reporadar™

3-month LIBOR has today been set at 4.49625pc. Before yesterday's headline-shaking 150 basis point cut in the Base Rate 3-month LIBOR, the interbank lending rate most commonly used by banks, had been set at 5.56125pc. This means the rate is now 106.5 basis points lower than the pre-cut level yesterday.

The Bank of England’s Monetary Policy Committee concluded the monthly two-day meeting by surprising the market with a gargantuan 1.5 percentage point cut in the Base Rate, reducing it to 3.00% and storming through the previous multi-generational low hit in 2003 as the rate hit its lowest point in 54 years. Media and economists had been [...]

Earlier today the Danish Central Bank raised the key interest rate by 50 basis points to 5.50%. In a statement the bank said: “As a result of continued intervention to support the Danish krone, Denmark’s Nationalbank increases the lending rate and the rate of interest for certificates and deposits from 5 percent to 5.5 percent”. The move [...]

Bradford and Bingley to be nationalised. One thing the media isn't mentioning, just as it didn't bother to point it out when the run on Northern Rock occurred, is that these banks based their business models on the one which the Government was keen on Building Societies emulating.

Midday came and went, and with it the annoncement that the Bank of England’s Monetary Policy Committee had kept the base rate at 5%. The September meeting was over and nothing had changed. With commodity prices having peaked and now in a consolidation phase, let alone what is happening to house prices and real per capita [...]

Price inflation peaking. King finally comprehending the situation. Deliberate support for the panic housing measures. Surprise. All this is why "I think there is a 60% chance they'll surpise and cut".

Although this is just an initial reaction to a cursory look at the Government's panic measures, they would appear to be inadequate and likely to be long-term detrimental to the housing market.

The last couple of weeks have seen a myriad of headlines expressing fears of imminent recession. The Government claim GDP growth is still holding above the negative. But how reflective of the situation are their numbers?

At first glance the statistics on buy-to-let mortgage numbers, arrears and repossessions would seem not that bad. That BTLers are weathering the current market better than encumbered owner-occupiers. However, closer inspection would suggest that the BTL bad debts are surging.

Revised GDP growth figures, released earlier today, put reduced quarter-on-quarter GDP growth to zero, from a previous 0.2%, taking the year-on-year growth rate down to 1.4%. The problem I have is that those figures use the Government’s preferred method of calculation, applying their GDP Expenditure Deflator. A deflator which is substantially less than CPI, let alone RPI [...]