What happened to the Recession and Swine Flu?
Banks and other mortgage lenders, first home buyers and retailers and all rejoicing as Australia appears to have escaped the recession that has swept the World and the dreaded Swine Flu in a single bound!
Swine Flu reported numbers are falling and without a single fatality, and the Reserve Bank of Australia deciding to leave interest rates unchanged at 3 per cent, when the board met today at its June Meeting.
The Rudd government must be dancing in the corridors of Parliament house this afternoon. Expect them to make the Liberal opposition pay now for its criticism of the stimulus package handouts, and First Home Owners Grant boost, which saved the building industry from decline and job losses. The Retail industry must also be thankful as the stimulus reaped them a record April shopping spree. Things are looking good.
The decision to keep interest rates at its 45-year low is good news for the housing industry, home buyers and mortgage lenders because there is money to throw at any weakness the RBA board sees later in the year.
In a statement released this afternoon, Reserve Bank governor Glenn Stevens said there was evidence emerging the global economy is stabilising.
"The turnaround is clearest in China and some other emerging countries," he said.
"Recovery in the major countries is likely to take longer to begin and be slower when it does occur."
Mr Stevens said although the effect of low mortgage rates was yet to be seen, future rate cuts were possible if the economy continued to deteriorate.
"The prospect of inflation declining over the medium term suggests that scope remains for some further easing of monetary policy, if needed."
The Reserve Bank cut the official cash rate by 25 basis points in April ending 425 basis points worth of reductions since September.
The central bank has since indicated it is in no rush to lower rates further as it assesses the impact of its easier monetary policy stance and the Federal Government's stimulus packages.
The stimulus packages have worked their magic and have lifted the retail industry, with figures out yesterday showing consumers spending a record $19.4 billion shopping in April.
Showing posts with label Mortgage Lender. Show all posts
Showing posts with label Mortgage Lender. Show all posts
Tuesday, June 02, 2009
Wednesday, October 08, 2008
Wells Fargo Bank goes bargaining hunting in the mortgage meltdown embers
The US finance sector may well have creatored [John McCain's words, not Mr Mortgage's], but that hasn't stopped Investment Guru and billionaire investor Warren Buffett raked over the smoldering ruins and buying in big into Goldman Sachs, nor a $US15 billion ($19.3 billion) takeover of struggling mortgage lending specialist Wachovia by Wells Fargo Bank [with Warren Buffett in the background]. Not so fast says Citigroup, we had a deal here.
And a New York judge agreed with them in principal, and has blocked the sale pending review of a pre-existing agreement giving Citigroup exclusive rights to negotiate a purchase of Wachovia's banking operations for $US2.2 billion. [What a deal!]
The Citigroup-Wachovia deal was brokered by the Federal Deposits Insurance Corporation, which had agreed to take on potentially hundreds of billions of dollars of future Wachovia loan losses to ensure it went ahead.
The deal was topped on Friday when Wells Fargo, whose biggest shareholder is Mr Buffett, countered with a seven times higher offer that required not a single dollar of support from beleaguered US taxpayers, who last week footed the bill as Congress signed off on a $US700 billion bailout of Wall Street finance and banking firms crippled by the credit crisis.
But the buy price is not the only consideration, as the FDIC supportedthe original Citigroup-Wachovia deal it brokered because under the terms of the Citigroup-Wachovia deal, the FDIC had agreed to take onboard all Wachovia loan losses above $US42 billion.
On Friday FDIC chairman Sheila Bair said she would review all proposals that were on the table and work with the primary regulators of all three banks.
Citigroup, which is reportedly seeking $US60 billion in damages, is counting on the courts upholding the agreement that forbade Wachovia from entering sale negotiations with other parties until after October 6.
The orders issued in the New York Supreme Court on Saturday by Justice Charles Ramos now extend that agreement until further court action between the parties, which are the third largest (Citigroup) and fourth largest (Wells Fargo) banks on Wall Street by stock market value.
In the end, Citigroup may be snookered by a provision in the Wall Street bailout legislation that raises questions about the enforceability of contracts relating to pending acquisitions in which the FDIC is involved.
