Source : The Straits Times, Sep 12, 2007
Fed officials say there is a risk of broader downturn; comments set stage for rate cut
WASHINGTON - TWO senior Federal Reserve officials said on Monday that the turmoil in housing and mortgage lending has begun to threaten the overall US economy.
Their statements set the stage for a likely cut in the Fed's benchmark interest rate next week.
Fed governor Frederic Mishkin told a group of investors on Monday that the risk of a broader downturn 'cannot, in my view, be ruled out'.
Mr Mishkin said inflation pressures had become less of a problem - a judgment that, if embraced by other Fed officials, would remove a major argument against lowering interest rates.
Fed Bank of San Francisco president Janet Yellen said a housing downturn and tighter credit were likely to cause 'significant downward pressure' on consumer spending and, thus, on economic growth.
Even if investors overcome some of their fears, mortgage rates are likely to remain higher on a long-term basis and could continue to push housing prices down, she said.
'Should the decline in house prices occur in the context of rising unemployment, the risks could be significant,' she added.
Her comments highlighted a point recently stressed by Fed chief Ben Bernanke, that officials do not plan to wait for irrefutable statistical evidence of an economic downturn.
Rather, they are ready to act on warning signs, including anecdotal business reports, that the probabilities of a downturn are too high to ignore.
In response to the comments, Fed watchers said it seems likely that an interest rate cut will take place.
However, they said it is not clear if Mr Bernanke and his colleagues are ready to cut as much as investors expect, and many economists say they must, to keep the United States out of a recession.
The contrasting remarks made by two other Fed officials indicated that there may be some divide among the policymakers themselves as to what to do next week.
Dallas Fed president Richard Fisher said on Monday that the bleak jobs report was merely a 'discordant note', and that he was still unpersuaded about a broader downturn.
Philadelphia Fed president Charles Plosser said earlier last Saturday that policymakers should not put too much stress on the loss of jobs last month, and that he had not made up his mind yet on a rate cut.
The scope of remarks may reflect a debate inside the US central bank over whether to lower the benchmark rate on Tuesday by a quarter-percentage point, or a half-point, as some investors expect.
Meanwhile, market conditions have turned investors jittery.
On Monday, European Central Bank president Jean-Claude Trichet warned of 'hectic behaviour' in the global economy and urged central bankers to keep a close eye on the US for signs of an economic slowdown.
'This is no time for complacency. The current situation calls for close observation and monitoring,' said Mr Trichet at a gathering in Basel, Switzerland, of the world's top central bankers, including US Federal Reserve chairman Ben Bernanke and the Bank of Japan governor Toshihiko Fukui.
A survey by the US National Association for Business Economics, meanwhile, lists a recession as the greatest risk to the US economy over the next year, outpacing inflation as the biggest concern by a two-to-one margin.
The economists forecast a half-point cut in the federal funds rate by the end of the first quarter of 2008, up from May's forecast of a quarter-point cut.
NEW YORK TIMES, REUTERS, BLOOMBERG NEWS
Wednesday, September 12, 2007
US Home Sales Not Likely To Recover Next Year
Source : The Straits Times, September 12, 2007
Moody's says slump may last till 2009 as buyers struggle to get mortgages
(NEW YORK) The US housing slump will probably last until 2009 and home sales will take a 'substantial hit' in the next several months as borrowers struggle to get mortgages, Moody's Investors Service said.
'The downturn is more severe and more protracted than we had expected,' Joseph Snider, a credit officer at Moody's, said. Home sales will be hurt by the lack of sub-prime and Alt-A mortgage lending and the difficulty borrowers with good credit are having obtaining mortgages, Moody's said on Monday.
A glut of new and existing homes for sale is prompting potential buyers to wait for prices to fall before purchasing.
The Moody's forecast contrasts with the National Association of Home Builders, which expects housing to begin rebounding in mid-to-late 2008. It also came as Federal Reserve Bank of San Francisco president Janet Yellen said the economy is under 'downward pressure' from turmoil in credit and housing markets.
The worst housing market in 16 years has sent a Standard & Poor's measure of 16 US homebuilders down 49 per cent this year.
Moody's said on Monday it has taken 38 negative ratings actions on the 22 US homebuilders it rates over the past year and more downgrades are possible. Builders may also begin violating credit agreements and banks may tighten restrictions placed on companies.
'Tighter lending and credit standards, diminished consumer home-buying confidence, rising cancellation rates, and falling home prices - especially in the most reliable strong real estate markets prior to 2006 - have exacerbated the industry's woes and further deepened our year-long negative view,' the report said.
A recovery for housing could be hastened should the Federal Reserve take 'frequent and concerted action', the report said. Moody's said it doesn't expect that kind of action to occur unless the economy heads into a recession.
