Why are UK banks so risk averse at the moment?
As we see signs that the UK mortgage market is improving, albeit at a very slow rate, there are concerns about the future trend of mortgage liquidity. On one hand we have the UK government pushing the UK banking sector to increase mortgage liquidity while on the other hand we have them being penalised if they take too many risks. The UK government has effectively caught the UK banking sector in a pincer movement!
Until we see a strong recovery in the UK property market it is unlikely we will see a massive injection of mortgage liquidity in the short to medium term. Despite the introduction of some competitive rates over the last few weeks, ultimately a number of would-be property buyers are still effectively barred from the market at this moment in time. The reality is that first-time buyers are the life blood of the UK property market and without them it is difficult to see how we could push ahead with a strong recovery in the sector.
There is no doubt that the markets will level off, consolidate and then move ahead in due course but when this will happen is open to debate because there are very mixed feelings regarding the prospects for 2010.
Share this..
Related stories
Government left with £2.3 billion loss after shareholders snub RBS rescue
The government has today been left nursing a £2.3 billion loss after Royal Bank of Scotland shareholders snubbed their attempt at raising £15 billion and leaving the government to take up the vast majority of shares on offer. The government's holding is now 57.9% and gives its effective control of one of the U.K.'s largest commercial banks.
This is not the start to the rescue pack...
Adam Posen criticises competition in the UK banking sector
Adam Posen, a member of the MPC, has today stepped into the public domain to criticise competition in the UK banking arena at a time when businesses and consumers are crying out for more liquidity. While he appreciates that the UK is probably ahead of the EU and even the US in terms of tackling various banking problems, he believes that the fact that five major banks in the UK control the vast maj...
Read MoreTony Blair to advise Lansdowne Partners
Tony Blair has inadvertently placed the UK government in a very difficult position having taken on an advisory role with hedge funds expert Lansdowne Partners that will see him deliver four exclusive speeches to the company's staff. He will receive hundreds of thousands of pounds for the talks later this year which will cover a number of topics of interest to Lansdowne staff and their clients. Th...
Read MoreRBS takeover of ABN Amro to be investigated
The £60 billion acquisition of ABN Amro by Royal Bank of Scotland back in 2007 is set to be investigated by the Financial Services Authority (FSA). While many people have been calling for a formal investigation of the takeover it is a surprise to see that nearly 2 years after the acquisition the FSA is set to act. So what is the basis of the investigation?
The investigation will lo...
Can We Trust MPs To Look After Our Finances?
Over the last few months there has been a ground swell of support amongst MPs to increase their salaries to take into account a whole host of expenses which they look set to lose in the short term. There has even been talk of MPs being paid a bonus for attending the House of Commons, something which is totally unheard of in the private sector. So can we trust MPs to look after the public purse w...
Read More