Monday 13th June 2011
Taxpayer-funded Lloyds to suffer most if house prices drop
Investment bank Morgan Stanley is expecting UK house prices to drop 10% by the end of next year.
If that happens, it predicts that taxpayer-funded Lloyds will be the most exposed bank.
Analysts at the investment bank say in a report: “We still think that the UK housing market will see another leg of correction. Our central case is that UK house prices will be 10% below fourth-quarter 2010 levels by the end of 2012. Among UK banks, Lloyds is most exposed.”
Morgan Stanley think that Lloyds is likely to be worse hit by house price falls because of greater losses from its loans.
Over half (54%) of Lloyds lending is in UK mortgages, with the amount standing at £341bn last December.
Morgan Stanley’s analysts forecast that 27% (£90bn) of these loans will be in negative equity by the end of 2012.
Lloyds shareholders will not be delighted at the news. Their shares have been battered again after a £3.2bn hit over its mis-selling of insurance policies.
The Government has a 41% stake in Lloyds.
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UK housing market woes(Source: StarBiz, dated: 25-May-2011)
More price falls seen after unexpected slump in sales this spring.
LONDON: The UK housing market is bracing itself for more price falls after an unexpected slump in sales this spring thanks to economic uncertainty, prolonged good weather and the glut of bank holidays.
Average UK house prices had dropped 1.5% since the New Year and were now 20% below the pre-downturn peak in the summer of 2007.
Hometrack, a consultancy analysing estate agents' sales data across England and Wales, said average prices had fallen 3.3% in the past year and might drop further "as consumer confidence weakens and household incomes remain under pressure".
The website, www.propertysnake.co.uk, monitors homes when they are first advertised for sale, and then tracks changes to their asking prices. It says no fewer than 210,000 of estimated 400,000 homes now on sale have reduced their prices.
The only exception to the housing market woe is in central London itself, where homes continue to sell at prices equal to, or even above, pre-recession levels.
Taxpayer-funded Lloyds to suffer most if house prices drop
Investment bank Morgan Stanley is expecting UK house prices to drop 10% by the end of next year.
If that happens, it predicts that taxpayer-funded Lloyds will be the most exposed bank.
Analysts at the investment bank say in a report: “We still think that the UK housing market will see another leg of correction. Our central case is that UK house prices will be 10% below fourth-quarter 2010 levels by the end of 2012. Among UK banks, Lloyds is most exposed.”
Morgan Stanley think that Lloyds is likely to be worse hit by house price falls because of greater losses from its loans.
Over half (54%) of Lloyds lending is in UK mortgages, with the amount standing at £341bn last December.
Morgan Stanley’s analysts forecast that 27% (£90bn) of these loans will be in negative equity by the end of 2012.
Lloyds shareholders will not be delighted at the news. Their shares have been battered again after a £3.2bn hit over its mis-selling of insurance policies.
The Government has a 41% stake in Lloyds.
___________________________________________________________________
UK housing market woes(Source: StarBiz, dated: 25-May-2011)
More price falls seen after unexpected slump in sales this spring.
LONDON: The UK housing market is bracing itself for more price falls after an unexpected slump in sales this spring thanks to economic uncertainty, prolonged good weather and the glut of bank holidays.
Average UK house prices had dropped 1.5% since the New Year and were now 20% below the pre-downturn peak in the summer of 2007.
Hometrack, a consultancy analysing estate agents' sales data across England and Wales, said average prices had fallen 3.3% in the past year and might drop further "as consumer confidence weakens and household incomes remain under pressure".
The website, www.propertysnake.co.uk, monitors homes when they are first advertised for sale, and then tracks changes to their asking prices. It says no fewer than 210,000 of estimated 400,000 homes now on sale have reduced their prices.
The only exception to the housing market woe is in central London itself, where homes continue to sell at prices equal to, or even above, pre-recession levels.
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