Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-62297 Thu, 25 May 2017 14:46:33 GMT The great London property squeeze sees spillover into substandard housing http://implode-explode.com/viewnews/2017-05-25_ThegreatLondonpropertysqueezeseesspilloverintosubstandardhousing.html There is a direct link between the wealth of those at the top and the capital's housing crisis -- which affects not just those at the bottom but the majority of Londoners who struggle to buy properties, or pay extortionate rents. The 2008 financial crash created a new politics of space, in which people on low incomes are forced out of their homes by rising rent and the wealthy are encouraged to use property for profit. These trends are not limited to London. The same currents of global capital are also transforming San Francisco, New York and Vancouver, European cities from Berlin to Barcelona and towns and cities in the UK from Bristol and Manchester to Margate and Hastings. This isn't gentrification, it's another phenomenon entirely. Global capital is being allowed to reconfigure the country.

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The shortage of affordable housing has given rise to a range of problems in private rented accommodation, from slum landlords and "beds in sheds" to middle-class Londoners under the age of 45 who can no longer afford to live in the city. A generation is being affected and our essential services, such as hospitals and schools, and the majority of our small and medium-sized businesses, are being undermined.

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Although it is notoriously difficult to get accurate figures, a 2013 report by the Migrants' Rights Network concluded that Ealing may have as many as 60,000 occupants in illegal structures, and Slough borough council, which deployed planes equipped with thermal imaging equipment in an effort to spot them, may have as many as 6,000 beds in sheds. In 2013 a BBC investigation found estate agents renting out beds in sheds in Willesden Green and Harrow.

Newham's licensing scheme has been widely praised, and many councils have expressed wishes to emulate it. But in 2015, to the delight of landlords, the government made it clear it did not want to extend the scheme's use, with then housing minister Brandon Lewis describing licensing as a "tenants' tax".

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iehi-feed-62295 Thu, 25 May 2017 14:27:24 GMT A 10% hike to mortgage payments would sink almost 3 quarters of homeowners, Manulife says http://implode-explode.com/viewnews/2017-05-25_A10hiketomortgagepaymentswouldsinkalmost3quartersofhomeownersMan.html iehi-feed-62293 Thu, 25 May 2017 14:22:25 GMT Toronto Homeowners Are Suddenly in a Rush to Sell http://implode-explode.com/viewnews/2017-05-25_TorontoHomeownersAreSuddenlyinaRushtoSell.html After a double whammy of government intervention and the near-collapse of Home Capital Group Inc., sellers are rushing to list their homes to avoid missing out on the recent price gains. The new dynamic has buyers rethinking purchases and sellers asking why they aren't attracting the bidding wars their neighbors saw just a few weeks ago in Canada's largest city.

"We are seeing people who paid those crazy prices over the last few months walking away from their deposits," said Carissa Turnbull, a Royal LePage broker in the Toronto suburb of Oakville, who didn't get a single visitor to an open house on the weekend. "They don't want to close anymore."

Home Capital may be achieving what so many policy measures failed to do: cool down a housing market that soared as much as 33 percent in March from a year earlier. The run on deposits at the Toronto-based mortgage lender has sparked concerns about contagion, and comes on top of a new Ontario tax on foreign buyers and federal government moves last year that make it harder to get a mortgage.

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The fate of Home Capital, known as a "b-lender" because it caters to new immigrants and other homebuyers who can't get a traditional bank loan, remains in question. A run on deposits and stock plunge began late last month after regulators accused the company of misleading investors about potentially fraudulent mortgage applications.

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iehi-feed-62290 Wed, 24 May 2017 15:11:00 GMT Home sales fall as tight supply boosts prices http://implode-explode.com/viewnews/2017-05-24_Homesalesfallastightsupplyboostsprices.html iehi-feed-62286 Tue, 23 May 2017 15:18:46 GMT Jared Kushner's Slumlord Empire http://implode-explode.com/viewnews/2017-05-23_JaredKushnersSlumlordEmpire.html iehi-feed-62285 Tue, 23 May 2017 04:33:42 GMT America's Cities Are Running Out of Room http://implode-explode.com/viewnews/2017-05-23_AmericasCitiesAreRunningOutofRoom.html A shortage of homes for sale has bedeviled U.S. house hunters in recent years, so why don't builders build more? One problem is that they're running out of lots to build on--at least in the places that people want to live.

Cities that were sprawling before the Great Recession have begun to sprawl again. Space-constrained cities, meanwhile, have run out of room to build. That reality has spurred developers to focus on center-city neighborhoods where high-density building is allowed--and new units command exceedingly high prices.   

At some point, said Issi Romem, chief economist at BuildZoom, vacant lots in desirable urban neighborhoods will run out. "If you have three days of rations left, you'll be fine on day one, two, three," said Romem, author of new research demonstrating home construction patterns. "On day 4, you have a problem."

