With the US subprime crisis spreading to Europe, shockwaves in Northern Rock which would spread to other banks, UK economy growth not looking healthy, increasing trade deficits, sharply rising mortgage costs, falling corporate profits and job cuts especially in the City, and as market turmoils escalates, housing price which shows a first drop of 2.6% (from Rightmove last month), this are the signs of the beginning of a housing crash. PROPERTY SHARES ARE A SELL!

I have a wee problem with the idea of mis-selling and tighter regulation.
It has been argued by many (including a tory investigation into the role of the FSA) that regulation is far too tight already, and is hindering the industry with mountains of unneccessary red tape.
John Redwood argued for more caveat emptor and less big brother.
As far as mis-selling goes, the rigmarole for a broker is painstaking and exhaustive. They are held responsible for investigating the truth behind applications and for assessing a clients affordability. Morally and ethically, how can anyone argue that offering a client a product they have asked for, on the basis of facts they themselves supplied, provided by a lender willing to take the risk, giving the client full written details of the contract prior to their commitment to it and employing a solicitor to check it over can ever possibly be mis-selling!!!!!
It is the typical bullshit of "blame someone else" for my mistakes culture that is going a long way to ruining life.
What next? Car companies sued for mis-selling a 1.6 litre car to someone who only needs a 1.2 litre and have suffered an extra few quid in fuel costs?
What utter crap. I am waiting for the queues of people claiming mis-selling, but that is an astonishing abrogation of their duty to themselves. Anyone taking on a long term commitment of any sort is a fool who deserves all they get if they do it without considering the what ifs of the future.
We happily apply that to the lenders. The borrowers should expect the same response.

hewittalan6 - interesting comment about bridging facility and New.B/Society. Somebody cannot be living in this world. I wonder how wide spread this type of transaction goes on at present against the current background. Scary indeed. I can see where Courts should be used where there is a good deal of equity in the property or a reasonable amount but, presumably where negative equity is concerned,it won't make much difference unless the authorities are prepared to underwrite the bad loans and take on some of all of the risk. I agree with you that capitalism should take its course but, with so many people involved in sub prime the social problem could be immense. Unfortunately, we have not got the right people in government to think the situation through and hopefully something will give and Brown &co are forced to go. A backbench revolt may be the catalyst if things get worse and they start getting worried about losing their seats.

It will be a good test of the independance of the BoE, Gus.
Politics demand a rate cut or two. It can be argued that good fiscal management requires at least to hold rates and there is a good argument for raising them!!
In the long term, I think raising rates would be a fairly good move, as it would strengthen the considerably and interest foreign depositors, and hasten a fall in property prices to more sustainable levels.
Fear of a fall in value is what has restricted lending at least as much as the lack of money, and once that fall is realised lenders will loosen their criteria a little, spurring the market on to a steadier playing field.
I agree though that the socio-sconomic fallout would be too much for a government to weather, so a cut is on the cards, with all this means for simply putting off the inevitable end game.

Tend to agree with you hewittalan6 about interest rates. However, for now at least, the rate set by the BOE seems to have de-coupled from market rates. Presumably this will continue while there is such mistrust between institutional lenders. If BOE lowers rate this week, be interesting to see what market rates do.

If anyone cannot afford to pay the interest on their house let alone the capital repayment then they should be thrown out. It's that simple.

We live in a society where we seem to think loans should never be repaid. Stick 'em in the streets I say.

Britain is heading for a decline in the housing market similar to that witnessed in America, while the number of people having their homes repossessed could double as mortgage costs rise, the International Monetary Fund claimed.

Against a backdrop of a 180 per cent rise in house prices over the past decade, George Osborne, the shadow chancellor, accused the Government of allowing a "debt bubble to grow in Britain" which is now beginning to burst. Mortgage lenders are responding to the global credit crunch by tightening up conditions for loans and raising the cost of borrowing.

At the end of the day, why shouldn't the UK see house price falls like all the other countries in the world? We're about the only ones not to have had it yet!

