As more people worry about house repossession, economists warn the worse is yet to come.
The Monetary Policy Committee has spoken out warning house repossession and economic recession could become a firm reality unless the Bank of England acts urgently. David Blanchflower, a member of the MPC was widely quoted in the press for his remarks that the UK is on a dangerous financial brink. The senior Bank of England policymaker teaches economics in America and is well-respected in the finance industry. He said in a speech to the Royal Society reported in the Telegraph newspaper: “We face a real risk that the UK may fall into recession, and aggressive action is required to prevent this from occurring. For some time now I have been gloomy about prospects in the United States, which now seems clearly to be in recession.” Blanchflower went on to say the he felt there are similarities between the UK and the United States that suggest that in the UK there will be a substantial decline in economic growth, as well as, “a pick-up in unemployment, little if any growth in real wages, declining consumption growth driven primarily by significant declines in house prices.”
House Repossession – the Increased Risk
More homeowners will be forced into sell house fast schemes to stop house repossession, but some will inevitably become victims to house repossession – house repossessions have swept across America causing economic and emotional devastation. Mr Blanchflower said aggressive action was needed to stop this scenario reaching UK shores. But already, house repossession is on the rise. As Mr Blanchflower said, “The credit crunch is starting to hit and hit hard.”
House Repossession Warnings
The speech broke at the same time as news was released that property prices had witnessed their lowest fall since records began in 1990. It is clearly an explicit warning about the very real risks of negative equity and house repossession, that look inevitable in the current economic climate. Mr Blanchflower believed that a drop by a third in property prices was reasonable in order to restore the affordability levels of home ownership; great news for up-coming first-time buyers, terrible news for those who have over-stretched their finances in the past few years to buy their home. For them, house repossession may be an ugly reality. Many families are facing up to increasingly gloomy finances, with a rise in utility bills, food shops and inflation as employers cut wage increases to safeguard their profits.
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