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Economy becomes top worry for EU mortgage lenders

There is no end in sight to problems in Europe's 6 trillion euro (£5 trillion) home loans market but countries with conservative lending policies are riding the storm relatively well, top industry officials said on Thursday.

Big booms in housing markets in European Union states like Britain, Ireland and Spain have burst spectacularly but Germany, the Netherlands, Belgium and Denmark are relatively stable.

After 10 years of growth, Europe's mortgage market has slowed as the worst financial turmoil in 80 years has begun making loans harder to come by.

But recession in the euro zone and Britain is now becoming a bigger dampener on the market and more interest rate cuts would help stabilise the situation, officials said.

Michael Coogan, director general of Britain's Council of Mortgage Lenders said third quarter figures due out on Friday will show arrears on UK home loans were the worst this century.

"We may well be facing transaction numbers across the UK at the lowest level since World War Two. The turmoil will continue for much of the next 12 months," Coogan told a European Mortgage Federation conference.

Coogan said that in the last quarter in Britain demand for loans was shrinking faster than supply due to economic slowdown.

Other officials were equally gloomy.

"I don't know when this crisis will be over. We are now in a phase where we see a correction of huge imbalances in the global economy and that is the real thing that is happening," Bernhard Scholz, a board member of Germany's Hypothekenbank, said of the European market.

Germany saw no boom in private housing and won't see a big bust and there was no shortage of funds for loans, Scholz said.

"We don't see any credit crunch in the private housing sector and we don't expect any but demand has slowed. We are expecting a recessionary time in the next few months," he said.

It was also unclear what would be a sustainable business model for the industry in future, Scholz said.

Still, conservative lending policies in the Netherlands, Denmark and Belgium have shielded them from major problems.

Peter Engberg Jensen, chief executive of Denmark's financial services group Nykredit did not expect a need for state intervention to guarantee the country's mortgage banks.

Each Danish home loan is "perfectly matched" with funds issued at precisely the same maturity, interest rate and currency but a slowing economy was a concern, Jensen said.

The EMF expects Europe's home loans market to be roughly flat this year.

A Dutch industry code on lending has avoided excesses and could serve as a model for Europe in anticipation of likely EU regulation, said Wim Mijs, managing director of the Netherlands Bankers Association. It lays down the maximum amount of money that can be borrowed depending on income and interest rates.

Freddy Van den Spiegel, chief economist at Belgian-Dutch Fortis bank, said the Belgian market was "doing quite well" due to its conservative lending policy but borrowers were switching from flexible rates to more fixed rates and longer maturities.

"We don't yet see a decrease in demand. If the economic situation continues to deteriorate it will be demand shock rather than a supply shock," Van den Spiegel said.

Other countries were applying lessons learnt.

Zbigniew Krysiak of the Polish Banks Association said changes introduced included a minimum down payment of 30 percent compared with nothing in some cases in the past. Up to 75 percent of loan applications in Poland were now rejected.

Officials urged regulators to be cautious.

"It can be extremely dangerous to try to overregulate right now. It could reduce macro economic growth even more," said Nykredit's Jensen.

 

 

 

 

No quick fixes seen from key UK mortgage report

Government guarantees for mortgage-backed bonds and allowing lenders to swap loans for easily saleable government debt could be among proposed remedies for the ailing British mortgage market in a report due out on Monday.

However, analysts say the report, authored by former HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz) chief executive James Crosby, is unlikely to offer any quick fixes because of the dramatic deterioration in the British property market since it was commissioned in April.

"Nobody wants to fund a market where wholesale finance is hard to find and asset prices are going south," said Collins Stewart analyst Alex Potter.

The UK government asked Crosby to look into ways of revitalising the mortgage market as it became clear that a lack of mortgage funding was dragging down house prices with worrying speed. House prices have dropped around 15 percent since their peak last year.

His interim report, published in late July, said possible solutions included measures aimed at encouraging investors to resume purchases of mortgage-backed securities.

The mortgage-backed security market was an important source of funding for British banks until the global credit crunch effectively closed it in August 2007, accounting for about two thirds of net new mortgage lending the previous year.

However, Crosby also said that doing nothing may be the best option as any government tinkering could "create more problems than it would solve."

Analysts say a relentless decline in house prices since April, triggering a steady increase in mortgage arrears, has made the task of kick-starting demand for mortgage-linked instruments more difficult.

