Monday, Apr 21, 2008
Government believes it is necessary to protect itself from the prospect that house prices could fall by up to 30%
Citywire: Bank of England £50bn bail-out leaves lenders exposed to housing crash
The Government's plan to restore liquidity to the banking system marks a £50 billion intervention into financial markets but aims to minimise taxpayer risk.
The nature of the scheme shows that the Government is seeking to insulate itself from the risk of the housing market falling by between 10 and 30%.
Posted by lukeskywalker @ 04:02 PM (355 views) Add Comment
3 Comments
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1. voiceofreason said...
"However, banks will pay a heavy price for accepting the facility from a plan which aims to leave the long-term risks of a falling housing market firmly with the banks, rather than the taxpayer."
Thank Crunchie for that !
I hope the mortgage backed bond valuations are from an independant 3rd party.
2. it_is_going_with_a_bang said...
"The governor of the Bank of England was optimistic in claiming the move could have a radical effect"
Yes in reinforcing the belief that prices will go down by 30%.
3. jonb said...
However, they have to go down by about 60% just to get back to the long term average. They will probably overshoot on the way down. High inflation while the crash takes place could of course work in the opposite direction.