a new analysis has revealed.

A new analysis by Mazars found that 19 of the 20 postcodes with the most “risky” mortgages - defined by the Bank of England as those where the loan is at least 4.5 times the borrower’s earnings - were in London.

The only postcode outside of London in the top 20 was Maidenhead, still within the London commuter belt.

 

In particular, South West London dominated the top of the list. Wandsworth had the most risky mortgages, worth a total of £232 million, while Battersea was second with £198 million and Wimbledon was third, followed by Fulham and Tooting.

The Bank of England only permits a maximum of 15% of a lender’s mortgage book to be “risky” loans.

Mazars partner Paul Rouse said that this means banks and building societies have to make choices about where these 15% should be allocated.

“Mortgage lenders have to make a very careful judgement over where they write the riskiest loans in their loan books – and they clearly see south London as a sensible place to do that,” Rouse said. “Only a substantial and prolonged fall in the housing market will reveal whether that’s true.

“Hopefully the concentration of such a large amount of their lending to their most highly geared customers in an area about 20 miles wide will only get challenged by the bank’s own stress testing.

“Areas like Wandsworth, Wimbledon and Battersea should be attractive to homebuyers even in the worst market conditions. Lenders believe that makes houses there a good risk for them to take.

As interest rates rise, mortgages worth a high portion of earnings may be at the highest risk of default, meaning these London postcodes could be hit hardest in the event of a property market crash.

“With the housing market potentially facing further choppy waters in the coming months, mortgage lenders will be hoping that their loan books are well-prepared to weather some defaults,” Rouse said.

[jamtomorrow]

https://www.theguardian.com/money/2023/sep/12/uk-mortgage-meltdown-looms-amid-terrifying-growth-in-arrears

UK ‘mortgage meltdown’ looms amid ‘terrifying’ growth in arrears

Jump in borrowers unable to make payments with landlords particularly hit and ‘worse to come’

Mortgage arrears jumped by 13% in the second quarter of the year to the highest level since 2016, according to Bank of England figures that underscore the stress in the UK mortgage market.

Rising interest rates and unemployment over recent months have put pressure on household disposable incomes, forcing some families to cut or suspend their monthly mortgage payments.

Buy-to-let mortgage payers have also come under pressure in parts of the country where tenants are struggling with the cost of living crisis.

The Bank of England said mortgage arrears rose to £16.9bn, up by 29% on the previous year and the highest since the third quarter of 2016.

Mortgage arrears are based on figures showing the number of borrowers failing to make payments equivalent to at least 1.5% of the outstanding mortgage balance or where the property is in possession.

Mortgage lending was also hit in the second quarter with gross advances falling by £6.3bn to £52.4bn. Year on year, mortgage lending slumped by almost a third, to the lowest level since the worst of the Covid-19 collapse in lending in the second quarter of 2020.

Lewis Shaw, founder of Mansfield-based Shaw Financial Services, told the news agency Newspage a “mortgage meltdown” is approaching, unless the Bank of England changes its approach.

Shaw said: “The speed at which mortgage arrears are increasing is terrifying and should give cause to pause at the next Bank of England interest rate meeting. This is dire data, and we know that it’s about to get an awful lot worse with 1.6m mortgage holders due to renew over the next 12 months at significantly higher rates than anyone has been used to for well over a decade.”

Simon Gammon, managing partner at the finance arm of estate agents Knight Frank, said the proportion of mortgage payers falling behind with payments remained low at just 1%, despite the “sizeable jump in arrears”.

He said: “That’s because the vast majority of outstanding mortgages were issued under the post-global financial crisis regime, which was much more stringent when it comes to affordability.”

However, while homeowners were more likely to make cuts to other spending before falling behind with mortgage payments, buy-to-let landlords may take a different view, he said.

“We are more likely to see arrears in the buy-to-let sector, where landlords face a unique set of challenges. If a landlord finds their mortgage is no longer affordable, or the rent no longer covers their outgoings, they only have two choices – sell or default. If they opt to sell, they may have to wait up to a year for the tenancy to end, unless they are willing to sell with a tenancy in place, which is more difficult.

“Landlords are also more likely to opt to default than those struggling with a mortgage secured against their main residence, so this is an area to watch,” he added.

Incoming Bank of England deputy governor Sarah Breeden said she agreed with her future colleagues on the monetary policy committee (MPC), which sets UK interest rates, that inflation may fall at a slower pace next year than expected, forcing the central bank to keep the cost of borrowing higher for longer than expected.

