PPCC: Pisitófilos Creditófagos. Verano 2023

[Derby]

El fantasma de la subida de tipos de principios de los 90 y la "negative equity"...
No me salen bien los gráficos, a ver si Cadavre luego me echa un mano.

https://www.telegraph.co.uk/personal-banking/mortgages/britain-mortgage-crisis-worst-30-years-avoid-disaster/

Britain’s mortgage crisis is the worst for 30 years – this is how we can avoid disaster

(...) What is a mortgage crisis? It is defined by a sharp rise in numbers of borrowers in payment arrears and in those losing their homes through repossession. The two previous crises were in 1991-95 and in 2009-11. The questions are, how bad is the current crisis going to be and are there policy lessons from the past?

In research for the Government in 2016, we showed that the economic drivers of arrears and repossessions in past crises were rising negative equity – where debt exceeds the value of the home, rising debt service-to-income costs, and unemployment. We found that income support for distressed borrowers and increased forbearance and generous refinance options from lenders softened the blow.

Currently there is high and entrenched inflation. Interest rates are expected to rise and may peak at the end of 2023, then take years to recede. Current inflation has foreign sources, from Brexit and high gas prices, and the pandemic-related disruption to global supply chains.

The Bank of England currently can have only a limited influence on inflation. Had the models at the Bank predicted the rise, earlier action might have constrained inflation to a degree. Their models lack “threshold effects” where shocks exceeding a threshold cause a large reaction (such as wages’ response to price rises). Weak models of consumer spending caused the Bank to under-estimate the post-Covid demand surge.



The UK has predominantly short-term mortgage fixes and adjustable rates: higher interest rates quickly feed into big rises in servicing costs for mortgages. This contrasts with mainly ten-year fixes in the US, Germany and France. This links to the UK’s volatile history of interest rates and inflation, and especially of housing price booms and busts. There are ways to address this.

Poorly regulated lending standards featured in the previous crises but far less so today. The 1991-5 crisis followed the 1980s boom in credit and house prices, after deregulation of mortgage markets, often resulting in overly lax lending standards. The house price boom was fuelled at its height by replacing the property tax – domestic rates – by the community charge, better known as the poll tax.

Another difference with past crises is that even with recession, unemployment is likely to be moderate in the current tight labour market, suggesting fewer housing arrears and repossessions from this source. Also, with inflation far worse than in the 1990s or in 2009-11, nominal house prices will not fall far, suggesting that negative equity will be less of a problem than in the past.



However, the household debt service-to-income ratio is now far higher. The combination, for stretched mortgage borrowers, of 13 years of austerity and stagnant real incomes, exacerbated by food and energy price rises, is devastating. Many households are vulnerable to housing arrears and repossessions from this source. Stagnant real incomes are linked with the past lack of investment in human capital, innovation and infrastructure, badly affecting productivity growth.

Moreover, landlords are passing on costs in a new rental crisis. Rent controls were finally eliminated in 1989 when public sector rents were a larger part of housing. Selling off at half price much of the stock of council houses without replacing affordable housing has worsened the housing crisis.

Inflationary pressure from private landlords thus matters more. Moreover, with low interest rates encouraging the Government’s pension fund liberalisation, it failed to provide a safe, low-fee investment fund for savers. Many resorted to buy-to-let housing purchases, fuelling house prices.

On balance, the incipient mortgage crisis of 2023-25 is likely to be worse than 2009-11 but probably less severe than 1991-95.



Our top housing policy reforms are: reform the planning system to incentivise building, use land value capture to pay for infrastructure costs and make housing more affordable, and gradually introduce a market-related type of property taxation that does not penalise the poor unfairly as it does today. And we would offer some protection against likely arrears and repossessions for the most vulnerable.

As these reforms take time to implement, an early start is advisable.

