Banks finally posting profits whilst property prises start to rise..at last

[supra_aero]

http://news.bbc.co.uk/1/hi/business/8008158.stm

 

http://www.bloomberg.com/apps/news?pid=20601087&sid=aWBrx4eKx_WM&refer=home

 

I do hope we are finally out of the worse of the recession.

 

For those of you who have been monitoring property prices you'll know that last month they rose and the month before saw no change.

 

And today our bank amongst others posted their first billion dollar profitable quarter in a long long time. Its nice to finally see the big corporates posting profits again, which should help confidence in the financial markets and other industries.

 

Anyone else notice relatively recent recoveries in the industries you guys work in?

[adnanshah247]

petrol prices are going back up so looks like its all changeing!

[Scott]

http://news.bbc.co.uk/1/hi/business/8008158.stm

 

http://www.bloomberg.com/apps/news?pid=20601087&sid=aWBrx4eKx_WM&refer=home

 

I do hope we are finally out of the worse of the recession.

 

For those of you who have been monitoring property prices you'll know that last month they rose and the month before saw no change.

 

And today our bank amongst others posted their first billion dollar profitable quarter in a long long time. Its nice to finally see the big corporates posting profits again, which should help confidence in the financial markets and other industries.

 

Anyone else notice relatively recent recoveries in the industries you guys work in?

 

We have been given the top reward as far as quarterly bonus goes. Of course its great news but the fact that 250 people lost their jobs a couple of weeks ago its still not as promising as it could be.

[supra_aero]

Actually its the 3rd consecutive month of rising prices for houses

 

My mistake

[supra_aero]

We have been given the top reward as far as quarterly bonus goes. Of course its great news but the fact that 250 people lost their jobs a couple of weeks ago its still not as promising as it could be.

 

I agree, I was one of the few lucky ones to still have a job. I never realised how much a recession affects everybody. I do hope we see lower food prices now.

 

Petrol price seem to follow their own price agenda lol. I am on diesel now after selling the supe. Astounded how economical a 406 diesel is. 52mpg! After driving a supra as a daily driver for nearly 2 years its just incredible the economy of it.

[Digsy]

Is that the asking price for properties, or the price they are actually selling at? I suspect it’s the former, and people are hedging their bets hoping to trigger a wave of buying from people who have been waiting for the market to bottom out. In fact I wouldn't be at all surprised if this is partially media spin doctoring to try and get properties moving again.

 

I think its too soon. The banks have obviously coining it in since the BOE rate fell, but its hardly been passed on to the borrower in the street. I do believe (and I was saying as much to my girlfriend yesterday) that the current situation has been going on long enough for most people to get used to it. I woulnd't be surprised if they don't start trying to sneak the interest rates up again before the end of the year, rather than lowering them to make mortgages more affordable again - which they should be able to do as long as they carry on making a profit and remain sensible about who they lend to.

 

To be honest part of me was kind of hoping that things would drag on long enough for the suits to realise that this country is finished unless we find a way of making everything run a lot more cheaply.

 

Throwing taxpayers' money at financial institutions who really shouldn't have let us get into this situation in the first place isn't the long-term solution. Making the UK able to compete with the Far East for manufacturing and services is the way to give us our economy back.

[supra_aero]

Well mortgage rates go hand in hand with banks profits. If banks start to see (which hopefully they are and this will continue to) billion dollar profits. With the increased profits mean the availability of credit again. This is what caused the credit crunch in the first place.

 

If all the banks have money again due to billion dollar profits, you'll see more inter-lending between them and other companies. And eventually you and I will see this credit offered in the high street with much better rate loans and mortgages.

 

The biggest question is, will banks ever go so far as they did before with 110% mortgages etc. - I suspect they will be very cautious and or put a very small print caveat clause in their favour if things don't work out.

[colsoop]

Still far too early, they tried this spin last month too.

[supra_aero]

Still far too early, they tried this spin last month too.

 

Its early days but I have never seen a bank post a $4billion dollar profit in 3 months for years. That doesn't happen by luck imo.

[colsoop]

Its early days but I have never seen a bank post a $4billion dollar profit in 3 months for years. That doesn't happen by luck imo.

 

It happened because they acquired another company

[supra_aero]

It happened because they acquired another company

 

A company which was on the brink of bankruptcy and cripped with debt. Plus citi revealed big profits too

[Whitesupraboy2]

A company which was on the brink of bankruptcy and cripped with debt. Plus citi revealed big profits too

 

Your not reading some of the info correctly As Colsoop pointed out it was due to the aquisition.

 

The largest US bank, Bank of America, has seen its first quarter net income soar to $4.2bn(£2.9bn) from $1.2bn during the same period in 2008.

 

Its acquisition of Merrill Lynch contributed $3.7bn in net income and its purchase of lender Countrywide boosted its mortgage business.