Breeden, who will replace Jon Cunliffe as the Bank’s deputy governor for financial stability after the MPC’s meeting next week, said there was also a risk that growth and unemployment will worsen.

“I will, after November, be very careful in balancing those two factors: the risk of inflation becoming embedded through more persistent, second-round effects, as well as the impact of tightening coming through,” she told parliament’s Treasury Committee in a hearing convened to approve to her appointment.

 

“The challenge right now is that wages are high and rising and there is a real risk that second-round effects means that this inflation becomes embedded,” she said, adding that in keeping a lid on inflation, “it is not our intention to cause a recession”.

The MPC is expected to raise interest rates by a quarter point to 5.5% on 21 September, raising the average mortgage payments by £3,000 a year for a household that refinances a 2-year fixed product.

Breeden said she expected inflation to be “around the [Bank of England’s] 2% target in two years’ time”.

 

Time to fire up those shorts @sancho panza, or are you going to wait until you can see the whites of their eyes?

[sancho panza]

2 hours ago, jamtomorrow said:

https://www.theguardian.com/money/2023/sep/12/uk-mortgage-meltdown-looms-amid-terrifying-growth-in-arrears

UK ‘mortgage meltdown’ looms amid ‘terrifying’ growth in arrears

Jump in borrowers unable to make payments with landlords particularly hit and ‘worse to come’

Mortgage arrears jumped by 13% in the second quarter of the year to the highest level since 2016, according to Bank of England figures that underscore the stress in the UK mortgage market.

Rising interest rates and unemployment over recent months have put pressure on household disposable incomes, forcing some families to cut or suspend their monthly mortgage payments.

Buy-to-let mortgage payers have also come under pressure in parts of the country where tenants are struggling with the cost of living crisis.

The Bank of England said mortgage arrears rose to £16.9bn, up by 29% on the previous year and the highest since the third quarter of 2016.

Mortgage arrears are based on figures showing the number of borrowers failing to make payments equivalent to at least 1.5% of the outstanding mortgage balance or where the property is in possession.

Mortgage lending was also hit in the second quarter with gross advances falling by £6.3bn to £52.4bn. Year on year, mortgage lending slumped by almost a third, to the lowest level since the worst of the Covid-19 collapse in lending in the second quarter of 2020.

Lewis Shaw, founder of Mansfield-based Shaw Financial Services, told the news agency Newspage a “mortgage meltdown” is approaching, unless the Bank of England changes its approach.

Shaw said: “The speed at which mortgage arrears are increasing is terrifying and should give cause to pause at the next Bank of England interest rate meeting. This is dire data, and we know that it’s about to get an awful lot worse with 1.6m mortgage holders due to renew over the next 12 months at significantly higher rates than anyone has been used to for well over a decade.”

Simon Gammon, managing partner at the finance arm of estate agents Knight Frank, said the proportion of mortgage payers falling behind with payments remained low at just 1%, despite the “sizeable jump in arrears”.

He said: “That’s because the vast majority of outstanding mortgages were issued under the post-global financial crisis regime, which was much more stringent when it comes to affordability.”

However, while homeowners were more likely to make cuts to other spending before falling behind with mortgage payments, buy-to-let landlords may take a different view, he said.

“We are more likely to see arrears in the buy-to-let sector, where landlords face a unique set of challenges. If a landlord finds their mortgage is no longer affordable, or the rent no longer covers their outgoings, they only have two choices – sell or default. If they opt to sell, they may have to wait up to a year for the tenancy to end, unless they are willing to sell with a tenancy in place, which is more difficult.

“Landlords are also more likely to opt to default than those struggling with a mortgage secured against their main residence, so this is an area to watch,” he added.

Incoming Bank of England deputy governor Sarah Breeden said she agreed with her future colleagues on the monetary policy committee (MPC), which sets UK interest rates, that inflation may fall at a slower pace next year than expected, forcing the central bank to keep the cost of borrowing higher for longer than expected.

Breeden, who will replace Jon Cunliffe as the Bank’s deputy governor for financial stability after the MPC’s meeting next week, said there was also a risk that growth and unemployment will worsen.

“I will, after November, be very careful in balancing those two factors: the risk of inflation becoming embedded through more persistent, second-round effects, as well as the impact of tightening coming through,” she told parliament’s Treasury Committee in a hearing convened to approve to her appointment.

