The UK economy and the UK housing market have been in trouble for some time, but the latest news from the UK Times suggest that more troubles may be ahead.
According to the Times, Nationwide, the second largest mortgage lender in the UK just announced that they will start to turn away business in order to get “greater control” over their loans.
Are they facing internal difficulties?
Are they in trouble?
Could this foreshadow a big blowup in the UK?
I’m not sure how stable Nationwide is at the moment, but I do know that the Bank of England is behind the curve. They need to catch up with the Fed and look beyond just adding liquidity or cutting interest rates.
With one of the largest financial markets in the world, the UK is just as vulnerable losses related to underperforming subprime mortgages or other credit derivatives.
I expect the UK housing market to suffer the same fate as the US , just at a slower or more delayed pace.
This news is very bearish for the British pound. I expect the GBP/USD to fall back below 2.0 and EUR/GBP to hit a new record high.
Just for the record. I am writing this when the GBP/USD was trading at 2.0060 and EURGBP at .7870
From tomorrow on, Nationwide will increase the rates on its tracker deals by more than half a percentage point in an attempt to become less competitive.
Read the entire article in the Times Online > Nationwide shuts door on mortgage hunters