Totally agree with you, Big Al...
The young generation of today seems to think money grows on trees, living on credit cards and paying only the interest, buying things they don't need and cannot afford impulsively, driving inflation upwards, bingeing on alcohol and drugs, and also think that things will get only BETTER without helping themselves!

It's not just the young, hyleo.

I know folk in their 50's who've been cashing in pension plans in the last year or so to buy properties and are only paying interest on the mortgage. Nuts! This is especially so since they made about 6000 income on 4 flats last year. They're currently having trouble remortgaging their earlier fixed deals at anything near the rates. I don't expect them to make much at all this year!

PS - they freely admit they cannot afford for prices to drop!

an economist last year said int. rates had to go at least 8% to tackle housing prices rocketing.....and probably 10%.....but even then it was getting late as should have been done about 2 years earlier.

has anyone ever thought why houses are up about 180% in 10 years.....as in previous 30 or 40 years say, housing is up about 3 per cent on average.

my guess is that Mrs. T revolutionised way people treat shares in that many buy shares since her day.....but also their pensions rely on stock market.....in other words, most people r reliant on shares.......this was not the case in 1970s under crappy labour.
now, the labour cabinet aint allowed to buy shares and its been about 20 years since they in power......so they think.....hmmm, how can i make money but no shares......i know, lets ramp up houses

has anyone noticed john reid has lots of property.....but its under his non-dom wife from south america.....he has cheek to call himself a socialist. he looks like a mafia wee gangster. it was just when the newspapers were getting hold off this story, that reid stepped down from government......strange that. eh!

now, he's away to ireland to help celtic.....oops, i meant glasgow!

As predicted widely, rates were cut today.
Manufacturing looks strong and inflationary pressures are very real.
The only solid reason why rates have been cut is to try to stem the credit crisis.
Is this done because the credit crisis will bring a sting in its tail by way of a slump, or is it for political reasons and the fallout a severe property downturn may bring?
Decide for yourselves, but I know which I think to be true.

Heard on the news that Nationwide has put some mortgage rates up.

Interest rates affect SVRs, LIBOR affects the rest is the basic story.

aye hewitt...its for political reasons. the interest cut will not be passed on to people in UK Mainly.

whenever, brown goes to country for election now, whether its next year or 2010.....the country is going to be screwed and most people no better than stagnating and probably much worse off

Interestingly, while awaiting remortgage offer from the Woolwich, on a sale property i have, i enquired as to what the Barclays Bank Base Rate actually was? and was quite surprised to find it is still identical to the BoE base rate, the broker expects the rate to drop on Monday to 5% in line with todays decision, so even though the product i am awaiting the offer for is no longer available, there are still some good deals out there albeit max 95% LTV...
As has been highlighted by many here, anyone who took a large mortgage fixed 2 years ago at around 3.75% and couldn't foresee a large jump in repayments when the deal ended deserves to be in a pickle...

Big Ted,
Its not people not foresseing that I get the hump about.
You will know as you are remortgageing that you will have had at least one Key Features Illustration, and you will get at least 2 more, that shows not only the current payment, but the payment at SVR and the effective rise in /S/D for every 1% increase in rates. This is followed by a paragraph challenging you to ask yourself if you could afford these higher payments and a further one warning your home may be repossessed etc.
You have to ask how on earth anyone could possibly, ever, in any circumstances, bleat that they were unaware of what could happen, and that it was all someone elses fault???? But they surely will.
You would have to be a totally illiterate moron to not understand all that lot!!!

Funnily enough, just had an offer on the property half hour ago, trouble is i dont trust anyone at the moment and this is a buy-to-let purchaser supposedly with cash, got my PI checking them out as i type...!

Did he/she give you the asking price?

Nope, but i'm ahead of the game somewhat, as it is already probably the cheapest property of its type in the area, so have demanded completion within 28 days and will continue marketing, although they are buying it at a fantastic price, i would rather it goes now whereas this price may seem expensive in 6 months time...