UK Home Loans Plunge

123jump.com Staff
24 Jun, 2008
New York City

UK mortgage loans in May fell 56% from a year ago and 20% from April. The sharp decline comes after credit markets and conditions for mortgages are tightened. The report from the BBA also suggested that credit card borrowing increased 7.4%, as spending rose at a faster rate then loan repayment rate. BG Group took its offer directly to shareholders of Origin Energy Limited and offered A$15.50 or A$13.8 billion. Earlier management rejected the same offer from BG.

[R]3:00PM New York, 8:00PM London - UK loans mortgage loans declines 56% in May. BG makes hostile takeover bid for Origin Energy.[/R]

London market averages fell marginally on the weaknesses in retailers and commodity stocks. Financial stocks however traded higher following gains in brokerages.

Market sentiment

In London trading FTSE 100 fell 0.57% or 323.5 at 5,634.70.

Of the FTSE 100 index stocks 27 gained, and 75 declined. Ferrexpo Plc led advancers in the index shares with a rise of 4.2% followed by Barclays rising 3.7%.

UK loans for house purchase fall 56% in May

The British Bankers Association reported on its Website today that the loans for house purchase dropped 56% in May to 27,968 from year earlier and were 20% lower from the previous month. Also approvals for the refinancing of mortgages slumped 10% to 63,303 from the year ago period.

According to the report, annual growth in credit card borrowing increased to 7.4% and with repayments not exceeding spending, net lending increased sharply. Annual growth in loans and overdrafts fell fractionally to 3%.

Statistics director, David Dooks, said, “Measures of mortgage activity were lower in May as a result of tighter lending criteria and economic pressures on households. Only remortgaging business is holding up, where people need or want to take advantage of deals with other lenders. People spent more on credit cards, but repayment levels were lower than expected in May and after April''s busy month with people putting money into ISAs, personal deposits were not as strong.""

BG Group announces $13.8 billion takeover of Origin

BG Group Plc announced on its Website today that it intends to acquire all of the issued shares in Origin Energy Limited at A$15.50 cash per share or values the company at A$13.8 billion.

The offer is at a 48% premium to Origin’s closing price of A$10.47 on 29 April 2008 when BG first disclosed its offer.

BG Group Chief Executive Frank Chapman said: “Origin has good retail, power generation and exploration and production businesses. BG Group has performed a thorough and balanced assessment of Origin’s prospects and is offering an all-cash 72% premium to the 90-day VWAP to the date immediately prior to the announcement of our initial proposal.”

Gainers & Losers

Ferrexpo Plc led advancers in the FTSE 100 index shares with a rise of 4.19% followed by increases in Barclays Plc of 3.67%, in Wood Group Plc of 3.35%, in Thomas Cook Group of 3.09%, and Royal Bank of Scotland of 2.21%.

Barclays gained after brokerages and banks advanced. Lloyds TSB Group advanced 2.20% and HBOS Plc edged up 1.67%.

Eurasian Natural led decliners in the FTSE 100 index shares with a drop of 4.8% followed by losses in Wolseley of 4.70%, in WPP Group of 4.18%, in Amec Plc of 4.10%, and London Stock Exchange of 3.97%.

Retailers fell as TNS Worldpanel data showed that the Tesco and Sainsbury had seen their grocery market shares erode slightly in the 12 weeks to June 15. Tesco dropped 3.41% and Sainsbury shed 3.23% on the news.