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Has the buyer's bubble burst?

Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
Interest rates are steadily going up, more people and firms are struggling with debt, money is becomming harder to get hold of - surely this signals a reduction in spending, which leads to Debenhams having to lay off staff to cut costs...

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Or at this stage is that just hysteria? I genuinely think we are headed for a market... whats the word... normalisation? Inflation, particularly in house prices, has made people value things such as property much more than they are actually worth. Now people are thinking again it's going to stop people spending money and locking it away until the all clear comes out. Which means - buying / lending bubble will burst.

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    Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Doesn't this all mean that it's a buyer's market rather than the buyers bubble has burst...?
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    JsTJsT Posts: 18,268 Skive's The Limit
    Most of the FTSE's losses today accumulated to one company!
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    Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    The FTSE is still hovering around 6300 pts, compared to just last month when it plumeted to 5800 - I don't see immediate problems today.

    Even the Northern Rock hype is over inflated.. only for the time being, I do believe we are going to see massive problems..not quite yet though.

    And don't expect the goverment to sit by and watch the prices tumble as fast as they rocketed, they, and their middle/upper class voters will not like a massive property tumble.

    With regards to interest rates, they held this month, as expected, not risen? Probably going to stay the same with the way the markets are..except for one deadly twist, if they bail out the other banks like they did Northern Rock, inflation is going to rocket, and then the rate rise will start again.. but its all swings and roundabouts really..
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    Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    the days of easy credit are running out, as northern rock are finding out :lol: house prices along with all other assets are due for a fall as liquidity is taken away, the central banks are pumping hard to keep things going at the minute but it's not really working if you look at long term libor rates, and if they drop interest rates it leads to an equally ugly scenario.....bottom line is cheaper houses but most people still won't be able to afford it if we go into a recession, we have more debt per person than the US and it's already clear for everyone to see that their economy is fucked.
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    Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Although there are some problems the general 'fundamentals' of the market a still pretty good, unemployment is still historically low across the US, EU and the UK, and confidence is still reasonably good. Both the EU and US central banks are giving out massive amounts of loans to make sure there is still liquidity and it looks likely that UK interest rates will go down a quater point. I dont see any reason to panic.
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    Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    There's no problem with liquidity for any bank, there's still more than enough cash in the system, they're just being a bit more reticent about doling it out to just anybody at the minute. I think the whole thing has been greatly overstated in this country.

    I don't see a major price tumble in a country where demand still outstrips supply. I imagine the new developments of executive flats, targeted directly at buy-to-let investors, will suffer a big bump but proper houses for proper people won't revise very far downwards, if at all.
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    Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Kermit wrote: »
    There's no problem with liquidity for any bank, there's still more than enough cash in the system, they're just being a bit more reticent about doling it out to just anybody at the minute.

    kermit my man you are talking a load of balls, if banks won't lend to each other that is a liquidity problem, why do you think 3 month libor has shot up and the central banks have been pumping billions of dollars in repo loans to keep it going, the investment banks start reporting earnings this week and the figures won't be pretty, let's wait and see....

    oh and btw looks like A+L are going down the crapper with NR, my bet is B&B are next...:wave: but everything's backed by the BoE so don't panic! :lol:
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    Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    at least mervyn king has his head screwed on. abolish lender of last resort pls.
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    Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    kermit my man you are talking a load of balls, if banks won't lend to each other that is a liquidity problem, why do you think 3 month libor has shot up and the central banks have been pumping billions of dollars in repo loans to keep it going, the investment banks start reporting earnings this week and the figures won't be pretty, let's wait and see....

    oh and btw looks like A+L are going down the crapper with NR, my bet is B&B are next...:wave: but everything's backed by the BoE so don't panic! :lol:

    I think your predicitions of doom and gloom are a tad overstated.

    NR that is fundamentally sound... However what should have been a short term problem is being exxagerated by people panicing and getting their cash out (and the majority are taking out money which is 100% protected) NR haven't even had to use their cash they borrowed.

    That said the NR shares are going down so fast, that the bets are that one of the other banks are going to get them cheap and make lots of money from the mortgages held by NR.
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    Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    If I had enough money to be able to take the risk I'd buy some AL and NR shares.
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    Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    If I had enough money to be able to take the risk I'd buy some AL and NR shares.

    I set up my trading account today :/
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    Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Yes NR is sound at the moment, as I'm sure you have read in the papers the problem is that NR give mortgages and then borrows the money needed from other financial institutions..

    If you take HSBC for example, they lend on the money that is held in savings, something NR didn't have enough savings to cover.

    The money requested is so they can KEEP LENDING, not to cover the money that has currently gone out etc..

    We live in a panic/sheep society, its quite sad really.
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    Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    fact is their business model is flawed and they lent too aggressively, now they can't find anyone to pass the debt onto and that's why noone will lend them anymore money, quite simple and they're not the only ones.....i don't think the banking system is going to collapse but you can't blame people for pulling their money out, it's their pension ffs and i wouldn't trust the govt or the media to tell me what to do with my money....
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    Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    That said the NR shares are going down so fast, that the bets are that one of the other banks are going to get them cheap and make lots of money from the mortgages held by NR.

    Maybe, maybe not, the problem with NR is that its given out lots of low interest loans in the UK, now even if the share price keeps falling taking on that debt which is only paying a very low return isnt very attractive.

    But, in real terms this wasnt cased by the UK market, its because NR bought more of the dodgy US loans than other UK banks.
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    Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    budda wrote: »
    Maybe, maybe not, the problem with NR is that its given out lots of low interest loans in the UK, now even if the share price keeps falling taking on that debt which is only paying a very low return isnt very attractive.

    But, in real terms this wasnt cased by the UK market, its because NR bought more of the dodgy US loans than other UK banks.

    True, however its a lot more customers for whoever takes them over. OK the low interest loans may not make much in the short term. However, fixed rates don't remain fixed rate forever and its possible for the new bank to change the rate to a higher level and bet that the majority of people don't move.
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    Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    True, however its a lot more customers for whoever takes them over. OK the low interest loans may not make much in the short term. However, fixed rates don't remain fixed rate forever and its possible for the new bank to change the rate to a higher level and bet that the majority of people don't move.

    Certainly, and I think if the price drops low enough then someone will have a go, but it might not be a good idea at really any price - you have to have funds to give out and you've got to get them from somewhere - which is exactly what banks cant do at the moment.
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    Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    budda wrote: »
    Certainly, and I think if the price drops low enough then someone will have a go, but it might not be a good idea at really any price - you have to have funds to give out and you've got to get them from somewhere - which is exactly what banks cant do at the moment.

    The shares would have to go low enough to make it really worthwhile, but many of the High Street banks (ie those who weren't building socieites) rely much less on loans from others and more on accounts, and aren't being hit as hard.
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    Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    The more people that want something and the less they have of the product is what is making prices go up, and to add to that, people spend too much on shit they dont need.
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