Mr Snider said that Moody's had estimated there might be a second-half housing recovery in 2008. That forecast has now 'been pushed back some', he said.
Meanwhile, Fannie Mae and Freddie Mac, the biggest sources of money for US home loans, adopted rules intended to discourage the funding of high-risk sub-prime mortgages, the Office of Federal Housing Enterprise Oversight said.
The rules require Fannie Mae and Freddie Mac to buy home loans from originators that 'help prevent abuses' in mortgage lending, Ofheo said on Monday.
The two companies can only purchase home loans after verification of the borrowers' income and ability to adjust to higher interest rates, according to the guidelines. -- Bloomberg
Moody's says slump may last till 2009 as buyers struggle to get mortgages
(NEW YORK) The US housing slump will probably last until 2009 and home sales will take a 'substantial hit' in the next several months as borrowers struggle to get mortgages, Moody's Investors Service said.
'The downturn is more severe and more protracted than we had expected,' Joseph Snider, a credit officer at Moody's, said. Home sales will be hurt by the lack of sub-prime and Alt-A mortgage lending and the difficulty borrowers with good credit are having obtaining mortgages, Moody's said on Monday.
A glut of new and existing homes for sale is prompting potential buyers to wait for prices to fall before purchasing.
The Moody's forecast contrasts with the National Association of Home Builders, which expects housing to begin rebounding in mid-to-late 2008. It also came as Federal Reserve Bank of San Francisco president Janet Yellen said the economy is under 'downward pressure' from turmoil in credit and housing markets.
The worst housing market in 16 years has sent a Standard & Poor's measure of 16 US homebuilders down 49 per cent this year.
Moody's said on Monday it has taken 38 negative ratings actions on the 22 US homebuilders it rates over the past year and more downgrades are possible. Builders may also begin violating credit agreements and banks may tighten restrictions placed on companies.
'Tighter lending and credit standards, diminished consumer home-buying confidence, rising cancellation rates, and falling home prices - especially in the most reliable strong real estate markets prior to 2006 - have exacerbated the industry's woes and further deepened our year-long negative view,' the report said.
A recovery for housing could be hastened should the Federal Reserve take 'frequent and concerted action', the report said. Moody's said it doesn't expect that kind of action to occur unless the economy heads into a recession.
Mr Snider said that Moody's had estimated there might be a second-half housing recovery in 2008. That forecast has now 'been pushed back some', he said.
Meanwhile, Fannie Mae and Freddie Mac, the biggest sources of money for US home loans, adopted rules intended to discourage the funding of high-risk sub-prime mortgages, the Office of Federal Housing Enterprise Oversight said.
The rules require Fannie Mae and Freddie Mac to buy home loans from originators that 'help prevent abuses' in mortgage lending, Ofheo said on Monday.
The two companies can only purchase home loans after verification of the borrowers' income and ability to adjust to higher interest rates, according to the guidelines. -- Bloomberg
Ritz-Carlton Residences In Singapore A First In Asia
Source : The Strait Times, 04 September 07
WELL-HEELED fans of the Ritz-Carlton's luxury accommodation will soon be able to buy homes in Singapore that come stamped with the five-star hotel brand.
Asia's first Ritz-Carlton Residences will be launched for sale in Singapore late next month, with 56 apartment units and two penthouses up for grabs.
The 36-storey tower will be built in Cairnhill Road on the former Horizon View site, and will be completed by early 2010.
Residents will enjoy a 24-hour concierge service, housekeeping and sommelier service. All the staff will be trained and managed by Ritz-Carlton.
While the apartment prices have not yet been finalised, Ritz-Carlton's vice-president of international hotel development, Mr Shawn Hill, said the hotel's branded apartments usually fetch up to 50 per cent more than comparable non-branded homes.
'Typically, comparing against non-branded residential properties, we see a 20 to 50 per cent premium over the highest-end homes in each market,' he told The Straits Times.
There are currently 32 other Ritz-Carlton Residences around the world, including in New York, Boston, Hawaii and the Bahamas. Similar projects are in the pipeline in Europe and the Middle East, Mr Hill said.
In Asia, Singapore was chosen for the residences' debut over cities such as Kuala Lumpur and Tokyo, where Ritz-Carlton has service apartments.
'We chose Singapore because we consider it to be a pace-setter in the region, and it's a highly sought-after city to live in,' explained MrHill.
'Singapore, as a city, has some of its own branding and a very strong international appeal. It represents a high quality of living as well as stability.'
But the group is also looking at building more of such homes in other 'gateway cities' in Asia, including Hong Kong, Shanghai, Tokyo, Ho Chi Minh City and Jakarta, Mr Hill added.
The Singapore project is a partnership between Ritz-Carlton and Hayden Properties - a 50:50 joint venture between real estate firm KOP Capital and Emirates Investment Group unit Emirates Tarian Capital.
