Monday 31 March 2008

Round 3 of the credit crunch


(click on the chart for a sharper image)

It looks like we are heading for round three of the credit crunch. UK interbank interest rate spreads are again rising. As of March 28, banks needed to pay 98 basis points more to borrow 3 month money relative to a 3 month repo using UK government paper. Back in good old days when banks trusted each other, the spread ranged from between 9-12 basis points.

Data source: Bank of England, Daily Sterling interbank lending rate, 3 month, mean LIBID/LIBOR (IUDAMIJ); daily 3 month Gilt repo interest rate (IUDGR3M)

2 comments:

Sackerson said...

Hi Alice: I came to your blog via "Great Depression of 2006" (Jim from San Marcos). Nicely presented graphs; could you indicate data sources, please?

Market Ticker (Karl Denninger) says long term house prices tend to 3x income, though in the UK it seems to be c. 3.5 - which would suggest a drop in real terms (who know over what time) of about 1/3.

Alice Cook said...

Sackerson,

Funnily enough, on this post I did report the data sources. Usually, I have reference somewhere to where the data comes from. Most data comes from either the Bank of England, the Council of Mortgage Lenders, the Office of National statistics or one of our bubble-mad banks.

As for income ratios, UK prices are well in excess of 3. We are closer to five. I might post on this issue in the next couple of days.

Alice