Rays of hope for the market
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The news that Lloyds Banking Group has undertaken a second securitisation worth £2.5bn has cheered the market.
The lack of affordable funding has crippled the mortgage sector, with the biggest problem being that even if deals originated by lenders are squeaky clean loans at 40% LTV, without a healthy and functioning securitisation market there is no exit for them.
The rate Lloyds group paid for its first securitisation last year was high at 1.7% above three-month LIBOR compared with deals going for between 0.1% and 0.2% above LIBOR at the height of the market. On the plus side, Lloyds’ latest deal was a move in the right direction at between 1.15% and 1.3% above LIBOR. Yes, it was once again made up of prime loans. But the fact is Lloyds group having comfortably put two securitisations to market is an encouraging sign.
And another positive comes in the shape of the Centre for Economics and Business Research’s prediction that house prices will be around 20% higher than today’s levels by 2013.
This forecast is based on an improved mortgage lending outlook, with approvals predicted to reach around 72,000 per month by the end of 2010 compared with the present level of around 60,000. The CEBR says this will rise to around 90,000 per month by 2013.
On the minus side, figures out last week show risible UK economic growth in Q4 2009 of just 0.1%. We’ve lifted our head above water - but only just. Look at the figures from the US and it’s even more depressing. The US saw growth of 2.2% in Q3 2009 and more than doubled that in Q4 to 5.7%. We still have a mountain to climb.
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Readers' comments (1)
Paul Silcox | 1 Feb 2010 6:19 pm
"And another positive comes in the shape of the Centre for Economics and Business Research’s prediction that house prices will be around 20% higher than today’s levels by 2013."
Pardon my ignorance, but this is good news for whom exactly? I can only think that it is good for downsizing boomers. Letting house prices settle at their natural long-term level (Around 30-50% down from here, according to most methods of valuation, except for the risable notion of "affordability" based on stupid-low rates) then I am sure even brokers would benefit from the substantial increase in mortgage lending as more people could actually afford to purchase a house.
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