 

“The challenge right now is that wages are high and rising and there is a real risk that second-round effects means that this inflation becomes embedded,” she said, adding that in keeping a lid on inflation, “it is not our intention to cause a recession”.

The MPC is expected to raise interest rates by a quarter point to 5.5% on 21 September, raising the average mortgage payments by £3,000 a year for a household that refinances a 2-year fixed product.

Breeden said she expected inflation to be “around the [Bank of England’s] 2% target in two years’ time”.

 

Time to fire up those shorts @sancho panza, or are you going to wait until you can see the whites of their eyes?

Interesting article.I think we saw in the year end 22 data that banks like Natwest were already preparing for a singificant deteriroration in in their capiatl ratios with the rise in stge 2's-which is them adjsuting for a deteriroration the borrowers credit profile or a deteriroration in the qulaity of teh asset.

The stagehas been set for some time but timing is everything.We learend the hard way that markets can remain irrational longer than we can stay solvent

Technically arrears are low and for the potential shorters then you have factor in some time delay before it beceoms apparent to the banks that things are going pear shaped and then secondly when it becoems apparent to instoitiutional investors.Being early is as good as being late in some respects.

@spunko psoted up about hosue prices in kent -an area proxiamte to London-and we know from our looking at bank /BS balance sheets that the most likely scenario is that London and SE represents a disproprotionate amoutn of the elverage on their balance sheets.iirc some were circa 40%-50% exposed on a total asset basis to these two regions where avehosue/salary multiples regularly exceed 10(although it can vary with the inputs)

Lookign at spunkos kent asking price data,it looks like the sellers who are shrewd or desperate are starting to move at the margins jsut taking a view on speed of drops/likely hoome owner(lot of assumtpiosna dn we knoew what assumption is)/mrotged vs unmrotgaged.it was interesting to go through the pages and take a roguh guide from it as below.SO it looks like APs in the mid market are sensing trouble.These are more likely mortgaged with equity from the last twnety years rolled over in my experience-but again this is an assumption.

 

'WOrth noting as well when you quickly look at how many drops per page,the top end circa £5mn and down is about 5 or 6 a page of 24.once you get under £800k it becomes 12/13/out of 24 with AP drops.calams down to 9/10 from £400k '

 

Once the marginal sellers start downshifting expectations then I think we need to wait some time before we see that downdraft reflected in the broader market-and thats when I thinkw e;ll see a significant downturn in pricing.
Im on the worng computer but will psot up some call/put data later.

persoanlly I thinkt eh BoE are wrong and I think IRs will not revert to 2% in the near future unless it's to save the financial system.

 

[sancho panza]

 

Great vid from gorgeous george on mean reversion in US real estate.same applkeis here imho.The key is to work out when to move your moeny on the table as ever.I include a couple of stills as they are superb

first up case shiller vs CPI.GG argues quite simply that Case Shiller will revert to longer term CPI .

personally I think thats too simplistic and ignores the fact that a huge amount of jobs in the US are dependent on a non to stable fiscal deficit being run as it has been over last twnety years.

 

 

[sancho panza]

ref put calls ,jsut playing with best way to track them .going 6 months out so given sept expiry a week away we're talking Feb 24 .

so gotta be careful reading big things into small moves given time decay etc

thinking best to jsut track at the moeny stirkes,using saxobnak data

Deuteshce goes to mar 24

key take home here is its costing more to heddge the upside than the down on Natifa/DB

 

 

                          GBP/USD                                     call                     put(pence)              call/cp               put/cp              call/put

company       current price          strike           bid/offer               bid/offer                   %age                 %age              

Barc                    1.57                     1.60          10.75/11.75              10.25/11.25             6.5%                 6.68%             1.046

Antifa West       2.31                     2.30           19.5/21                      12.5/13.75               8.8%                 5.7%               1.54

Deutshce          10.082                 10               104/107                 76/79                 10.46%              7.68%             1.36

 

dyor natch

Edited September 13, 2023 by sancho panza

[sancho panza]

GG precidting a 2023 crisis based upon analysis of Federal Home Loans Bank,which is effectively the second Fed.Intertesitng analysis,include a couple of stills

 

firstly some uncanny timing as they head up into the wave top

Excel spreadsheet of top borrowers from FHLB in 2022

No.1 Signature

No. 2 Silicon Valley bank

No.3 First Republic