If it fails, Citigroup will be left with no alternative but to make a better offer.
Wells Fargo had been in the hunt for some time, but a week ago dropped off, leaving Citigroup the only suitor and in a powerful position to squeeze federal authorities for support. But after consultations with its advisers JPMorgan Chase, and Wells Fargo secretly re-entered negotiations with Wachovia late last week and pulled off a stunning deal that caught Citigroup by surprise.
Let's see what happens next, but both Citigroup and Wells Fargo both know that Wachovia is a bargain, especially with the US tax offsets on offer from the bailout package.
And a New York judge agreed with them in principal, and has blocked the sale pending review of a pre-existing agreement giving Citigroup exclusive rights to negotiate a purchase of Wachovia's banking operations for $US2.2 billion. [What a deal!]
The Citigroup-Wachovia deal was brokered by the Federal Deposits Insurance Corporation, which had agreed to take on potentially hundreds of billions of dollars of future Wachovia loan losses to ensure it went ahead.
The deal was topped on Friday when Wells Fargo, whose biggest shareholder is Mr Buffett, countered with a seven times higher offer that required not a single dollar of support from beleaguered US taxpayers, who last week footed the bill as Congress signed off on a $US700 billion bailout of Wall Street finance and banking firms crippled by the credit crisis.
But the buy price is not the only consideration, as the FDIC supportedthe original Citigroup-Wachovia deal it brokered because under the terms of the Citigroup-Wachovia deal, the FDIC had agreed to take onboard all Wachovia loan losses above $US42 billion.
On Friday FDIC chairman Sheila Bair said she would review all proposals that were on the table and work with the primary regulators of all three banks.
Citigroup, which is reportedly seeking $US60 billion in damages, is counting on the courts upholding the agreement that forbade Wachovia from entering sale negotiations with other parties until after October 6.
The orders issued in the New York Supreme Court on Saturday by Justice Charles Ramos now extend that agreement until further court action between the parties, which are the third largest (Citigroup) and fourth largest (Wells Fargo) banks on Wall Street by stock market value.
In the end, Citigroup may be snookered by a provision in the Wall Street bailout legislation that raises questions about the enforceability of contracts relating to pending acquisitions in which the FDIC is involved.
If it fails, Citigroup will be left with no alternative but to make a better offer.
Wells Fargo had been in the hunt for some time, but a week ago dropped off, leaving Citigroup the only suitor and in a powerful position to squeeze federal authorities for support. But after consultations with its advisers JPMorgan Chase, and Wells Fargo secretly re-entered negotiations with Wachovia late last week and pulled off a stunning deal that caught Citigroup by surprise.
Let's see what happens next, but both Citigroup and Wells Fargo both know that Wachovia is a bargain, especially with the US tax offsets on offer from the bailout package.
Wednesday, October 10, 2007
Mortgage lender Northern Rock gets a breath of life as the Bank of England gives new aid package.
The Bank of England threw a fresh lifeline to English mortgage lender Northern Rock overnight, offering to guarantee new retail deposits and extend funding arrangements to give the bank time to salvage something from its battered business.
The latest aid package came as the country's financial services watchdog said Northern Rock may not have needed to draw on emergency funds from the Bank of England (BoE) at all if its rescue had not been conducted in the full public glare.
Northern Rock, which saw a run on deposits last month after it was forced by the global credit crunch to seek an emergency funding line from the BoE, said the new package would cost it STG40 million ($A91.21 million) to STG50 million ($A114.01 million) this year -- around 10 per cent of its targeted 2007 profit.
But the bank said the new help would buy it time to assess its full range of options, which include being taken over as a whole, being broken up or even attempting to remain independent on a smaller scale -- an option largely discounted previously.
The review process should be completed by February, it said.
Analysts said the new arrangements could help to reassure prospective buyers and allay fears of shareholders and bondholders of a firesale of assets.
But the arrangements are also controversial, as the decision to guarantee new retail deposits could potentially give Northern Rock an advantage over competitors.
