Some recently published reports from Hinde Capital note that, if anything, Britain has become more vulnerable to shocks since the financial crisis. And once again, much of the danger is centred around the UK housing market. The problem is that, following the crisis, more and more houses have moved from fixed-rate loans to variable or tracker-rate loans. In fact, fixed-rate loans now account for “less than 30% of mortgages” from more than half (by outstanding balance) before the crisis. All of this means that the housing market is much more sensitive to any shift in interest rates. In all, this leaves “UK property vulnerable to another correction”. And that’s where we get back to the question of the gilt market, the bank-sovereign-bank ‘doom loop’.

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