Well, this is a little alarmist -- you don't necessarily need vacant lots; you just need inferior properties to demolish and replace with superior ones.

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iehi-feed-62282 Mon, 22 May 2017 15:16:24 GMT Interest-only loans could be 'Australia's sub-prime' http://implode-explode.com/viewnews/2017-05-22_InterestonlyloanscouldbeAustraliassubprime.html High-risk mortgage loans to young families, professionals and other over-extended borrowers amounting to more than six times household incomes could wipe out 20 per cent of the major banks' equity base, institutional investment fund JCP Investment Partners has warned.

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In a proprietary study of the nation's record high-and-growing household debt mountain, the Melbourne-based fund said Irish-style housing losses for the bigger-than-recognised pool of riskier borrowers could wipe out half of the banks' equity capital.

Interest-only loans, said JCP -- which is one of three Australian equities managers appointed by the Future Fund -- could be "Australia's sub-prime".

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Among the biggest concerns is what may happen when households feel they can no longer service their loans, for instance, as borrowing costs are reset higher or those with interest only mortgages are forced to repay the principal as well.

That creates a negative feedback loop -- experienced by Ireland after the financial crisis -- in which stressed borrowers slash their spending, in turn crunching the economy, driving up unemployment and adding to downward pressure on house prices.

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The fund's senior researchers Matthew Wilson and Craig Shephard found that about half of all the nation's mortgage debt was in the hands of borrowers whose debt was more than four times larger than their gross income.

The same borrowers had paid off less than half of their loans, the team found, based on data from several official and private sector sources that adjusted for changes in incomes and the collateral values of their homes.

The average loan-to-income ratio of these heavily indebted households was 6.4, or more than double the old banking "rule of thumb" that mortgage managers didn't lend more than three times a household's income "unless they were doctors".

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JCP calculated how the banks' balance sheets would handle an 2008 Irish-style loss on the high risk loans. It estimated that 50 per cent of the equity of Australian banks would be destroyed by soured loans to these high-risk borrowers.

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iehi-feed-62281 Mon, 22 May 2017 14:58:37 GMT Car loans, low rates, second mortgages: all the ingredients for a new credit crunch (UK) http://implode-explode.com/viewnews/2017-05-22_Carloanslowratessecondmortgagesalltheingredientsforanewcreditcru.html A credit crunch is brewing and when it happens, the UK is going to get hurt. That is the message emerging from senior executives in the financial services industry, who do not think Britain has changed that much since the 2008 credit disaster and the devastating crash that followed. Three developments lie at the heart of this disturbing analysis: spectacular growth in the sale of second mortgages, car loans and credit cards.

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Officials at the Bank have a growing list of concerns. Not only is there the second mortgage problem and the number of car loans: figures show consumer spending on unsecured credit has also rocketed in the last year. In March alone, the amount UK consumers owed on loans and cards grew by £1.9bn, the highest figure in 11 years.

Households are known to have increased their reliance on short-term unsecured loans to buy cars and furniture, and to kit out new kitchens. Some use them to maintain their lifestyle in the face of a decade of flat wages. Unfortunately, another group use credit to pay the monthly rent.

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Try as they might, the UK's two big high street lenders cannot put the financial crisis behind them. Last week, when Lloyds Banking Group was congratulating itself over its return to the private sector, it was still being haunted by the fraud perpetrated at the Reading branch of HBOS, the hotshot lender it rescued in 2008. To add to the pressure, Noel Edmonds, the TV celebrity, is leading the campaign for compensation for the victims of the fraud which took place in the run-up to the financial crisis.

This week, Royal Bank of Scotland will be transported back to those calamitous days of 2008. A high court judge will begin hearing a claim for compensation from investors who backed a £12bn cash call by RBS in April 2008 -- only for the Edinburgh-based institution to be bailed out by taxpayers six months later.

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iehi-feed-62277 Sun, 21 May 2017 18:02:38 GMT A Quarter Of American Adults Can't Pay All Their Monthly Bills; 44% Have Less Than $400 In Cash http://implode-explode.com/viewnews/2017-05-21_AQuarterOfAmericanAdultsCantPayAllTheirMonthlyBills44HaveLessTha.html iehi-feed-62275 Sat, 20 May 2017 19:30:34 GMT Home ownership among young families halves in 20 years (UK) http://implode-explode.com/viewnews/2017-05-20_Homeownershipamongyoungfamilieshalvesin20yearsUK.html iehi-feed-62274 Sat, 20 May 2017 14:35:02 GMT The Housing Moment Investors Dread Is Here http://implode-explode.com/viewnews/2017-05-20_TheHousingMomentInvestorsDreadIsHere.html The May University of Michigan Consumer Sentiment survey showed a six-year low among those who think it's a good time to buy a house and a 12-year high among those who say it's a good time to sell. Disparities of this breadth tend to coincide with break points and that's just where we've landed in the cycle.

