Sunday, April 6, 2008
Even the VIs know the game is up
Mortgage lenders are bracing themselves for a slump in property prices of up to 20 per cent, The Independent on Sunday can reveal. A housing market collapse, wiping an average of £40,000 off a home, is now being discussed by lenders.Lenders had until recently predicted a small fall in house prices of no more than 5 per cent. But recent turmoil has spooked banks into thinking that a general crash is now more likely."Whereas in the past we were modelling for a 5 or 10 per cent property price fall, we are now testing against a 15 or 20 per cent fall," explains Matthew Bullock, chief executive at Norwich and Peterborough building society. Bank group Lehman Brothers went further last month and said that it expected house prices to have fallen 8 per cent by the end of next year.