Fsa Releases Stress Test Methodology

[Sybil13]

Unlike the FSA, Moody's does employ economists and accountants.

According to IMF, even after the 22% fall from 2007 peak, the UK market is 30% above the historical averages - 30/130 gives you another 23% fall and a total of 45% peak to through BUT

Prices never move in a straight line - they over shoot on the way up, and go through the historical average on the way down - on a graph that would look like a wave (prices) with a strike through line across, not under it (historical averages) - this is where the Moody's 60% comes from

The 60% brakes down into 2 components -

32% from the ned of securitisations and lax lending - already there, but not in a full blow due to market manipulation by means of the BoE base rate and QE

25-30% from economic recession factors (unemployment, wage stagnation, disposable incomes) - just beginning to unravel and will be in a full swing by Q4 2010/Q1 2011

b]According to IMF, even after the 22% fall from 2007 peak, the UK market is 30% above the historical averages - 30/130 gives you another 23% fall and a total of 45% peak to through BUT[/b]

Is that a quote from somewhere?

I know that the article about the BOE official who warned Darling in April, "Not to stop the housing crash," it said that property already down 21% was still 40% overvalued.

And I know the IMF have said:

Britain's homeowners must brace themselves for a prolonged slump in the housing market, according to the International Monetary Fund, which delivered a grim assessment of the UK economy this weekend, in stark contrast to Alistair Darling's prognosis.

While the chancellor insisted in last week's budget that he expected to see green shoots before the year is out, the Washington-based lender believes the housing crash is far from over, with property still over-valued.

House prices have already fallen by around 20% in the UK; but despite the rising optimism of Britain's estate agents, the IMF said the housing downturn in the UK, and equally damaging crashes in Ireland and Spain, probably have "a considerable distance left to run".

[threetimesdead]

Is that a quote from somewhere?

I know that the article about the BOE official who warned Darling in April, "Not to stop the housing crash," it said that property already down 21% was still 40% overvalued.

And I know the IMF have said:

http://www.home.co.uk/guides/news/story.ht...ouse_price_fall

[Jim B.]

I, like you, thought 35 - 40% seemed a big drop until I read this earlier this year

Yeah, I know. I lived through the early 90's crash and have to say it kinda passed me by completely. There was none of the systematic failure of banks and huge state borrowing that we see now. Yet they had massive falls. Mainly big interest rates caused the havoc it seems, putting pressure on people, but then again you can balance that out now with the unemployment and massive personal borrowing we have now. So logic would suggest falls much worse than in the early 90's. I hope so obviously, housing is far too expensive. There is certainly no end in sight soon, 50% could well turn out to be conservative.

[Sybil13]

UK bank stress model sees house prices down 50 percent

Did anyone pick up on the fact that Reuters printed 30% falls instead of 50% , quite a bit different.