Barclays Surge, UK Home Prices Fall

123jump.com Staff
26 Jan, 2009
New York City

Barclays in a letter to investors stressed that the company has

[R]1:00PM New York, 6:00PM London-U.K. house prices decline 9.4% to £158,300 in January. Net mortgage lending ease £2.9 billion in December.[/R]

U.K. stocks rose after Barclays reiterated that the lender does not need capital from the government. The bank also brought forward its earnings results to February 9, 2009 to allay fears over the company''s liquidity.

Commodity stocks also increased as oil and gold prices advanced.

However reports that showed that U.K. house prices fell the most in eight years and net mortgage lending eased in December trimmed gains.

In London trading FTSE 100 index gained 3.9% or 156.54 to 4,209.01.

Of the FTSE 100 index stocks, 88 increased, and 14 declined. Barclays Plc led advancers in the index shares after the bank said it is well funded and profitable.

U.K. House Prices Decline 9.4%

Hometrack Ltd reported today that the average price of a home in England and Wales declined 1.1% from a month ago and 9.4% from a year earlier to £158,300 in January, falling the most since 2001.

In London prices fell 1.1% from December.

All ten regions that are tracked by the London-based property researcher reflected price declines.

According to the report, the average time a property spends on the market increased 45% from a year ago to 12.3 weeks, while sellers realised less than 90%.

The survey projects that house prices will slip 10% this year.

Net Mortgage Lending Ease £2.9 billion in December

British Bankers Association reported today that net mortgage lending eased £2.9 billion in November, but below the average of the previous six months.

Loans for house purchase fell 47 to 22,051 in December from 17,339 in November. Consumer credit declined by £400 million net, while personal deposits increased by £4 billion.

The BBA says the value of mortgages for homebuyers fell to £2.6 billion from £6.7 billion a year ago.

In addition, gross mortgage lending by the main high street banks dropped 23% from 2007 to £170 billion.

Statistics director David Brooks said, “The banks approved less than half the 2007 number of loans for house purchase, reflecting falling demand from households facing greater economic uncertainty and double-digit falls in house prices over the year which led to a wait-and-see mentality.”

Gainers & Losers

Barclays led advancers in the FTSE 100 index shares with a rise of 73.2% followed by increases in Lloyds Banking of 32.3%, in Royal Bank of Scotland of 19.8%, in Aviva Plc of 14.1%, and Old Mutual of 10.5%.

Commodity stocks gained as gold prices soared $9 to $906 per barrel, and crude oil prices rallied at $46 per barrel, Tullow Oil advanced 9.6%, Rio Tinto of 8.7%, and Anglo America of 7.3%.

Barclays Has £36 billion Committed Equity Capital and Reserves

Barclays'' Bank chief executive officer John Varley and chairman Marcus Agius said today in an open letter that the lender has £36 billion of committed equity capital and reserves and is well funded and profitable.

The bank will bring forward the release of its 2008 financial results to Monday, February 9.

The letter notes that profit before tax for the year will be more than the forecasted £5.3 billion on gains arising from the acquisition of the Lehman Brothers North American business and also gains on the sale of the closed life business.

Gross write-downs will be £8 billion on credit market exposures in Barclays Capital. Barclays said its income generation was at record levels in 2008 and enabled it to absorb the effects of the global financial turmoil.