Still no easy paths to finance for first time home buyers

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Still no easy paths to finance for first time home buyers

Despite the strenuous efforts of the UK treasury to push the banks to ease credit conditions for first-time buyers and those trying to upgrade but with limited equity are finding it difficult to raise finance , with the problem increasing instead of declining according to figures released yesterday. The figures, issued by the Council of Mortgage Lenders (CML) showed a decrease in mortgage lending activity in January 2009. Less than 25,000 new house purchase loans were approved, half of the figure from the corresponding month last year and down a quarter from December 2008.

The reason for the decline in sales and mortgage lending is reckoned to be largely due to the continued uncertainty in the UK economy, coupled with the fact that ,while prices have fallen by around twenty percent from when they were reckoned to have peaked in 2007, most potential buyers are still hanging back in anticipation of further devaluation. Learning from previous mistakes, lenders are now demanding much higher deposits, and have set considerably higher salary levels for loan repayment. These two issues, together or separately, continue to place that first home out of the reach of most UK families for the time being.

Depressing news for home owners coming out of CML's report is that financial experts now say that house prices could still fall a further fifty per cent to fall.

On the business news front, indications are that UK investors will be looking at some pretty sparse dividend pay outs in 2009, with estimates of shortfalls of over twenty billion pounds as compared to 2008 being bandied. The reason being given for the lack of dividend distribution is that UK companies prefer to protect their balance sheets in this era of recession.

On the FTSE Thursday there was some positive news about as things in the market appear to be stabilizing, causing a brief flurry in share buying activity. Banks and continued to show improvement, while mining and insurance were on a downturn.

Antofagasta, who own copper mines in Chile saw their shares fall by seven percent as the price of the metal retreated.

The largest British based insurance company, Avista sank by fourteen percent as Citigroup Inc. analysts warned that the company could be carrying “too much risk."

Shares in the world’s largest mining company BHP Billiton Ltd., also by fell 3.7 percent to 1,281 pence. This was also after analysts lowered earnings estimates for the group. Reasons for the fall in value of BHP shares were not necessarily due to the company's mining activities but more likely because of the continuing reduction in crude all prices. Apart from their mining interests, BHP is also Australia’s biggest oil and gas producer.

U.K.-based engineering company Amec Plc suffered a drop in share value of 2.2 percent (11.5 pence to 523). Amec who employ 23,000 employees around the globe announced as 42 percent decline in 2008 profits

On the up were shares in the U.K. satellite company Inmarsat Plc. Inmarsat's shares rose by three percent (13 pence to 443) on reports of growth across all business sectors. The company, which provides a wide range of communications services, reported a considerable rise in their 2008 earnings

The FTSE 250 index rose by 2.49% on Thursday or 151.21 points to 6213.03 while the FTSE 100 finished the session up 2.12 per cent, or 78.87 points, higher at 3,790.93

On the currency markets the Pond was also looking chirpier, with minor increase across the board.

Pound/US dollar 1.3984
Pound/Euro 1.00847
Pound/Japanese Yen 137.69
Pound/Swiss Franc 1.660

In the US, there were a few smirks around, possibly as Bernard Madoff was sent off to spend the next one hundred and fifty years regretting the follow of his ways. At around $300 million dollars a year, who said that crime doesn’t pay.

On Wall Street, the Bank of America reported a long awaited return to being in the black in January and February, and U.S. retail sales for February showed a bearable drop. The market reacted by sending the Dow Jones Average up 3.5% on the day.

Shares rose by 239. 66 points to 7170.06 while the NASDAQ also rose by a respectable 54.45 points to 1426.1