Thursday, 28 June 2007

Northern Rock shares take a dive

It is heartening to see that the stock market is factoring in a housing crash. Shares in Northern Rock Building Society took a serious tumble this week, falling over 10%. Investors are getting a little concerned about increasing interest rates and its impact on banking sector profitability. Furthermore, equity analysts are downgrading the company, putting further pressure on an already beleaguered share price.

If only homebuyers could do the same thing, and stop buying those ridiculously overpriced houses. In the long run, things would be easier. The higher prices go, the further they have to fall.

LONDON - Fears about the impact of rising interest rates on British mortgage lenders grew after Northern Rock issued a profit warning on Wednesday, sending its shares down by over 10.0%. Shares in Britain’s eighth-largest bank plummeted by 96.50 pence ($1.92), or 10.2%, to £8.51 ($16.97), after it said that it expects its full-year profit to rise by 15%, to £422 million ($841.8 million) from £367 million ($732.1 million), rather than the 17.0% rise predicted by analysts. Northern Rock weighed down the FTSE 100, which slipped 0.6% in morning trading in London, despite some strong

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