Since I wrote the blog about people shielding themselves from the realities of our economic climate with Joo Janta 200 Super-Chromatic Peril Sensitive Sunglasses, it appears that many people have taken them off!
The FTSE 100 fell below 5000 and Banks stopped lending to each other again for a while as a chill ran down the spine of the financial markets.
Zorba the Greek was the problem and had been spending too much time in the sun and instead of repaying his debts.
The international investors I referred to in my Joo Jants blog have frozen Greece out, in just the way I had suggested they may do to the UK.
However, it has been a relatively good event for the UK as gilts have been seen as a safe haven and on this basis we can still raise enough to repay our massive borrowing, for the time being anyway. But this does little to help us fund UK mortgages.
I’m sure by the time you read this the FTSE 100 will be bouncing back, but this episode illustrates the problems we continue to have in funding the UK mortgage market.
If Governments are finding it difficult, what hope is there for UK mortgage lenders of delivering products to satisfy UK broker demand?
World economy fundamentals are still the same, too much debt in the west and too much under used productivity in the east.
Added to this the US housing market is still imploding. The US government's tax credit programme, which subsidizes buyers, finished at the end of April and signs indicate that US housing is still in decline.
This has had a negative effect on regional Banks in the US with 73 US banks having gone bust so far in 1010 and 140 having failed in 2009.
We are not immune in the UK from falling house prices, although the Nationwide and Halifax index’s show that house prices have risen over the last year, house prices in relation to the price of gold have fallen by 70% in the UK.
This is because the pound has fallen against the dollar and not only is gold priced in dollars it continues to rise. It’s not that UK house prices have gone up it’s that the pound is not worth much in the eyes of international investors.
With these world-wide issues how will the UK mortgage market keep funding itself? It is great to see new lenders coming back into the UK market.
Well done Colin and Alan with the launch of Aldermore and Precise Mortgages but the amount of funding they have will not make a great difference at the moment.
Strategically their decision to get back into UK lending is spot on. Get in now and establish the brand and the distribution network for when the market gets back to normal.
But, what is normal and when will we get back? We need the new Government to take a long hard look at how they can fill the funding gap, get the securitization markets open for business again and boost non Bank funding.
Come on Dave and Nick - get your skates on!
