Sunday, December 23, 2007
David Smith reassures us all
How much more gloom can you take? HBad news sells, so perhaps I should be laying it on with a trowel. We have the credit crisis, the budget deficit is overshooting and the pound has fallen. But there is reason to be optimistic. If you believe that a big, 10% fall in house prices (which I don’t expect) would take us back to the negative equity of the early 1990s, and leave banks with dodgy mortgage books, then fine, but it is not true. Loan-to-value ratios have been kept under control, so mortgage books are insulated from quite a big fall in prices.