[Derby]

https://www.marketwatch.com/story/home-buyers-now-need-117-100-in-annual-income-to-afford-a-median-priced-home-harvard-report-says-6bc77cb9

Home buyers now need $117,100 in annual income to afford a median-priced home, Harvard report says

There’s been a significant increase in homeownership costs since last year, when a household earning $97,400 could afford a median-priced home.

https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2023.pdf

[Derby]

https://www.ft.com/content/a37036c2-9431-4c44-b264-f8e341ed8a2c

So long, and thanks for all the fixed-rate mortgages?

A hitchhiker’s guide to the housing market

(...)According to the Bank, over 400,000 owner-occupier mortgagors will see their fixed rate deals expire over each of the coming quarters. That’s a lot of people measured in football stadia capacity. But it’s not a lot compared to the total 7.5mn owner-occupier mortgagors. And it’s less than 1.5 per cent of the 28.2mn households in the UK.

To put it plainly, we have shifted from a world where a meaningful part of the monetary policy transmission mechanism consisted of subjecting large numbers of indebted households to small and incremental amounts of financial stress, to one in which a small number of indebted households are incrementally subjected to large amounts of financial stress.

If rates stay at these levels for the next five years, they will all eventually have their fixed rates reset higher. And as Neal Hudson and Tim Harford discussed on Radio Four’s More or Less, with loan-to-income ratios substantially higher than they were in the 1970s or 1980s, current mortgage rates ‘feel’ like a much bigger deal than they did the last time they were at around 6 per cent. Or, in the words of Tim Harford “6 per cent of a big number is the same as 13 per cent of a smaller number”.

Households needing to re-fix their mortgages in a couple of years may be actively hoping that the financial pain suffered by current re-fixers is sufficient to cool economic activity, dampen inflation expectations, and lead the Bank to cut rates before they get to the front of the queue.

I wonder what Douglas Adams would’ve made of it.

[Cadavre Exquis]

El fantasma de la subida de tipos de principios de los 90 y la "negative equity"...
No me salen bien los gráficos, a ver si Cadavre luego me echa un mano.

Britain’s mortgage crisis is the worst for 30 years – this is how we can avoid disaster
Lessons can be learned from Britain’s volatile history of housing price booms and busts

John Mueller · University of Oxford | Janine Aron · University of Oxford | 21 June 2023

A shocked friend recently shared a letter from her lender: after her two-year mortgage fix ends in September, her interest rate could jump from 1.85 to 7.5pc.

Since rates began to rise in January 2022, around two million fixed-rate deals have expired; this rises to around 4.4 million by December 2024. For the many borrowers on variable rate mortgages, the hit to their finances has already begun.

What is a mortgage crisis? It is defined by a sharp rise in numbers of borrowers in payment arrears and in those losing their homes through repossession. The two previous crises were in 1991-95 and in 2009-11. The questions are, how bad is the current crisis going to be and are there policy lessons from the past?

In research for the Government in 2016, we showed that the economic drivers of arrears and repossessions in past crises were rising negative equity – where debt exceeds the value of the home, rising debt service-to-income costs, and unemployment. We found that income support for distressed borrowers and increased forbearance and generous refinance options from lenders softened the blow.

Currently there is high and entrenched inflation. Interest rates are expected to rise and may peak at the end of 2023, then take years to recede. Current inflation has foreign sources, from Brexit and high gas prices, and the pandemic-related disruption to global supply chains.

The Bank of England currently can have only a limited influence on inflation. Had the models at the Bank predicted the rise, earlier action might have constrained inflation to a degree. Their models lack “threshold effects” where shocks exceeding a threshold cause a large reaction (such as wages’ response to price rises). Weak models of consumer spending caused the Bank to under-estimate the post-Covid demand surge.

SOURCE: RESOLUTION FOUNDATION

The UK has predominantly short-term mortgage fixes and adjustable rates: higher interest rates quickly feed into big rises in servicing costs for mortgages. This contrasts with mainly ten-year fixes in the US, Germany and France. This links to the UK’s volatile history of interest rates and inflation, and especially of housing price booms and busts. There are ways to address this.

