Released on: June 22, 2008, 11:21 pm

Press Release Author: First Choice Loan

Industry: Financial

Press Release Summary: A warning has been issued by Halifax Bank of Scotland that
prices of houses will fall by 9%. However, the bank says that the levels are
manageable and will be able to cope up without much impact on it.

Press Release Body: It has now been officially predicted. The Halifax Bank of
Scotland warned that we were to see a 9% fall in the prices of houses this year.
This is the most dismal announcement that the HBOS has made since the year 1989.

Halifax is the country's biggest mortgage lender. However, one can have a very good
idea of the situation that is prevailing if we realize that Halifax has suffered a
fall of around 7% in its shares and reached 296.76p. The other banks were also
brought down by the announcement that the sales of houses would fall by 45% and it
would get really difficult for the borrowers to repay their home loans on time to
the lenders.

To bring investors back to the rights issue which is worth £4bn, the company
published a 194 page prospectus to convince them. Another revelation related to the
credit crunch was made by HBOS. It said that the value of the write-downs has gone
over the £1bn mark. Also, out of the corporate business field, around 38% was prone
to the disturbed construction and property sectors. However, in spite of all this,
the bank maintained that the business was still satisfactory and was still living up
to the expectations that they had of it.

Last April, at the time of the £4bn cash call; there had been a forecast about the
house prices reaching the mid-single digit. The prediction made this time is a
near-doubling of the previous one. The end of the year 2007 had seen the prediction
of the house prices falling flat this year. With the 5% fall already making its
place in the house prices, experts still say that the situation is comparatively
optimistic.

The Council of Mortgage Lenders had predicted a fall of 7%. Therefore when compared
to this figure, the prediction made by HBOS was still "comfortable" for the bank,
said the HBOS chief executive Andy Hornby. The last time a warning was issued by the
bank was in 1989 when a 10% fall was expected.

After the issue of rights, the bank will have a measure of 6% to 7% from the now
existing 5.7%. This is called as the core tier-one ratio. The bank also said that a
fall by 10% in the house prices could be borne without any impact on the core
tier-one ratio by the bank.

The RBS had announced its cash call of a record £12bn and has already taken the cash
from the investors. However, the rights issue of HBOS was announced one week after
that of the RBS and will be completed only in the mid next month.

Two weeks before, Bradford and Bingley had given shock profits warnings and reprised
its rights issues. This caused a big confusion among the investors. As a result, the
share price of HBOS fell by 275p per share and led to the introduction of new rules
by the FSA which demand additional revelation of trading position in a rights issue.


Waving off any rumors of the rights issue being in trouble, Hornby stated, "The
rights issue is completely under control and has been proceeding according to the
plans. The times are difficult but we are intent on ensuring delivery."

If there is a 9% fall in the prices of their house, the customers will have to face
negative equity. This is due to the fact that they have personal loans which are
worth more than 90% of the equity of their property.

A modest rise in the unemployment has been warned about by the HBOS and it is the
first bank to do so. This could affect the repayment ability of the people. However,
the bank still claims that the levels of rise are according to the expectations and
will be dealt with. A rise of 17% has been seen in the arrears in the first five
months of 2008. Also, a higher increase of 24% was seen in specialist buy-to-let and
self-certification. According to Hornby, the rise seen in the arrears was being
compared to last year when the levels were record low. However, the mid of 2006 was
seen having the same levels which means this year, the levels are just getting back.


Breaking personal loans news is provided by http://www.firstchoiceloan.co.uk


Web Site: http://www.firstchoiceloan.co.uk

Contact Details: 27647
Moseley Road
Worcestershire
WR2 6NJ
01908678868
01908678869
shaunudal@gmail.com