[nickball75]

So long as people are hearing GOOD news, everything will get better

[Whitesupraboy2]

Also I hate to say it that bloomberg website is talking about asking price not the price they sold at or even if they sold!

[Digsy]

Well mortgage rates go hand in hand with banks profits. If banks start to see (which hopefully they are and this will continue to) billion dollar profits. With the increased profits mean the availability of credit again. This is what caused the credit crunch in the first place.

 

 

I don't entirely agree. I think a bank is like many other industries - the whole thing is set up to run at a specific rate otherwise it starts to lose money. Like the automotive giants, its cheaper for them to keep turning out cars that no one is buying because re-setting the whole business model to be cost effective at a lower production volume would cost more than the money they would save in simply making less cars. The banks have lost a shedload of cash in the credit crunch (which, let's face it, was actually caused by them being greedy in the first place and selling bad debt to people who could never pay it back) and now they will want it back. I don't think you'll see much passed onto the consumer until the banks have balance their books again.

 

If the property market "recovers" now we will have properties only marginally cheaper than before the crunch, and mortgages still relatively unaffordable for most people. Businesses will still be licking their wounds, and will be using this as an excuse to freeze salaries for years until they've made their books healty again. Joe public will be the last person to see any long-term benefit in his pocket. Personally, I'm actually doing OK right now because I'm paying £200 a month less than I used to, however everything apart from the mortgage has gone up, and if the interest rates start to go the wrong way again it won't take much to end the party. I'm not assuming this will carry on for long, but I am saving as much as I can and enjoying it while it lasts.

 

On the other hand if things carried on until we had a real property crash, I think everything would have to come down in line to stimulate the market into a proper recovery (like we had after the late 80's). However what we would need next time around would be proper policing of the major financial institutions to make sure we don't have a repeat of the bonkers lending that caused the crunch.

[supra_aero]

Your not reading some of the info correctly As Colsoop pointed out it was due to the aquisition.

 

The largest US bank, Bank of America, has seen its first quarter net income soar to $4.2bn(£2.9bn) from $1.2bn during the same period in 2008.

 

Its acquisition of Merrill Lynch contributed $3.7bn in net income and its purchase of lender Countrywide boosted its mortgage business.

 

Apologies. Teaches me for skim reading and not concentrating.

 

Still think its an incredible feat

[caseys]

We'll see an upturn around Spring 2010 for the economy from what I've been hearing and seeing.

 

Some people speculate that the FTSE will drop below 3300 before we start a proper recovery. Considering it was 6600 points less than 2 years ago that's quite shocking.

 

Anyway America, Citi et al have a long way to go before they make any money... consider how much money they borrowed from the US TARP (troubled assets relief program) scheme.

[supra_aero]

I don't entirely agree. I think a bank is like many other industries - the whole thing is set up to run at a specific rate otherwise it starts to lose money. Like the automotive giants, its cheaper for them to keep turning out cars that no one is buying because re-setting the whole business model to be cost effective at a lower production volume would cost more than the money they would save in simply making less cars. The banks have lost a shedload of cash in the credit crunch (which, let's face it, was actually caused by them being greedy in the first place and selling bad debt to people who could never pay it back) and now they will want it back. I don't think you'll see much passed onto the consumer until the banks have balance their books again.

 

If the property market "recovers" now we will have properties only marginally cheaper than before the crunch, and mortgages still relatively unaffordable for most people. Businesses will still be licking their wounds, and will be using this as an excuse to freeze salaries for years until they've made their books healty again. Joe public will be the last person to see any long-term benefit in his pocket. Personally, I'm actually doing OK right now because I'm paying £200 a month less than I used to, however everything apart from the mortgage has gone up, and if the interest rates start to go the wrong way again it won't take much to end the party. I'm not assuming this will carry on for long, but I am saving as much as I can and enjoying it while it lasts.

 

On the other hand if things carried on until we had a real property crash, I think everything would have to come down in line to stimulate the market into a proper recovery (like we had after the late 80's). However what we would need next time around would be proper policing of the major financial institutions to make sure we don't have a repeat of the bonkers lending that caused the crunch.

 

 

Interesting views. I can't see property falling to how I can I put it,...'realistic levels' as that would cripple 90% of Britain who have borrowed against that. So I can only see somehow the goverment and beyond keeping prices high and stimulating demand where properties are at at the price levels they are at at the moment.

 

Infact not only would the joe public be hugely in negative equity should there be a crash of significant magnitude, the banks who are relying on property values as collateral in repossesions would also be screwed. It is a very interesting debate and I do wonder what'll happen.

[stevie_b]

Interesting views. Subscribed.

