Archive for the ‘Sub-prime’ Category
Friday, August 15th, 2008
The giant American investment bank, which employs thousands in the City, has made losses of $29bn (£15bn) for its exposure to the US subprime mortgage crisis. But it has charged the amount to its British arm, meaning it can offset the losses against corporation tax for decades to come.
Accountants say that the move, which is set to spark anger among ordinary taxpayers, is legal but unusual. All big banks have suffered from dramatic writedowns on investments linked to the US housing market but so far Merrill is the only one to charge the entire loss to the UK. The move will reduce payments to the Government at a time when its finances are in disarray. It will also raise eyebrows in the City and cause consternation at the Treasury.
The paper calculates that if Merrill starts making profits again at the rate it did in 2006 - a record year - it still won’t have to pay any corporation tax for the next 60 years.
Tags: corporate tax, Merrill Lynch, subprime, subprime mortgage crisis, US housing
Posted in Credit crisis, Credit crunch, Finance, Sub-prime, Taxation | No Comments »
Friday, August 8th, 2008
The number of homes being repossessed leapt by 41% in the first half of the year to hit the highest level since the mid-1990s and by 48% compared to the same period in 2007. During the 1990s house price crash repossessions peaked at 38,900 in the second half of 1991, with a total of 75,500 homes seized that year. However, the Council of Mortgage Lenders has predicted repossessions to accelerate further that it’s current figure of 18,900 and hit 45,000 this year. The CML said it expected 170,000 mortgages to be in arrears of more than three months by the end of the year, however the numbers remained small in context of the 11.74 million mortgage borrowers in the UK.
Tags: arrears, CML, Council of Mortgage Lenders, Mortgages, Repossession, repossession rise
Posted in Credit crisis, Finance, Mortgages, Property Market, Repossession, Sub-prime | No Comments »
Tuesday, July 8th, 2008
Former specialist mortgage lender Edeus is offering cash sweeteners to encourage its borrowers to redeem their mortgages early. It is also waiving early repayment charges and will not charge borrowers exit fees. The incentives are available to selected clients over an undisclosed period. Edeus will be encouraging the selected borrowers to contact the brokers that originally introduced the loan to Edeus in order to source a suitable deal with another lender. The firm, launched less than two years ago, was a specialist lender at the forefront of the UK’s subprime mortgage sector but plans to move into asset quality assessment and debt management.
Tags: borrowers, Debt Management, Edeus, Edeus incentives, quality assessment, redeem mortgage, redeem mortgages, specialist lender, subprime mortgage
Posted in Credit crisis, Debt Management, Finance, Mortgages, Sub-prime | No Comments »
Thursday, April 10th, 2008
Some are questioning whether the financial turmoil has rendered the Bank of England powerless to direct how much the biggest financial names on the High Street charge for credit and pay customers for their deposits. For many, today’s predicted cut in base rate will be meaningless. While banks and building societies have been cutting savings rates, they have also been raising mortgage rates for new borrowers. The only people to benefit would be existing mortgage customers on the track rates which follows the movement of the base rate. The current market turmoil could however be providing banks and building societies with the opportunity to rebuild their profit margins after being hit (at various levels) by the subprime market. Once again, the consumers are paying for the cost of the financial industries’ imprudence.
Tags: Bank of England, banks, base rate, building society, lost control, new borrowers, tracker
Posted in Bank of England, Banking, Credit crisis, Credit crunch, Finance, First-time buyers, Mortgages, Property Market, Rate reduced, Savings, Sub-prime | No Comments »
Tuesday, March 18th, 2008
Banking giant Goldman Sachs, the world’s most profitable bank, known for having the best-paid employees in the City, admitted its pay and bonuses fund had shrunk by more than a third compared with this time a year ago (and by half so far this year) even though it had managed to avoid the credit crisis by selling off most of its subprime mortgages last spring. Economists warn that if Goldman Sachs employees are suffering, it is likely bonuses for other City bankers could be disastrous this year. This, as well as the 10,000 workers expected to be laid-off in the City this year will have a major impact on the London economy as big-spending bankers tighten their belts. The knock-on effects are likely to be in the property and art markets as well as in London’s restaurants and shops.
Tags: city bankers, city workers, employees, goldman sachs, job axe, pay cuts, subprime, subprime mortgages
Posted in Consumer, Credit crisis, Credit crunch, London, Sub-prime | No Comments »
Thursday, March 6th, 2008
Borrowers with bad debts are getting better mortgage deals than first-time buyers without a deposit. The cheapest deal for a first-time buyer with good credit history but without a deposit is with Bradford & Bingley - 6.89% with £999 fee. But a sub-prime borrower with missed mortgage repayments (in the past year, one of which is in the last six months), could get a rate of 6.69% with a £995 fee with Chelsea BS. However, those with a 25% deposit could get a rate of 4.75% from First Direct with a £1,498 fee. A year ago, 27 banks and building societies offered 100% mortgages compared with just 11 today at much higher rates. As the credit crunch hits banks and building societies, first-time buyers have been left out in the cold.
Tags: 100% mortgages, Bradford & Bingley, Chelsea BS, Credit crisis, Credit crunch, credit history, cub-prime, First Direct, First-time buyers, subprime
Posted in Credit crisis, Credit crunch, First-time buyers, Mortgages, Personal Finance, Property, Sub-prime | No Comments »
Wednesday, March 5th, 2008
The Government is planning to use next week’s budget to introduce plans to grade all mortgages in a bid to kick start the wholesale money markets. Chancellor Alistair Darling is understood to be arranging the introduction of a new system under which all mortgages are graded, with the least risky awarded a gold standard ‘Kitemark’. Investors have been reluctant to buy mortgage-backed securities for fear they contain risky sub-prime loans and this has made it difficult for banks to remove mortgage assets from their books. It is hoped that by providing investors with greater reassurance about the quality of the loans they are taking on, it will make it easier for lenders to sell on mortgages to investors. The scheme could help re-vitalise the wholesale money markets and provide banks with access to cheaper funding, which subsequently could be passed on to consumers in lower mortgage rates.
Tags: alistair darling, Banking, Credit crisis, Credit crunch, Government, investors, kitemark, MBS, money market, mortgage rates, mortgage-backed securities, Mortgages, Sub-prime
Posted in Consumer, Credit crisis, Credit crunch, Finance, Government, Mortgages, Property Market, Speculation, Sub-prime | No Comments »
Saturday, February 23rd, 2008
Lenders have completely pulled out of the 125% mortgage market as the credit crunch continues to bite. Birmingham Midshires Solutions said it was pulling its version of the product, which will lend people up to 125% of their property’s value, due to market conditions. The group had been the only provider to continue offering the deals after Alliance & Leicester, Abbey, Northern Rock, Coventry Building Society and Godiva Mortgages all said they were scrapping them earlier this week. Faced with only limited availability of funds, lenders are keen to concentrate on less risky mortgages, and the problem has been compounded by fears that house prices could fall. There are now just two mortgage providers who will advance more than 100% of a property’s value, with Scottish Widows offering loans of 110% to professionals only, while Dunfermline Building Society is offering 110% to professionals and 105% to graduates but only in Scotland.
Tags: 125% mortgages, Birmingham Midshires, Credit crisis, Credit crunch, Dunfermline Building Society, Mortgages, Scottish Widows, Sub-prime
Posted in Credit crisis, Credit crunch, Finance, House prices, Investments, Mortgages, Property, Property Market, Sub-prime | No Comments »
