More Thoughts on the Economy Part IV

By Andy Shaw | January 25, 2010

Originally Posted 7th January 2009

Further Regulation is Needed…Well at Least That’s What They Want Us to Think

Hector Sands, Chief Executive of the FSA, basically admitted that no amount of regulation would have stopped this crisis and I agree 100%. To think you can regulate in advance of changing sentiment is wholly ridiculous. The problem is that they are now going to try to do just this, as something has to be blamed and this is going to be found in the human element.

Read the rest of this entry »

Topics: Government, The Economy | Comments Off

More Thoughts on the Economy Part III

By Andy Shaw | January 25, 2010

Originally Posted 6th January 2009

What Now for Monetary Policy?

The 8th Jan is nearly upon us and despite this it’s going to be good news for us property investors. Conventional monetary policy ease, through which central bank target interest rate cuts, at present is nearly useless at guiding the economy. Over the next few months we in the UK will join Japan, USA and Switzerland on rates that are at a maximum of 0.5%. But with these monumental cuts our economy is still in freefall and  will continue to remain so after these cuts have taken shape.

Read the rest of this entry »

Topics: Government, The Economy | Comments Off

More Thoughts on the Economy Part II

By Andy Shaw | January 25, 2010

Originally Posted 5th January 2009

The Unthinkable Political Turnaround Could Actually Happen

To my regular readers I have made it quite clear that I think the likelihood of Gordon Brown being re-elected is about as likely as me learning rocket science. However, a recent series of illusions with more still to come could see this trick of walking on water actually happen.

Read the rest of this entry »

Topics: Government, The Economy | Comments Off

Quantitative Easing and Mortgage Availability

By Andy Shaw | January 25, 2010

Originally Posted 2nd January 2009

A Question From A Site Member:

Hi Andy Given the Fed’s decision in the US to go down the path of “quantitative easing” (my understanding is that in essence this means making more money available for the banks to lend) and the likelihood that this will (albeit eventually) happen in the UK, what impact do you think this will have on the availability of reasonably priced mortgages in the UK? Like many people on the site I am seeing amazing deals but access to funds at 70% or even 60% LTV mean that there are very few at the moment that I can actually go for. The UK also follows the quantitative easing path then should we see cheaper and better mortgages soon? Or am i being blindly optimistic again? All the best Andrew

Firstly the governments are saying that they are adding this money in so that there is more money going to be available for lending. I think the truth is somewhat different.

They are making quantitative easing more paletable for everyone by saying this, in truth there is plenty of money about with those that have it but frankly they don’t want to lend it, and what’s worse is that the majority don’t want to borrow it, and the ones that do want to borrow it are the ones the banks don’t want to lend it to.

For example I spoke with a bank manager in Cyprus last week who explained the mortgage deal he was finding it easiest to get through right now. You want to buy a property for 300k, well if you deposit 300k with him, he’ll pay you 6.75% interest on it. And if you leave it with him then he’ll give you 100% mortgage against these funds and charge you are rate of just 7%…meaning that you are only paying 0.25% to use your own money to buy that property (yes, I know it is mad, but this is the world we are living in right now).

Also ‘Buy-to-let’ is considered ‘sub-prime’ and therefore no bank really wants more of that on their balance sheet. So I see these extra funds just coming in as cashflow to the banks and very little being lent out. The BoE know this, but then they get paid on the money so why wouldn’t they want to pump more into the system (I’m being somewhat unfair there).

But the politicians know that the economy needs loans otherwise it will die. So I’d say shortly we will see more money following in from funds released purely to make loans in certain markets. These of course will be government guided choices so therefore will not likely be in the right place. Then when the banks fail to get the money out fast enough, I’d say the government will start to use its own companies to get the money on the street (HBOS, Lloyds, RBS and our favourite Bradford and Bingley).

The trouble is all of this is going to take time and the economy needs fast progress, these idiots (for lack of a more apt description) think what is going on is under control, wait until you read that line again in 9 months time when we are really in trouble. Basically all I said in a recent article needed to have already happened and the predictions I have made as to what will happen if they do not do it are unfortunately closer to becoming a reality. Frankly I don’t think we can stop it now.