Poorly regulated lending standards featured in the previous crises but far less so today. The 1991-5 crisis followed the 1980s boom in credit and house prices, after deregulation of mortgage markets, often resulting in overly lax lending standards. The house price boom was fuelled at its height by replacing the property tax – domestic rates – by the community charge, better known as the poll tax.

Another difference with past crises is that even with recession, unemployment is likely to be moderate in the current tight labour market, suggesting fewer housing arrears and repossessions from this source. Also, with inflation far worse than in the 1990s or in 2009-11, nominal house prices will not fall far, suggesting that negative equity will be less of a problem than in the past.

SOURCE: MONEYFACTS

However, the household debt service-to-income ratio is now far higher. The combination, for stretched mortgage borrowers, of 13 years of austerity and stagnant real incomes, exacerbated by food and energy price rises, is devastating. Many households are vulnerable to housing arrears and repossessions from this source. Stagnant real incomes are linked with the past lack of investment in human capital, innovation and infrastructure, badly affecting productivity growth.

Moreover, landlords are passing on costs in a new rental crisis. Rent controls were finally eliminated in 1989 when public sector rents were a larger part of housing. Selling off at half price much of the stock of council houses without replacing affordable housing has worsened the housing crisis.

Inflationary pressure from private landlords thus matters more. Moreover, with low interest rates encouraging the Government’s pension fund liberalisation, it failed to provide a safe, low-fee investment fund for savers. Many resorted to buy-to-let housing purchases, fuelling house prices.

On balance, the incipient mortgage crisis of 2023-25 is likely to be worse than 2009-11 but probably less severe than 1991-95.

SOURCE: HAMPTONS, ONS, BOE

Our top housing policy reforms are: reform the planning system to incentivise building, use land value capture to pay for infrastructure costs and make housing more affordable, and gradually introduce a market-related type of property taxation that does not penalise the poor unfairly as it does today. And we would offer some protection against likely arrears and repossessions for the most vulnerable.

As these reforms take time to implement, an early start is advisable.
John Muellbauer is professor of economics and Janine Aron is a senior research fellow. Both work at the Institute for New Economic Thinking at the University of Oxford

Saludos.

[Derby]

https://www.reuters.com/markets/europe/german-recession-will-be-sharper-than-expected-ifo-2023-06-21/

German recession will be sharper than expected: Ifo

BERLIN, June 21 (Reuters) - The German economy will contract more than previously expected this year as sticky inflation takes its toll on private consumption, the Ifo Institute said on Wednesday while presenting its forecasts.

"The German economy is only very slowly working its way out of the recession," Ifo's head of economic forecasts, Timo Wollmershaeuser, said.

German gross domestic product is expected to fall by 0.4% this year, more than the 0.1% forecast by the Ifo Institute in March.

"When we compare Germany with our main trading partners, these countries are at least expected to post growth," Wollmershaeuser said. Ifo forecasts eurozone GDP will expand by 0.6% this year and the U.S. by 0.9%.

The economic institute has also cut the forecasts for Germany in 2024 to 1.5% GDP growth, down from the 1.7% it previously expected.

Inflation is forecast to ease slowly from 6.9% in 2022 to 5.8% this year, down to 2.1% in 2024. Regarding core inflation, the Ifo Institute forecasts it will increase to 6% this year from 4.9% in the previous year, before falling to 3% in 2024.

Due to inflation, private consumption will fall by 1.7% this year, the economic institute forecasts. It will not rise again until 2024, when it is expected to post a 2.2% increase.

The number of unemployed will rise slightly in 2023, but the unemployment rate will remain unchanged from the previous year at 5.3% this year, rising to 5.5% in 2024.

New government borrowing will fall from 106 billion euros ($115 billion) in 2022 to 69 billion this year and 27 billion next year, according to Ifo's estimates.