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The silver lining in the dynamic that's just beginning to play out is what pricing pressures on the home front imply for the future of household finances -- that is after the recession comes and goes. The cost to rent and buy has never been as high as it is today for the average working young American. The preponderance of apartments constructed in the current cycle has been luxury units. At the same time, private equity investors with deep pockets swooped in and bid up the price of rental homes, leaving many would-be first-time homebuyers and renters alike with no choice but to remain at home with their parents after graduating from college.

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iehi-feed-62271 Fri, 19 May 2017 17:56:43 GMT Trump Admin's Mnuchin Backtracks on Glass-Steagall http://implode-explode.com/viewnews/2017-05-19_TrumpAdminsMnuchinBacktracksonGlassSteagall.html iehi-feed-62270 Fri, 19 May 2017 17:50:24 GMT ECB Tapering May Trigger "Disorderly Restructuring" of Italian Debt, Return to National Currency http://implode-explode.com/viewnews/2017-05-19_ECBTaperingMayTriggerDisorderlyRestructuringofItalianDebtReturnt.html Since 2008, 88% of government debt net issuance has been acquired by the ECB and Italian Banks. At current government debt net issuance rates and announced QE levels, the ECB will have been responsible for financing 100% of Italy's deficits from 2014 to 2019. But now there's a snag... The ECB has already reduced the rate of purchases to €60 billion a month. And it plans to further withdraw from the super-expansionary monetary policy.

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Astellon Capital's report on Italy's dependence on ECB bond purchases poses the question: If the ECB tapers its purchase of Italian bonds further, who would pick up the slack?... According to Astellon , the only long-term solution to this problem is to carry out an orderly restructuring of Italian debt. In fact, by this stage in proceedings, the stark choice is between an orderly or disorderly restructuring of Italy's debt... [the latter] would significantly increase the likelihood of an Italian exit from the Eurozone.

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iehi-feed-62269 Thu, 18 May 2017 14:41:12 GMT Households owe record amount, topping pre-recession peak http://implode-explode.com/viewnews/2017-05-18_Householdsowerecordamounttoppingprerecessionpeak.html The Federal Reserve Bank of New York said Wednesday that household debt, which also includes home equity lines of credit, stood at $12.73 trillion in the first quarter. That's above the $12.68 trillion outstanding in the fall of 2008, the previous record. The figure isn't adjusted for inflation or population size.

Even with debt levels back to record heights, analysts note that household borrowing appears more sustainable now than it did nearly a decade ago. Interest rates are lower, and lenders are much more focused on credit-worthy borrowers.

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iehi-feed-62254 Tue, 16 May 2017 13:52:09 GMT Goldman Says Swedish, Kiwi Housing Markets Most at Risk of Bust http://implode-explode.com/viewnews/2017-05-16_GoldmanSaysSwedishKiwiHousingMarketsMostatRiskofBust.html iehi-feed-62252 Tue, 16 May 2017 13:42:51 GMT Now That Fed Won't Be Easing, What of "Easy Money Benefits the Poor" Argument? http://implode-explode.com/viewnews/2017-05-16_NowThatFedWontBeEasingWhatofEasyMoneyBenefitsthePoorArgument.html iehi-feed-62248 Mon, 15 May 2017 22:55:27 GMT Global property bubble is ready to pop http://implode-explode.com/viewnews/2017-05-15_Globalpropertybubbleisreadytopop.html iehi-feed-62228 Thu, 11 May 2017 14:51:12 GMT Six Canadian Banks Cut by Moody's on Consumers' Debt Burden http://implode-explode.com/viewnews/2017-05-11_SixCanadianBanksCutbyMoodysonConsumersDebtBurden.html Canada's dollar and bank bonds declined after Moody's Investors Service downgraded the nation's banks for the first time in more than four years, signalling that soaring household debt combined with runaway housing prices leave the lenders more vulnerable to losses.

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The downgrade of the Canadian banks follows a recent run on deposits at alternative mortgage lender Home Capital Group Inc. that has sparked concern over a broader slowdown in the nation's real estate market as Canadians are taking on higher levels of household debt. The firm's struggles have taken a toll on Canada's biggest financial institutions, which have seen stocks slide on concern about contagion.

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iehi-feed-62227 Thu, 11 May 2017 14:49:41 GMT 'Stagnant' buyer demand puts the brakes on UK housing market | Business | The Guardian http://implode-explode.com/viewnews/2017-05-11_StagnantbuyerdemandputsthebrakesonUKhousingmarketBusinessTheGuar.html iehi-feed-62225 Thu, 11 May 2017 14:34:19 GMT New York apartment concessions rise as rents fall http://implode-explode.com/viewnews/2017-05-11_NewYorkapartmentconcessionsriseasrentsfall.html