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Morgan Stanley: Scale Of U S House Crash Not Likely In Europe

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Thursday August 30, 01:28 PM

Scale of US housing market problems unlikely to visit Europe - Morgan Stanley

LONDON (Thomson Financial) - The scale of the US housing market slowdown is unlikely to be repeated in Europe, although a rise in interest rates and tighter credit conditions are likely to slow house price gains, according to a leading investment bank.
In an analysis of the European housing market Morgan Stanley (NYSE: MS - news) said the US subprime mortgage market - whose problems have exacerbated the housing market's slump - does not have a European equivalent which should limit any similar problems this side of the Atlantic..../
However lending conditions in Europe are by-and-large much more stringent, with few subprime borrowers able to borrow 100 pct of the value of a home. 'For that reason the likely scale of potential problems in European housing and mortgage markets is significantly lower than in the US,' said Morgan Stanley economist David Miles..../
However, Miles emphasised that house price gains across much of Europe over the past ten years have been significantly higher than those seen in the US, leaving them vulnerable if optimism about the housing market's strength wanes or if borrowing costs go up.
He highlighted the UK
along with Spain, Denmark and Greece - where speculative factors have helped to drive up prices in recent years - as being particularly susceptible to a slowdown.

Good old Brown and his miracle economy which has outdone everyone in the world with regard to HPI excess. 125% loans--no problem. SI? Not earning-no problem. Bad credit? Sign here, not a problem. Only earning 40k and the house is 400k? Not a problem 10 x salary will do nicely.

Edited by Realistbear

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