[Cadavre Exquis]

https://twitter.com/jluiscava/status/1671438767469502464

José Luis Cava | Fed's Jefferson, in testimony, says inflation has 'started to abate'. 21/6/23-10h

Hola qué tal, muy buenas, y como pueden ver ustedes bochornosos días desde Madrid.

La inflación ya ha comenzado a reducirse, y no lo digo yo, lo ha dicho Philips Jefferson, que es un miembro del Consejo de gobernadores del sistema de la Reserva Federal, y lo ha dicho en el Comité Bancario del Senado de los Estados Unidos.

Tal y como pueden ver ustedes, lo ha recogido así Reuters:

José Luis Cava | Fed's Jefferson, in testimony, says inflation has 'started to abate'. 21/6/23-10h [00:00:20]

Bueno, ¿y por qué ha dicho esto? Muy fácil, ustedes saben perfectamente que la inflación el IPC ha caído, y ustedes saben perfectamente que ha caído por la por el descenso del precio de la energía, pero cuando vamos a la inflación subyacente todo el mundo dice: "Ay Ay Ay Ay", la inflación subyacente sigue estando muy alta.

Vamos a ver cuál es el componente principal de la inflación subyacente. Fíjense en el detalle, nos vamos a fijar en el precio de los alquileres, en el coste del alojamiento; bueno el coste del alojamiento representa aproximadamente el 36% de la cesta del IPC, pero fíjense ahora y el 43% del IPC subyacente –que es una barbaridad– por lo tanto, tal y como nos dijo Powell en su comparecencia tras la última reunión del fondo: "nosotros estamos vigilando el precio de los alquileres"; claro, porque si la energía ya ha caído y el precio de los alquileres se mantiene alto, cuando el precio de los alquileres empiece a descender nos encontraremos que el IPC caerá con decisión y el subyacente también.

Bueno vamos a ver cuáles son los índices de los alquileres, miren:

José Luis Cava | Fed's Jefferson, in testimony, says inflation has 'started to abate'. 21/6/23-10h [00:01:29]

En este gráfico les hemos hemos recogido tres líneas: una línea azul que representa el índice Zillow; otra línea verde que representa el precio de los alquileres –el coste de los alquileres de apartamentos– y luego, ven ustedes que hay una línea roja. Bueno, esa línea roja representa el índice de alquileres de la residencia principal, la que se tiene en cuenta para elaborar el IPC. Vamos a la línea azul para hacerlo sencillo. La línea azul representa el índice Zillow, y en este índice se tienen en cuenta los nuevos alquileres. Ven ustedes que la inflación, el ritmo del crecimiento del precio de los alquileres, subió con fuerza y ahora la línea azul ha caído, esto significa que la inflación está disminuyendo los nuevos alquileres. Si ahora se van ustedes a la línea roja ven ustedes que la línea roja ha hecho un máximo, se ha girado a la baja, y ahora Jefferson lo que nos ha dicho es que la inflación va a empezar a caer. Hombre Jefferson, si tú nos dices que la inflación va a empezar a caer es porque has visto que el precio de los alquileres ha empezado a caer. Fíjense en la línea roja, a la hora de elaborarse se tienen en cuenta todos los alquileres, no se tienen en cuenta los últimos, sino que todo, se ponderan por igual. Entonces, nos encontramos que a medida que se vayan incorporando los nuevos alquileres el coste total de los alquileres disminuirá y la línea roja cerá, y está la razón por la que Jefferson nos dice que ya la inflación ha comenzado a reducirse.

Ahora bien ustedes no caigan en la trampa, todavía no hay que comprar bono americano porque todavía el sistema la Reserva Federal no ha recortado el tipo de interés de los fondos federales.

[...]

Saludos.

[Derby]

https://finance.yahoo.com/news/housing-market-isnt-recovering-send-211422330.html

The housing market isn't recovering and will send home sales to a new low as mortgage rates stay elevated, Pantheon Macroeconomics says

The housing market isn't recovering yet, and home sales will notch a new low, Pantheon Macroeconomics said.

