Thursday, July 29, 2004

The Bank of England, speaking excellent Greenspanian, voiced fears last month that British homeowners could soon find themselves in a negative equity situation.
"Prospects for house prices are highly uncertain and, after the strength of house price inflation in recent years, the chances of a fall have risen. If that were to happen, housing equity would be reduced and capital gearing raised, increasing household mortgage arrears and thus raising the risk of write-offs."
Now today we find out that Brits are in hock to the tune of �1 trillion, and
about 80% of UK personal debt is in the form of loans secured against homes, such as mortgages and re-mortgages.
Clearly a fall in housing prices in the UK would cut deeply into consumption since a housing-based wealth effect is driving overall UK growth much as it is in the US. British housing stock is worth about �3 trillion today. If homeowners' average equity value is anywhere close to 33%, things look troubling.


At 1:41 AM, Anonymous hypotheken said...

Hi Blogger! Ik ben op zoek naar hypotheken Zou Afab echt zo goed zijn als iedereen beweert? Of kan ik beter zoiets als Geldshop proberen?

Groetjes Albert


Post a Comment

<< Home