Hayden, which was set up last October, is also the developer behind the luxury project at 37 Scotts Road that boasts a garage in every apartment.
The Ritz-Carlton Residences in Singapore will offer units in three sizes. The three-bedroom units will be 2,800 sq ft while the four-bedders will be 3,100 sq ft and the penthouses will weigh in at more than 5,000 sq ft.
Each unit will have designer fittings and appliances. The property will also have a lap pool, library, wine cellar, and a kitchen and entertainment area managed by the Ritz-Carlton.
Monthly maintenance fees for the apartments may add up to between $2,000 and $3,000, said Ms Ong Chih Ching, Hayden's founder and lead director.
She said the trend of hotel-branded residences is set to grow in Asia, as homebuyers become more affluent.
'Apart from the luxurious hardware that you will see in buildings, the other thing that buyers will look for is service. A lot of the hotel chains have good reputations for their service.'
Other hotel-branded residences in Singapore include Four Seasons Park and St Regis Residences.
Mr Ku Swee Yong, director of marketing and business development at Savills Singapore, agreed that more co-branded apartments will emerge, and not just involving hotels.
'The co-branding trend includes architects, designers, fashion labels such as Armani and Versace, and these will put Singapore on the world map.'
He expects foreigners to make up most of the buyers of the Ritz-Carlton apartments. These could 'definitely fetch a minimum' of $4,000 per sq ft, which is at least 20 per cent more than current prices in Cairnhill, he said.
--------------------------------------------------------------------------------
Luxury living
*Ritz-Carlton Residences in Singapore will offer 56 apartment units and two penthouses.
*The 36-storey tower in Cairnhill will be completed by early 2010.
*Residents will enjoy a 24-hour concierge service, housekeeping and sommelier service.
*Similar projects are in the pipeline in Europe and the Middle East.
*The group is also eyeing other 'gateway cities' in Asia such as Hong Kong, Shanghai, Tokyo,
*Ho Chi Minh City and Jakarta.
WELL-HEELED fans of the Ritz-Carlton's luxury accommodation will soon be able to buy homes in Singapore that come stamped with the five-star hotel brand.
Asia's first Ritz-Carlton Residences will be launched for sale in Singapore late next month, with 56 apartment units and two penthouses up for grabs.
The 36-storey tower will be built in Cairnhill Road on the former Horizon View site, and will be completed by early 2010.
Residents will enjoy a 24-hour concierge service, housekeeping and sommelier service. All the staff will be trained and managed by Ritz-Carlton.
While the apartment prices have not yet been finalised, Ritz-Carlton's vice-president of international hotel development, Mr Shawn Hill, said the hotel's branded apartments usually fetch up to 50 per cent more than comparable non-branded homes.
'Typically, comparing against non-branded residential properties, we see a 20 to 50 per cent premium over the highest-end homes in each market,' he told The Straits Times.
There are currently 32 other Ritz-Carlton Residences around the world, including in New York, Boston, Hawaii and the Bahamas. Similar projects are in the pipeline in Europe and the Middle East, Mr Hill said.
In Asia, Singapore was chosen for the residences' debut over cities such as Kuala Lumpur and Tokyo, where Ritz-Carlton has service apartments.
'We chose Singapore because we consider it to be a pace-setter in the region, and it's a highly sought-after city to live in,' explained MrHill.
'Singapore, as a city, has some of its own branding and a very strong international appeal. It represents a high quality of living as well as stability.'
But the group is also looking at building more of such homes in other 'gateway cities' in Asia, including Hong Kong, Shanghai, Tokyo, Ho Chi Minh City and Jakarta, Mr Hill added.
The Singapore project is a partnership between Ritz-Carlton and Hayden Properties - a 50:50 joint venture between real estate firm KOP Capital and Emirates Investment Group unit Emirates Tarian Capital.
Hayden, which was set up last October, is also the developer behind the luxury project at 37 Scotts Road that boasts a garage in every apartment.
The Ritz-Carlton Residences in Singapore will offer units in three sizes. The three-bedroom units will be 2,800 sq ft while the four-bedders will be 3,100 sq ft and the penthouses will weigh in at more than 5,000 sq ft.
Each unit will have designer fittings and appliances. The property will also have a lap pool, library, wine cellar, and a kitchen and entertainment area managed by the Ritz-Carlton.
Monthly maintenance fees for the apartments may add up to between $2,000 and $3,000, said Ms Ong Chih Ching, Hayden's founder and lead director.
She said the trend of hotel-branded residences is set to grow in Asia, as homebuyers become more affluent.
'Apart from the luxurious hardware that you will see in buildings, the other thing that buyers will look for is service. A lot of the hotel chains have good reputations for their service.'
Other hotel-branded residences in Singapore include Four Seasons Park and St Regis Residences.
