British Housing Collapse on the Way

February 17, 2010 (LPAC) — The Daily Telegraph reports that, by next January, mortgage lenders will have to start paying 319 billion pounds borrowed from the government during the original crisis of 2007 — a quarter of the U.K.'s entire 1.3-trillion-pound stock of mortgages. This, at a time when mortgage lending and the raising of funds by mortgage lenders has collapsed. Mortgage approvals have fallen from an average of 3.4 million annually during the reckless years between 2005-2007, to 1.3 million. While lenders were able to raise 130 billion pounds in the 12 months prior to the credit crunch, they raised just 11.5 billion in the last two years!

Mortgage lenders do not have access to the almost free money the Bank of England gives to British banks, so, this most likely will have to come from the government, again, which has obvious consequences for the government's budget deficit.

It looks like there's one more leak on the Titanic.