"If my mother were to ask me where she should put her money at the moment, I would say Northern Rock," Numis Securities analyst James Hamilton said.
"What (prospective) buyers will want to know, is how long these arrangements will last and whether they will continue (after a deal)."
Northern Rock said the arrangements would remain in place "during the current instability in the financial markets" and that it would "pay an appropriate fee ... to ensure that it does not receive a commercial advantage".
Paying a commercial rate should help ease concerns the move could be found to count as undue state aid. The EU Commission said Tuesday it would form an opinion once it had full details.
The government had previously agreed to guarantee retail deposits made with Northern Rock before Sept. 19 -- the day after its initial pledge -- but said moving beyond that would be unfair.
It said on Tuesday, however, that it would extend the guarantee to all new deposits "during the current instability in financial markets".
It also said it would offer additional funding from the BoE on more flexible terms, which will allow Northern Rock to also use commercial lending as and when it can.
News of the agreement lifted Northern Rock's shares, down almost 70 per cent since the crisis began in mid-September. The stock ended the day up 19.9 per cent at 206.75 pence.
Source: Reuters
The latest aid package came as the country's financial services watchdog said Northern Rock may not have needed to draw on emergency funds from the Bank of England (BoE) at all if its rescue had not been conducted in the full public glare.
Northern Rock, which saw a run on deposits last month after it was forced by the global credit crunch to seek an emergency funding line from the BoE, said the new package would cost it STG40 million ($A91.21 million) to STG50 million ($A114.01 million) this year -- around 10 per cent of its targeted 2007 profit.
But the bank said the new help would buy it time to assess its full range of options, which include being taken over as a whole, being broken up or even attempting to remain independent on a smaller scale -- an option largely discounted previously.
The review process should be completed by February, it said.
Analysts said the new arrangements could help to reassure prospective buyers and allay fears of shareholders and bondholders of a firesale of assets.
But the arrangements are also controversial, as the decision to guarantee new retail deposits could potentially give Northern Rock an advantage over competitors.
"If my mother were to ask me where she should put her money at the moment, I would say Northern Rock," Numis Securities analyst James Hamilton said.
"What (prospective) buyers will want to know, is how long these arrangements will last and whether they will continue (after a deal)."
Northern Rock said the arrangements would remain in place "during the current instability in the financial markets" and that it would "pay an appropriate fee ... to ensure that it does not receive a commercial advantage".
Paying a commercial rate should help ease concerns the move could be found to count as undue state aid. The EU Commission said Tuesday it would form an opinion once it had full details.
The government had previously agreed to guarantee retail deposits made with Northern Rock before Sept. 19 -- the day after its initial pledge -- but said moving beyond that would be unfair.
It said on Tuesday, however, that it would extend the guarantee to all new deposits "during the current instability in financial markets".
It also said it would offer additional funding from the BoE on more flexible terms, which will allow Northern Rock to also use commercial lending as and when it can.
News of the agreement lifted Northern Rock's shares, down almost 70 per cent since the crisis began in mid-September. The stock ended the day up 19.9 per cent at 206.75 pence.
Source: Reuters
Monday, October 08, 2007
Westpac Bank throws RAMS a lifeline
Westpac has bought the RAMS brand and franchise network of 92 stores around the country for $140 million - a fraction of what RAMS was worth when the company listed two months ago.
RAMS' share price crashed a month ago when the company revealed the United States credit squeeze was posing funding problems for some of its loans.
Analysts say while the deal would not be the first option for RAMS, it shows Westpac is confident of riding through the credit market crisis.
Good deal
The past two months for RAMS Home Loans have been disastrous.
Just three weeks after listing on the Australian Stock Exchange, its $2.50 share price had crashed to 55 cents.
The company revealed the United States credit squeeze was creating funding problems for $6 billion worth of its home loans.
But today RAMS has received a lifeline. Westpac chief executive David Morgan announced his company has bought the RAMS brand and its shop fronts and agreed to provide up to $2 billion to help the company's funding problems.
