so do we think this bank of england funding will make any difference to the falling house prices?

[sparkleymummy]

or will they stick to the decision to tighten lending criteria anyway?

No the shit will hit the fan, and house prices will drop, mortgage rates will go up and everyone will feel the pinch.

It is only to enable the banks to sort out their books and get trading between each other again.They need to pay it back and so still need to raise funds and be in profit so I see a decline in house prices coming and possibly raised rates.It will mean that money is at least availabler so if you need a mortgage and are in a good position you will have more chance of getting one than now when there is no money at all.

Agree sussies it is really a last ditch attempt and is to save the banking system NOT the housing market.It will cause inflation to soar and interest rates will rise by teh end on the year We will all pay for this

What noddy said. I suspect a lot of people are conflating house prices with the credit crunch and assuming that once the latter is 'fixed' everything will go back to 'normal' (meaning resumed house price inflation). But there's been nothing normal about house prices in the last few years, esp in relation to wages.

Prices had started their decline before the credit crunch in September - it only made things much much worse. Even once the credit crunch is over, lenders are not going to go back to lending 6x salary or 125% of a property's value.

IMO lower house prices are a good thing for almost everybody, not just first time buyers! In the last crash, up and down chains people were negotiating price drops all the way up the chain - the only ones to 'lose out' were those trading down (and they still did fine having benefited from years of boom).

but if people are linking the two in their minds then it might boost consumer confidence

it might - but that is a drop in the ocean.

Large numbers of huge loans have been taken out in the past few years by people desperate to get on the housing ladder because they are scared they will miss the boat.

Now these loans are not available, and won't be for years to come, even if the credit crunch ended today. People's confidence could go sky-high but they still can't pay for houses at anywhere near the same level they have been. Demand isn't really demand unless you have the dosh.

It might boost confisdence but if bank says no its no.I think this has all woken a huge proportion of people up to the fact that average prices at 10x average salary is not sustainable.Houses are not piggy banks and people have used them to fund lifestyles that otherwise they couldn't afford.Bring it on i say and lets get it over with Better a short sharp shock than years of gradual slowing.

To be honest, I hope not. We are FTB looking for a house, and the prices in the SE are still sky high (compared to average salaries). The number of people that will lose out from falling prices is quite small (really, just those who are selling for good, like people wanting to fund nursing home care), whetheras the number of people in our situation is huge. Most people buy a house and sell a house at the same time, so if your house goes down, so does the one that you want to buy, and no net loss or gain. A whole generation is getting stuffed at the moment.

They have just announced that this money is not to finance new lending ???Only to rebalance the books up to dec 07 and risks of losses remain with the banks.It will have no effect on housing it is purely a liquidity issue

I have been reading the report online and it seems like a pretty rum deal for teh banks and only those close to the brink will sign up for it so in effect it will probably make some banks decide to get revenue elsewhere by laying off staff cutting bonuses and making current customers pay by raising rates and pulling cheap deals.It will not make any difference to house prices from what they are saying.

bbc just saying it wont affect the housing slump