Credit crunch unlikely to subside in New Year
January 6, 2008
According to a recent report the likelihood to an ease in the effects of the credit crunch in the New Year is looking more and more bleak. Reports from across the Atlantic indicate that some banks may suffer the effects of the credit crunch for years to come, and further bad news came with the confirmation that house prices in North America are continuing to plummet at record pace.
The reports show that house prices in North America have fallen for ten consecutive months, and that the level of repossessions has resulted in an increase in the number of properties coming onto the market. In October house prices fell by 6.7%. The credit crunch was sparked in the sub-prime sector of the US mortgage market, and in the summer of last year swept across the Atlantic affecting the UK and other countries.
The global credit crunch has affected most areas of the financial markets, resulting in tighter credit conditions, increased inter-bank lending fees, and a reduction in liquidity amongst lenders. In order to help resolve some of the issues five of the world’s major central banks, including the Bank of England and the US Federal Reserve, have had to join forces and inject cash into the money markets.
Although some were hoping that the effects of the credit crunch would start to ease off in the coming year it seems that the bad news from across the pond indicates that these effects could continue for a long time to come. One of the many effects faced by consumers in the UK is difficulties in getting a cheaper mortgage if they are on cheap fixed rate mortgages that are due to come to an end.
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