"I'm delighted to announce a significant transaction for Westpac, a transaction that expands our distribution reach and provides us with a new growth path," he said.
"On growth, we plan to introduce a broader range of products to complement the RAMS mortgage offering.
"This will initially include a broader set of mortgage products and items such as credit cards, personal loans and general insurance."
RAMS has 92 stores around the country, where customers can go in and purchase a home loan.
The brand is well recognised and the stores are in prime locations in both regional areas and capital cities. This is what a number of banks have been eying off for the past few weeks.
For $140 million, independent banking analyst William Ammentorp says it is a good deal.
"So the big thing is that branch network. A lot of the RAMS franchisees are small businesses operating in local communities," he said.
"They've been providing mortgages and getting people houses for a number of years.
"They pick up those shopfronts and it allows Westpac to perhaps sell Westpac product through those RAMS distribution outlets, but also the opportunity to have yet another outlet to sell through."
"I think Westpac commented it was a 10 per cent uplift in their branch network when this transaction settles."
Solid sector
Mr Ammentorp also says the deal could be a sign Australia has seen the worst of global credit market crisis.
"The larger organisations are doing very well," he said.
"They are very well-capitalised, very well-run, and in times like this it shows just the strength of the Australian banking sector.
"That's not to say there couldn't be difficulties. Northern Rock, the lines around Northern Rock with people withdrawing funds had absolutely no rational basis yet it happened.
"So I'm not suggesting it could happen here, but you never know what can happen in a marketplace.
"But certainly the Australian banking sector and Australian financial services are renowned around the world for being solid and very, very well-run."
The sale is now subject to shareholder approval and is expected to be finalised by January next year.Source: ABC
RAMS' share price crashed a month ago when the company revealed the United States credit squeeze was posing funding problems for some of its loans.
Analysts say while the deal would not be the first option for RAMS, it shows Westpac is confident of riding through the credit market crisis.
Good deal
The past two months for RAMS Home Loans have been disastrous.
Just three weeks after listing on the Australian Stock Exchange, its $2.50 share price had crashed to 55 cents.
The company revealed the United States credit squeeze was creating funding problems for $6 billion worth of its home loans.
But today RAMS has received a lifeline. Westpac chief executive David Morgan announced his company has bought the RAMS brand and its shop fronts and agreed to provide up to $2 billion to help the company's funding problems.
"I'm delighted to announce a significant transaction for Westpac, a transaction that expands our distribution reach and provides us with a new growth path," he said.
"On growth, we plan to introduce a broader range of products to complement the RAMS mortgage offering.
"This will initially include a broader set of mortgage products and items such as credit cards, personal loans and general insurance."
RAMS has 92 stores around the country, where customers can go in and purchase a home loan.
The brand is well recognised and the stores are in prime locations in both regional areas and capital cities. This is what a number of banks have been eying off for the past few weeks.
For $140 million, independent banking analyst William Ammentorp says it is a good deal.
"So the big thing is that branch network. A lot of the RAMS franchisees are small businesses operating in local communities," he said.
"They've been providing mortgages and getting people houses for a number of years.
"They pick up those shopfronts and it allows Westpac to perhaps sell Westpac product through those RAMS distribution outlets, but also the opportunity to have yet another outlet to sell through."
"I think Westpac commented it was a 10 per cent uplift in their branch network when this transaction settles."
Solid sector
Mr Ammentorp also says the deal could be a sign Australia has seen the worst of global credit market crisis.
"The larger organisations are doing very well," he said.
"They are very well-capitalised, very well-run, and in times like this it shows just the strength of the Australian banking sector.
"That's not to say there couldn't be difficulties. Northern Rock, the lines around Northern Rock with people withdrawing funds had absolutely no rational basis yet it happened.
"So I'm not suggesting it could happen here, but you never know what can happen in a marketplace.
"But certainly the Australian banking sector and Australian financial services are renowned around the world for being solid and very, very well-run."
The sale is now subject to shareholder approval and is expected to be finalised by January next year.Source: ABC
Mortgage lender RAMS raises standard variable interest rate
Australian Mortgage lender RAMS has been badly affected by the US credit market crisis. (AFP Photo: Greg Wood)Troubled mortgage lender RAMS says it had no other choice but to pass on another rate rise to its home loan customers.
