In July 2007 we warned that the gravy train of free and easy credit could hit the buffers with serious consequences for the housing market here in the UK. We said:-
“The market for credit is truly global and so you can expect UK Mortgage Lenders to start becoming more risk averse. The sub-prime sector will most likely come under the spotlight first. If Lenders become more choosy about who they lend to and on what terms this can only act as a further brake on the market.”
We went on to speculate about whether the market would go into reverse. The rest, as they say, is history. The problem is that five years on nothing has really changed. Indeed, the IMF has cited the risk of an extended housing slump as being a significant threat to the UK economy. Those counting on a return to a normal market will need patience. More realistically perhaps they should be looking at a credible “plan B”.