Investor enthusiasm for mortgage-backed bonds has also been curbed by the global banking crisis, which prompted the government to buy major stakes in three of the UK's biggest lenders in October as part of a 37 billion pound ($54.91 billion) bailout scheme.

"The ideas we proposed (to Crosby) were very much around incentivising investors in the mortgage-backed securities market," said Sue Anderson, a spokeswoman for the Council of Mortgage Lenders.

"But the world has changed now, and that could be a very slow process because sentiment in those markets has become more entrenched. It may be that a different approach is required now."

Ray Boulger, analyst at independent mortgage expert John Charcol, said an alternative strategy would be for the government to intervene directly in the mortgage market through the lenders it partly owns.

"It could order them to allocate a certain percentage of lending to people who want to borrow between 80 and 90 percent. That would mean at least funding was available," he said.

Extending credit to borrowers who currently fall below the banks' newly-tightened lending criteria would help underpin the housing market, Boulger said.

UK home repossessions and the number of Britons struggling to make mortgage repayments rose in the third quarter, data out on Friday showed. [nLL615530]

While British mortgage lending rose for the first time since July in October, it is still 44 percent lower than the same time last year. [ID:nLK328046]

Publication of the Crosby report, originally scheduled for the autumn, was postponed so that it could take on board the UK banking bailout, as well as the sale and part-nationalisation of mortgage bank Bradford & Bingley in September.

It will now appear alongside British finance minister Alistair Darling's pre-budget report on Monday.

 

 

 

Personal Payday Loans: Quick Cash in Emergency
Author: Gray Smith

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Article Source: http://www.articlesbase.com/loans-articles/personal-payday-loans-quick-cash-in-emergency-416203.html

 

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An Fha Loan is a Great Options for Those With Less Than Perfect Credit

Author: IC

Have you always dreamt of owning a home but assumed because you have less than perfect credit that it would never be a reality for you? Many people feel the same way as you do, but assuming that you could never be a homeowner wasn't an accurate assumption at all. The FHA loan has been around for more than 70 years and in that time it has allowed many people like you, who have made mistakes in the past, to reinvent themselves from a credit point of view and buy their own home. It may be easier than you had ever thought possible to get into a new home with type of home loan.

Who the FHA Loan May Work For:

Have you made some credit mistakes in the past? If you have, you are a like a lot of people out there that have a difficult time getting any credit extended to them in the form of auto loans, credit cards, and personal loans. If you accepted credit cards, used them, and didn't pay them off or you have utility bills or medical bills that have gone unpaid your credit scores may not be pretty but that may not stop you from qualifying from an FHA loan. The great thing about these loans is the FICO scores do not apply! This is great news for people, perhaps people like you, who have less than wonderful FICO scores.

An FHA loan is also a great option for those that have filed for bankruptcy in the future. If you have a bankruptcy on your record you know that it can be very difficult to get any sort of credit extended to you. The difficult part of this is that sometimes bankruptcy is the only way out of a bad situation, and sometimes it is the best way out for everyone, including the creditors. But, many people find that once the deal is done it is hard to improve credit because credit is hard to come by. When you want to buy a home you may find that you keep getting doors closed in your face, but with the Federal Housing Administration you will be considered for a home loan when you have maintained good credit since your debts were discharged as long as it has been two years since then. What this means is that two years from the day that you file for bankruptcy you could own a home again!

When you have a foreclosure on your record you will often be told or you will hear that you will never own a home again. While you may never qualify for a conventional loan again you may still qualify for an FHA loan! It's true, two years from the date of your foreclosure you may be able to buy a home again if you have your credit back in shape again. Many people are not ready to buy again in two years, but it's good to know that when you are ready and you have your finances and your credit in order again, that the option to buy will be there.

The Federal Housing Administration is giving people hope of home ownership that didn't have the hope in the past. Whether you have less than perfect credit, very little in the way of a down payment, foreclosure or even bankruptcy on your record you may still be able to buy a home. This loan program has allowed for millions of people to buy homes that may not have been able to any other way.

 

Article Source: http://www.articlesbase.com/mortgage-articles/an-fha-loan-is-a-great-options-for-those-with-less-than-perfect-credit-408140.htm

 

About the Author:

 

Get more information about FHA home loan as well as expert advice regarding bad credit visit our expert source at: http://www.refinance.com/

 

 

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