RAMS has been badly affected by the credit market crisis which placed its funding from US capital markets in jeopardy.
Company chief executive officer Greg Kolivos says the lender has been forced to increase its standard variable interest rate for home loans.
"We've been able to hang on for as long we possibly can, but as we've found with a number of other institutions in the market place, our cost of funding has increased," he said.
"Obviously we expect to stay at higher levels than they were previously and therefore we have had to pass some of that on to consumers."
Pending shareholder approval, the company's distribution business and name will be sold to Westpac for $140 million, but it will still keep its home loan portfolio.
Federal Treasurer Peter Costello says the proposed restructure will strengthen the troubled company.
"This will give added strength to RAMS if that arrangement goes ahead, and I welcome the announcement that's been made," he said.
"It's an in principle announcement and provided all of the parties are in agreement, I think it could be a very positive step forward."
Despite the takeover news, RAMS shares took a battering and at the end of trade had slumped more than 22 per cent to 66 cents. Source: ABC
RAMS has been badly affected by the credit market crisis which placed its funding from US capital markets in jeopardy.
Company chief executive officer Greg Kolivos says the lender has been forced to increase its standard variable interest rate for home loans.
"We've been able to hang on for as long we possibly can, but as we've found with a number of other institutions in the market place, our cost of funding has increased," he said.
"Obviously we expect to stay at higher levels than they were previously and therefore we have had to pass some of that on to consumers."
Pending shareholder approval, the company's distribution business and name will be sold to Westpac for $140 million, but it will still keep its home loan portfolio.
Federal Treasurer Peter Costello says the proposed restructure will strengthen the troubled company.
"This will give added strength to RAMS if that arrangement goes ahead, and I welcome the announcement that's been made," he said.
"It's an in principle announcement and provided all of the parties are in agreement, I think it could be a very positive step forward."
Despite the takeover news, RAMS shares took a battering and at the end of trade had slumped more than 22 per cent to 66 cents. Source: ABC
RAMS investors unhappy after market slaughter of mortgage lender
RAMS Home Loans has disappointed investors with its first profit announcement since floating the Mortgage lender on the stock exchange last month.
It has reported a bottom line profit of just over $15 million.
The company says the results are in line in with its prospectus forecast, but its share price has dropped nine cents to $1.07.
The share price hit a low of 55.5 cents earlier this month after RAMS revealed that US credit market problems had forced it to access more expensive interim funding for $6 billion worth of its loan book.
The company says it will not know the full extent of the impact on its 2008 results until refinancing has been locked in.
Source: ABC
It has reported a bottom line profit of just over $15 million.
The company says the results are in line in with its prospectus forecast, but its share price has dropped nine cents to $1.07.
The share price hit a low of 55.5 cents earlier this month after RAMS revealed that US credit market problems had forced it to access more expensive interim funding for $6 billion worth of its loan book.
The company says it will not know the full extent of the impact on its 2008 results until refinancing has been locked in.
Source: ABC
Sunday, August 26, 2007
RAMS caught up in storm
Home mortgage lender RAMS is caught in the eye of an intensifying global financial storm, with its share price collapsing as it searches for billions of dollars in funding.
But the boss of the nation's biggest non-bank mortgage lender told The Australian last night that its customers had no cause for concern, and the business was not under threat.
"Yes, RAMS has some short-term funding issues to address, but that in no way affects our ability to continue to operate," chief executive Greg Kolivos said. "It's business as usual as far as we're concerned."
RAMS listed on the Australian Stock Exchange on July 27 in an $885 million float, enabling founder John Kinghorn to reap more than $600 million in cash by reducing his holding from 93 per cent to 20 per cent.
But investors who paid the $2.50 issue price were a long way under water yesterday after RAMS shares crashed again in response to the company's revelations about its funding problems.