However, all that gloom said, I do think better deals will become available within the next 4 months, that’s too general, I think workable re-mortgages will become available in that timeframe. How long they hang around for though is a little more dodgy. I think efforts will be made to keep the credit supply flowing and bearing in mind that by that time we will be under a year away from an election I think he will be using a lot more of the tools he has available.

If Gordon Brown gets this right, which in itself will create a floor in the housing market, then 80% mortgages will come back onto the table as well. Now given the yields and direct money supply that should mean competition for clients starts to show up again and that will mean an almost overnight change in the lending for the banks. I.e. they will have good deals at the right price, however, that’s if he applies some of the suggestions I’ve made, or if a ‘new’ problem occurs to help make this a must solve problem then we could see a real change.

Frankly I think the next six months are going to be tough for property investors until the deals start coming, then the following six will either get better or worse depending on what actions the government have taken.

The answer is to not rush in, but to buy and retract your money and then buy again, this is not the time to be taking big risks. Small movements forward, consolidate then move again.

Best wishes

Andy

Topics: Free Content, The Economy | Comments Off

More Thoughts on the Economy Part I

By Andy Shaw | January 25, 2010

Originally Posted 2nd January 2009

I am going to release a series of these over the next week or so, as there is quite a lot to cover.

UK Property – Research is a Property Investors Best Defence Against the Dark Side Which is Better Known as ‘The Media’

I’m back from Cyprus now and have been more connected to the UK news. The talk of the housing market slump seems to be one of the many stories that the media loves right now. So I did what the vast majority of people don’t do…which is of course, their own research. To begin with I looked into the areas where I bought the vast majority of my portfolio.

Read the rest of this entry »

Topics: Government, The Economy | Comments Off

Full Steam Ahead Towards The Iceberg Of Depression *Update*

By Andy Shaw | January 25, 2010

Originally Posted 17th December 2008

Quick update following the release of the minutes of the MPC meeting:

This update is about why the Bank of England only went to 1% when they clearly should have done more.

The following excerpt is taken from their minutes:

Read the rest of this entry »

Topics: Government, The Economy | Comments Off

Some Thoughts on the Economy

By Andy Shaw | January 25, 2010

Originally Posted 16th December 2008

Here are a few thoughts I have at the moment. They don’t really offer any conclusions, just hopefully raise some awareness of what’s going on.

What Will The Policy Makers Offer Next?

We are entering an undiscovered world at the moment where the economical theorists have only ever ventured before from the safety of their classrooms and libraries. What I mean by that, is that until now there are only a few theories and a few relatively poor examples for the money makers to follow; Japan and the 1930’s. And with both of those examples there are simply too many differences, which makes them poor.

Read the rest of this entry »

Topics: Government, The Economy | Comments Off

WARNING: Your Financial Well Being Is At Stake

By Andy Shaw | January 25, 2010

Originally Posted 15th December 2008

Below you’ll find a report containing what I consider to be some of the most important financial advice I have ever given.

This report was first published on my blog but as it was primarily intended for my site members, I have reproduced it here along with the comments given thus far

Read the rest of this entry »

Topics: Free Content, The Economy | Comments Off

Full Steam Ahead Towards The Iceberg Of Depression

By Andy Shaw | January 25, 2010

Originally Posted 12th December 2008

This week we saw the Bank of England reduce their base rate by a further 1%. My first word on hearing the policy makers decision on Thursday was F**k! Though not for the reason you’ll be thinking but because I was very disappointed. I’m wearing two hats here really. I was happy from the point of view of having at least 85% of my portfolio on tracker mortgages and saving an extra five figures a month in interest payments, but I was disappointed that yet again the Bank of England had missed the cue.

Read the rest of this entry »

Topics: Government, The Economy | Comments Off

How 99% of Property Investors Are Avoiding Making Future Gains And How You Can Avoid Being One Of Them

By Andy Shaw | January 25, 2010

Originally Posted 25th November 2008

The Bank of England has been asleep at the wheel for a long time now as my long time readers are well aware and for those who doubt this they only need to consider that just two months ago they actually considered raising interest rates…and one member actually voted for it! Now two months on they have already reduced rates by 2% with more cuts coming next month and in January. So I think it is time that everyone woke up to the opportunity that is being presented to them.

Read the rest of this entry »

Topics: Property | Comments Off

« Previous Entries Next Entries »