Chin Up in the Downswing

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On Both Sides of the Atlantic, Increased Confidence in Home Building, Home Buying and Lending Between Banks

April 15, 2009 06:00 PM
by Anne Szustek
Positive financial and business headlines today include an uptick in U.S. homebuilders’ and U.K. surveyors’ numbers; there’s also cheaper money to be lent between banks, which means more consumer access to funds.

U.S. Homebuilders Show Optimism in Market

According to statistics released today, U.S. homebuilders are showing the highest confidence levels seen since October, as measured by the National Association of Home Builders/Wells Fargo index. The index went up from 9 last month to 14 this month, marking the index’s biggest jump since May 2003. “Builders are generally a hopeful bunch so it is no surprise that the stabilization in the broader economy fed through to the confidence index,” Tom Porcelli, a senior economist at New York’s Castlestone Management, told Bloomberg before the report. “We would only caution that hope is a soft foundation.” The index rose in all four regions of the United States, including an increase of eight points to 16 and six points in the Midwest to 14.

UK Average Home Sales per Surveyor Up in March

There are also indicators across the Atlantic that the housing market may be rebounding: reports from the U.K. Royal Institution of Chartered Surveyors showed that in England and Wales, the average home sales per surveyor showed their first monthly increase in March since October 2007.

Libor Slips Away

Also set to help spur home sales, at least further down the line: London interbank offered rates, or Libor, are declining. The three-month U.S. dollar rate went down one basis point, or one-hundredth of a percentage point to 1.122 percent and rates for the British pound went down two basis points to 1.544 percent. What this means exactly: banks are less reluctant to lend to each other, signaling relaxation in the credit market and that the cost of borrowing money is getting cheaper. “Analysts polled by Bloomberg are now predicting on average that Libor will fall to 1.04 per cent by June,” The Times of London reports. “Last month, they were predicting it would stand at 1.21 per cent in June.”

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