The stock sagged 48.5c, or 36 per cent, to 85.5c, hitting an intra-day low of 55.5c. At the close of trading, the company was worth just $306 million, meaning Mr Kinghorn could buy it back with the cash he raised by selling shares into the float.
Other non-bank lenders, such as Bluestone, have also been hit by higher borrowing costs, which are likely to be passed on to customers in the form of higher mortgage rates. On Wednesday, Commonwealth Bank chief executive Ralph Norris said rates would inevitably rise across the industry.
Mr Kinghorn said on Tuesday, when the full extent of RAMS's problems surfaced, that "life was cool" until Thursday last week.
That was when France's biggest bank, BNP Paribas, triggered a new wave of global instability by suspending redemptions on several investment funds exposed to the US sub-prime mortgage crisis.
RAMS has no risky sub-prime exposure, but it relies on the evaporating short-term debt market in the US to raise money that it on-lends to Australian home buyers. The company has about 60,000 home loans to borrowers around the nation.
It passed on last week's 25-basis-point hike in official interest rates to new customers, while rates for existing borrowers went up 25-30 basis points. Despite the crisis, RAMS said on Tuesday it would not jack its rates up to offset the increase in its own funding costs.
In the US overnight on Wednesday, investors baulked when RAMS tried to roll over $600million in 30-day funding.
For the first time, an Australian company relied on a funding clause in the short-term debt market to extend its commercial paper, giving it a 180-day window to find alternative, longer-term funding for $6.17 billion of its $14.16 billion loan book.
RAMS told the stock exchange yesterday that the company's performance was not at fault.
"The current issues being experienced are as a result of the tightening in the global credit markets and not the performance of the company," it said in a statement. "The underlying business of the company continues to operate profitably."Source: The Australain
But the boss of the nation's biggest non-bank mortgage lender told The Australian last night that its customers had no cause for concern, and the business was not under threat.
"Yes, RAMS has some short-term funding issues to address, but that in no way affects our ability to continue to operate," chief executive Greg Kolivos said. "It's business as usual as far as we're concerned."
RAMS listed on the Australian Stock Exchange on July 27 in an $885 million float, enabling founder John Kinghorn to reap more than $600 million in cash by reducing his holding from 93 per cent to 20 per cent.
But investors who paid the $2.50 issue price were a long way under water yesterday after RAMS shares crashed again in response to the company's revelations about its funding problems.
The stock sagged 48.5c, or 36 per cent, to 85.5c, hitting an intra-day low of 55.5c. At the close of trading, the company was worth just $306 million, meaning Mr Kinghorn could buy it back with the cash he raised by selling shares into the float.
Other non-bank lenders, such as Bluestone, have also been hit by higher borrowing costs, which are likely to be passed on to customers in the form of higher mortgage rates. On Wednesday, Commonwealth Bank chief executive Ralph Norris said rates would inevitably rise across the industry.
Mr Kinghorn said on Tuesday, when the full extent of RAMS's problems surfaced, that "life was cool" until Thursday last week.
That was when France's biggest bank, BNP Paribas, triggered a new wave of global instability by suspending redemptions on several investment funds exposed to the US sub-prime mortgage crisis.
RAMS has no risky sub-prime exposure, but it relies on the evaporating short-term debt market in the US to raise money that it on-lends to Australian home buyers. The company has about 60,000 home loans to borrowers around the nation.
It passed on last week's 25-basis-point hike in official interest rates to new customers, while rates for existing borrowers went up 25-30 basis points. Despite the crisis, RAMS said on Tuesday it would not jack its rates up to offset the increase in its own funding costs.
In the US overnight on Wednesday, investors baulked when RAMS tried to roll over $600million in 30-day funding.
For the first time, an Australian company relied on a funding clause in the short-term debt market to extend its commercial paper, giving it a 180-day window to find alternative, longer-term funding for $6.17 billion of its $14.16 billion loan book.
RAMS told the stock exchange yesterday that the company's performance was not at fault.
"The current issues being experienced are as a result of the tightening in the global credit markets and not the performance of the company," it said in a statement. "The underlying business of the company continues to operate profitably."Source: The Australain
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