News - December 2008
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Wed Dec 10 - Lloyds aims to forge a UK "superbank"
LONDON (Reuters) - Up to 40,000 jobs, 600 branches and an asset or two could go as Lloyds aims to forge a UK "superbank" from its takeover of HBOS at a time of industry turmoil and looming recession. more>
Tue Dec 9 - House sales continue fall to record low
FT.com - House sales continued to fall in November, with the average number of transactions hitting a record low, according to the latest housing market survey from the Royal Institution of Chartered Surveyors. more>
Thur Dec 4 - Interest rates cut to lowest level since 1951
financemarkets.com - The Bank of England has cut interest rates by 3% to 2% today, which is the lowest level since 1951. A cut was widely expected by economists and has been welcomed by many commentators who believe the reduction will help the deteriorating economy. more>
Thur Nov 27 - Investor buys entire street at cut prices
FT.com - Investment funds are taking advantage of the sharp downturn in house prices to buy cheap properties from struggling buy-to-let landlords and distressed homeowners. more>
Finance News
It is too early to say whether the latest bank rescue plan will have the desired effect of persuading the banks to start lending again. But it is a step in the right direction and we welcome it as a positive move as it may just remove the remaining stumbling blocks to getting the credit and mortgage markets functioning properly once more.
Clearly, something further had to be done. October’s £37bn bank recapitalisation did little to persuade banks to regain their appetite for lending. Credit continues to be difficult to come by – unless you have a large deposit or equity in your home and a clean credit history.
The latest bailout aims to guarantee lending and insure banks’ bad debts, such as sub-prime lending in the US. The idea is that banks won’t need to hold back vast sums in case of default on loans – something they have been doing until now. What is particularly encouraging is that this is a comprehensive package of measures which taken together is likely to have more of an impact on increasing new lending than addressing one area at a time.
The new £100bn mortgage guarantee scheme to underwrite lending between banks and financial institutions as recommended in Sir James Crosby’s report, is perhaps the most significant development. Before the credit crunch hit, the securitisation market was a key source of funding for the mortgage market, responsible for a third of all lending. This scheme should help rejuvenate the securitisation market, which has all but closed.
Read more of this article here>
From the blog by Melanie Bien, director, Savills Private Finance
