Resumo de Us Crisis Comes Knocking On Britain''s Door

The cost of home loans in Britain is expected to rise for many buyers over the coming weeks as lenders absorb the impact of the US sub-prime lending debacle, mortgage experts said yesterday. Banks and specialist lenders are busy re-pricing their mortgages to take account of intense volatility in international money markets and a flight from risk by big investment institutions. Long-term fixed-rate mortgages could be one of the first areas to see price rises, though it would depend on each lender and the costs faced in supporting their range of mortgages. Several lenders said yesterday that planned product launches would be delayed until the cost of commercial borrowing became clearer. First-time buyers and people with tarnished credit histories were expected to feel the brunt of the rise in mortgage interest rates. Many of Britain''s sub-prime lenders, which lend to homebuyers with poor credit records, have already pushed up interest rates by as much as one percentage point in the past week. Others were expected to increase rates to take account of a collapse in confidence in the credit markets. Some big banks, such as Northern Rock, are expected to follow suit or see their profit margins cut. Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said: "While the housing market remains resilient, the turmoil in financial markets will push up mortgage costs for in-vogue longer term fixed-rate deals and will further slow the property market. With 90% of borrowers opting for fixed-rate security, those who are already stretched will find themselves paying a higher price for the added peace of mind." Nationwide chief economist, Fionnuala Earley, said: "Different companies will be affected to different degrees by this and clearly those more dependent on wholesale funding will be hit hardest as they have fewer funding options. And, while the US sub-prime problems continue to cast a shadow on mortgage-backed securities as safe assets, those institutions who favour this funding source are likely to find it more difficult to raise funds at the price they would like." The impact of the sub-prime crisis hit a peak on Friday when the Federal Reserve, the US central bank, was forced to step in to prevent US lenders from going bust. It cut the cost of borrowing for banks, which had stopped lending to each other. Billions of dollars of bad debts are believed to remain on bank balance sheets. Most analysts said yesterday that they believed financial markets would remain volatile for several months as these bad loans, which were repackaged and re-sold by the banks as complicated derivatives, were slowly revealed. Ray Boulger, of Britain''s largest mortgage broker John Charcol, said that while tougher criteria would be imposed on some borrowers, some lenders would see the turmoil as an opportunity to gain market share and cut rates, especially on short-term products. He pointed to news from Abbey, Alliance & Leicester and Norwich & Peterborough that they planned to shave rates on some of their fixed and discounted variable rate products. "The market is tightening generally and we expect the banks to tighten up their criteria further, possibly imposing harsher credit scoring, but the situation also brings with it an opportunity for the larger players and those that don''t rely on the wholesale markets to gain market share from hard-pressed niche players." Sub-prime lender DB mortgages, which is owned by Deutsche Bank, has told brokers it will refuse first-time buyers and higher risk clients, said Mr Boulger. Investec-backed Infinity Mortgages postponed the launch of a new product range and said it was unable to process applications in the pipeline. Mr Rubinsohn said: "There is evidence that lenders are becoming more discriminating in advancing loans to borrowers and this could be compounded by possible job losses in the City if the volatility persists. The potential for lower bonuses in the financial servndustry could also cast a pall over the property market." Explainer: How the swaps market works A large proportion of home loans in the UK are now fixed rate mortgages and so banks receive a fair amount of homebuyers'' payments at interest rates that do not change from month to month. But the banks have taken out many of their own loans at a variable rate, a so-called floating rate of interest. This means the banks require cashflow at a floating rate to meet their loan payments and the fixed rate payments made by borrowers are not always appropriate to meet these. To get the right cashflows to match their liabilities, the banks go into the swaps market. There they can swap their fixed rate cashflows for floating rate cashflows or vice-versa with other banks. Swaps, a form of derivative, are usually a safe and easy way for banks to get the kind of cashflows they need. However, the recent rise in floating interest rates, due to the turbulence in global financial markets, is making the pricing of swaps more difficult. That is in turn making it harder for banks to transform fixed rate assets into floating rate assets. If mortgage lenders continue to struggle to convert cashflows from fixed-rate mortgage clients, they could quickly become less willing to offer such mortgages. Katie Allen

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