Mr Ku Swee Yong, director of marketing and business development at Savills Singapore, agreed that more co-branded apartments will emerge, and not just involving hotels.
'The co-branding trend includes architects, designers, fashion labels such as Armani and Versace, and these will put Singapore on the world map.'
He expects foreigners to make up most of the buyers of the Ritz-Carlton apartments. These could 'definitely fetch a minimum' of $4,000 per sq ft, which is at least 20 per cent more than current prices in Cairnhill, he said.
--------------------------------------------------------------------------------
Luxury living
*Ritz-Carlton Residences in Singapore will offer 56 apartment units and two penthouses.
*The 36-storey tower in Cairnhill will be completed by early 2010.
*Residents will enjoy a 24-hour concierge service, housekeeping and sommelier service.
*Similar projects are in the pipeline in Europe and the Middle East.
*The group is also eyeing other 'gateway cities' in Asia such as Hong Kong, Shanghai, Tokyo,
*Ho Chi Minh City and Jakarta.
RBA Injects Extra Cash Into Market
Source : The Business Tims, September 12, 2007
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Despite the RBA widened the types of assets it accepts as collateral when lending to financial institutions, it has had little success in restraining interbank rates.
SYDNEY - Australia's central bank injected a modest amount of extra cash into the banking system on Wednesday as it struggled to temper a spike in money market rates caused by an ongoing global credit crunch.
Credit market woes have led to a near strike among lenders while borrowers are scrambling to find fresh sources of funding for one month and beyond.
The Reserve Bank of Australia (RBA) added A$900 million (US$750 million) to the banking system on Wednesday, above the market's estimated cash need of A$816 million.
The extra addition should see commercial banks' accounts with the RBA expand from the current A$4.31 billion, well above the A$750 to A$850 million range seen before the global credit squeeze started to bite.
The central bank has been providing the banking system with extra cash for the past month in an attempt to break a logjam in lending and limit upward pressure on some key market rates.
The RBA even widened the types of assets it accepts as collateral when lending to financial institutions, yet it has had little success in restraining interbank rates.
On Wednesday, three-month bank bill rates were up at 7.08/10 per cent and unusually far above the RBA's 6.5 per cent cash rate. -- REUTERS
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Despite the RBA widened the types of assets it accepts as collateral when lending to financial institutions, it has had little success in restraining interbank rates.SYDNEY - Australia's central bank injected a modest amount of extra cash into the banking system on Wednesday as it struggled to temper a spike in money market rates caused by an ongoing global credit crunch.
Credit market woes have led to a near strike among lenders while borrowers are scrambling to find fresh sources of funding for one month and beyond.
The Reserve Bank of Australia (RBA) added A$900 million (US$750 million) to the banking system on Wednesday, above the market's estimated cash need of A$816 million.
The extra addition should see commercial banks' accounts with the RBA expand from the current A$4.31 billion, well above the A$750 to A$850 million range seen before the global credit squeeze started to bite.
The central bank has been providing the banking system with extra cash for the past month in an attempt to break a logjam in lending and limit upward pressure on some key market rates.
The RBA even widened the types of assets it accepts as collateral when lending to financial institutions, yet it has had little success in restraining interbank rates.
On Wednesday, three-month bank bill rates were up at 7.08/10 per cent and unusually far above the RBA's 6.5 per cent cash rate. -- REUTERS
ECB Pumps US$104b Into Banking System
Source : The Business Times, September 12, 2007
FRANKFURT - The European Central Bank said on Wednesday it would pump 75 billion euros (US$104 billion) into the euro money markets via an exceptional three-month liquidity tender.
In a move aimed at giving the markets a bit more air, the ECB said it made the sum available at a marginal or lowest rate of 4.35 per cent and a weighted average rate of 4.52 per cent.
The rates were high compared with the ECB's present main interest rate of 4.0 per cent and the sum also exceeded the bank's normal refinancing amount of 50 billion euros.
Last Thursday, the bank had already made another three-month injection of liquidity into euro money markets, where rates have risen owing to uncertainty about the impact of the US high-risk home loan crisis on the global economy. -- AFP
FRANKFURT - The European Central Bank said on Wednesday it would pump 75 billion euros (US$104 billion) into the euro money markets via an exceptional three-month liquidity tender.
In a move aimed at giving the markets a bit more air, the ECB said it made the sum available at a marginal or lowest rate of 4.35 per cent and a weighted average rate of 4.52 per cent.
The rates were high compared with the ECB's present main interest rate of 4.0 per cent and the sum also exceeded the bank's normal refinancing amount of 50 billion euros.
Last Thursday, the bank had already made another three-month injection of liquidity into euro money markets, where rates have risen owing to uncertainty about the impact of the US high-risk home loan crisis on the global economy. -- AFP
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