[supra_aero]

I think banks will feed the profits through to mortgages as for them its almost like a risk free bond (dare I say that, that's the thinking what got them into this mess). It's risk free as houses *generally* always rise in value (at least within the 25 year mortgage term), and if the buyer defaults they get to keep the house anyway (and all the money they earned from the buyer from his/her years of paying).

 

Afterall interest rates are so low, there are little other investments worth investing in at the moment. Equities/Stocks are a massive gamble in this market. It will all be very interesting. I do think this market crash will make many multi-multi billionaires and millionaires who made the right moves.

 

I for one think U.S. house prices are rock bottom cheap and if you can afford to buy tons of them now and hold on to them (by renting or whatever), in 10-15 years you'll make a pretty penny if you chose the right area. Pity I am too young and poor to make this kind of investment.

[Digsy]

Interesting views. I can't see property falling to how I can I put it,...'realistic levels' as that would cripple 90% of Britain who have borrowed against that. So I can only see somehow the goverment and beyond keeping prices high and stimulating demand where properties are at at the price levels they are at at the moment.

 

Infact not only would the joe public be hugely in negative equity should there be a crash of significant magnitude, the banks who are relying on property values as collateral in repossesions would also be screwed. It is a very interesting debate and I do wonder what'll happen.

 

 

Has 90% of Britain really borrowed themselves up to the hilt of what their property was worth at the height of the boom, though? If they have then that's a pretty scary statistic. The implication being that things must carry on as they are, otherwise the whole economy will fall apart. I agree that a proper crash will hurt the people who have just jumped on the property ladder, or significantly traded up to a larger house, but I don't think the repo's resulting from that would be any worse than previous crashes. If everything did come back down to, say, mid 90's levels I'd like to think that those people would have a good chance of getting back on the ladder and staying there.

[supra_aero]

Has 90% of Britain really borrowed themselves up to the hilt of what their property was worth at the height of the boom, though? If they have then that's a pretty scary statistic. The implication being that things must carry on as they are, otherwise the whole economy will fall apart. I agree that a proper crash will hurt the people who have just jumped on the property ladder, or significantly traded up to a larger house, but I don't think the repo's resulting from that would be any worse than previous crashes. If everything did come back down to, say, mid 90's levels I'd like to think that those people would have a good chance of getting back on the ladder and staying there.

 

Good point to be fair, not everyone is 25-30 just buying or bought their first property. BUT I do believe particularly in London people have stretched themselves to silly proporitions. I recall my bank offering me silly money which I knew I couldn't really afford especially if there was a recession (which there was!).

 

I think many in London and over priced/expensive towns have certainly over exterted themselves.

 

Plus an area I have overlooked is all the new builds which have been budgeted to cost e.g. 180k to build over x many years and they expect to sell at 230k or whatever. All those construction firms would just stop building if they thought the risk of a major crash would happen.

 

There must be some engineers or people in construction who could shed some light on this? I am actually quite interested.

[stevie_b]

It still feels to me as if the astronomical house price rises of the last 12 years haven't yet been redressed. Houses can't go up long term out of step with wages. I'd guess wages are pretty stagnant at the moment, and I can't see banks being keen to lend large multiples of salary for a while. So what gives? It's got to be house prices.

 

We may see a period of high inflation in a few months time when the quantatitive easing really takes effect, which could reset the whole picture. Who knows, I certainly don't!

[supra_aero]

It still feels to me as if the astronomical house price rises of the last 12 years haven't yet been redressed. Houses can't go up long term out of step with wages.

 

That's a very good point but it did and has and repossessions surprisingly haven't rocketed. I have often wondered if it will become an elitist status symbol, being able to own a house - especially in certain areas.

 

As let's be honest, the government has done v.v.v little thus far to help first time buyers - particularly in expensive areas such as London.

 

Further more, those living in even more reserved expensive areas in places such as Hampstead, trendy areas of Hertfordshire etc., would want to keep it that way. And block any construction plans for multi storey flats to be put on greenfiend sites.

 

This has happenned in many other areas of the world so why not the UK? After all if you look historically at London and how it has expanded, it's clear that people are moving further and further out - I can only presume this is due to house prices.

 

Many city workers already live in Essex and Cambridgeshire etc. - I wonder if this contagion will spread further. I can't see house prices falling to sensible levels but that's just my view.

[Al Massey]

The only way to get out of and stop this downfall we are in now is to stop being greedy.

 

House prices the way they are now are stupidily too high.

In theory a house price should never go up.

Its just a bit of brick and mortar stick together with some pipes inside.

But the general public are greedy little fu**ers and want more thatn they spent on it when it comes to sell.

 

We are the ones that brought the recession onto ourselves by being greedy and wanting more for little effort and little money.

 

Same as big corporations and mainly banks. they want it all and they want it now and they dont care who they hurt to get that profit.

Banks are supposed to look after our money not make a huge profit from it and put us out of pocket.