Spanish real-estate bubble has bursted

Spanish real-estate bubble has bursted

April 24 (Bloomberg) -- Spanish stocks tumbled after a plunge in real-estate developers fueled concern the nation's property boom is imploding and will hurt builders and banks.

Astroc Mediterraneo SA, a developer based in Valencia, led the decline. Grupo Inmocaral SA, Spain's second-largest real- estate company, and Banco Bilbao Vizcaya Argentaria SA, the country's second-biggest bank, also slumped.

``This is the burst of the Spanish real-estate bubble,'' said Alberto Espelosin, a strategist at Zaragoza, Spain-based Ibercaja Gestion, which manages about $7 billion. ``Banks are exposed and have risk.''

Subprime Bondholders May Lose $75 Billion in U.S. Housing Slump

April 24 (Bloomberg) -- Bond investors who financed the U.S. housing boom are starting to pay the price for slumping home values and record delinquencies in subprime loans.

They will lose as much as $75 billion on securities made up of millions of mortgages to people with poor credit, says Pacific Investment Management Co., manager of the world's biggest bond fund. Some of the $450 billion in subprime mortgage-backed debt sold last year has lost 37 percent, according to Merrill Lynch & Co.


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Subprime Mortgage Bond Losses to Grow

Losses for 2006 subprime mortgage bonds are likely to be bigger than previously estimated, Moody's Investors Service said in a report.

On Friday, the credit agency said the new anticipated range for cumulative losses over the lives of 2006 subprime bonds is 6 percent to 8 percent, up from last year's estimated loss range of 5.5 percent to 6 percent.

The average life of a subprime bond is three years. As many subprime borrowers will soon face higher interest rates at the end of their initial fixed rate periods, many of them might be unable to afford the higher mortgage payments, leading to further increases in delinquencies.


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U.S. Economy: Home Sales and Consumer Confidence Drop

April 24 (Bloomberg) -- Sales of previously owned homes fell to the lowest level in almost four years and declining prices hurt consumer confidence this month, indicating the U.S. economy is struggling to pick up following a first-quarter slowdown.

Existing home sales slid 8.4 percent in March after rising 3.7 percent the previous month, the National Association of Realtors said today in Washington. A separate private report showed home-price declines in 20 major cities accelerated in February. The Conference Board's consumer confidence index fell to 104, from 108.2.


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Euro helps topple Spanish property

Fears of a property crash swept the Spanish stock market yesterday, sending shares of construction companies into free-fall, and hitting banks exposed to the mortgage market.

Spain's biggest property group, Sacyr, fell 8.15pc, while developers Colonial and Inmocaral plunged over 11pc.

Valencia builder Astroc first set off alarm bells last week after the regional junta changed planning laws. Its shares have since fallen 62pc, but there appears to be no obvious trigger for the sudden switch from euphoria to panic on the Madrid bourse.


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U.K. Home Prices Are `Very Inflated,' Tchenguiz Says (Update1)

By Peter Woodifield and Francine Lacqua

April 27 (Bloomberg) -- U.K. home prices, rising at the fastest pace in two years, are ``very highly inflated'' and at risk of collapsing, said Vincent Tchenguiz, one of Britain's largest residential property owners.

A shortage of housing has driven the price of an average home up 11 percent over the past year, according to HBOS Plc, the U.K.'s largest mortgage lender, even after the Bank of England raised its benchmark interest rate three times to a 5 1/2-year high.


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``It is not sustainable in the long term, prices are very high,'' Tchenguiz, 50, said in an interview. ``The bubble could burst in the event of a financial shock or terrorism.''

Sub-prime mortgage crisis hits GM

General Motors has become the latest victim of the US sub-prime mortgage lending crisis.

Its GMAC finance arm made a loss of $305m (£152m) in the first three months of the year because of charges taken at its housing finance unit.

GM sold 51% of GMAC to a group led by Cerberus Capital Management last year.

GMAC's losses offset improvements at GM's automotive operations, leaving three month net profits at $62m, down from $602m in the same period of 2006.


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