That's due to high mortgage rates, which have continued to shut out buyers and sellers from the market.

Experts don't expect the cost of borrowing to ease meaningfully anytime soon, postponing a recovery in housing.

Home sales are set to slump to a new low, as the US housing market can't start recovering so long as mortgage rates stay elevated, Pantheon Macroeconomics' chief economist Ian Shepherdson said.

"We are baffled by the emerging narrative in the commentariat that housing is now recovering, because it isn't," Shepherdson said in a note on Tuesday, pointing to growing optimism for a housing market recovery as mortgage rates pull back slightly.

The average rate on the 30-year-fixed mortgage moved 6 basis-points lower to 7% over the past week, according to Bankrate's most recent survey.

Meanwhile, mortgage applications increased 7% in the week leading up to June 9, per Mortgage Bankers Association data, and sales of new homes have jumped 20% over the last seven months.

But Pantheon said that doesn't change the bigger picture in the housing market, which is that a durable recovery won't happen until affordability improves..

Mortgage rates are still hovering near a 20-year-high, and a recovery in home sales is unlikely until mortgage rates begin to drop more meaningfully, Shepherdson said.

But experts have forecasted rates to stay high at least through 2023. Redfin estimates that mortgage rates will pull back to just 6% by the end of the year.

"The bulk of the drop in homes prices is yet to come; the lagged effect of the plunge in sales points to a steep and sustained drop," Shepherdson said. "The housing market is not in the early stages of recovery; the downturn merely is morphing from a collapse in demand, sales, and construction, to falling prices and housing-related consumption spending," he later added.

Experts have sounded the alarm on the US housing market, as higher rates have shut out both prospective buyers and sellers from the housing market, which have sent sales lower and prices higher.

[Cadavre Exquis]

https://www.eleconomista.es/vivienda-inmobiliario/noticias/12335383/06/23/domus-engordara-su-cartera-en-1000-millones-en-alianza-con-dos-grandes-promotoras.html

Saludos.

[Cadavre Exquis]

https://www.pressreader.com/spain/el-economista/20230622/page/16/textview

Amancio Ortega compra su primera nave logística europea en Países Bajos

Saludos.

[Cadavre Exquis]

https://www.eleconomista.es/banca-finanzas/noticias/12331251/06/23/bbva-y-openbank-bajan-el-precio-de-su-hipoteca-fija-pese-a-la-subida-de-tipos.html

Saludos.

[Cadavre Exquis]

https://www.eleconomista.es/transportes-turismo/noticias/12335336/06/23/el-taxi-aplaza-movilizaciones-a-la-espera-la-norma-expres-contra-las-vtc.html

https://www.eleconomista.es/opinion/noticias/12335252/06/23/los-taxistas-kodak-y-las-plataformas-digitales.html

Saludos.

[Cadavre Exquis]

https://www.eleconomista.es/opinion/noticias/12335249/06/23/hacia-un-ano-dificil-para-la-industria-.html

https://www.eleconomista.es/economia/noticias/12334132/06/23/la-industria-en-espana-se-frena-facturo-un-81-menos-en-abril-el-mayor-descenso-en-dos-anos.html

Saludos.

[Cadavre Exquis]

https://www.pressreader.com/spain/el-economista/20230622/page/38/textview

El instituto Ifo prevé que la recesión alemana sea del 0,4%

Saludos.

[Cadavre Exquis]

https://www.eleconomista.es/economia/noticias/12334088/06/23/ayuso-insta-a-los-municipios-a-rebajar-el-impuesto-de-plusvalias-y-a-bonificar-al-95-el-ibi-.html



Saludos.

[Cadavre Exquis]

https://www.pressreader.com/spain/el-economista/20230622/page/32/textview

Escrivá entra en campaña: promete bajas por paternidad de 20 semanas

Aspira a 'ahorrar' 45.000 millones para la jubilación del 'baby boom'

Saludos.