Now Lenders want to stuff the market.

It’s one thing having the Chancellor of the Exchequer putting the boot into the housing market but quite another for people in the business to frighten buyers away. Can you believe the news that hot on the heels of comments from the Chief of HBoS comes competition from his colleague at Nationwide for the “stuff the market” cup.

Last week, having just shut 53 of his own offices, HBoS chief Andy Hornby calmly said that he had “no doubt” that house prices would fall further at a scale similar to that seen in the early 1990’s. Something to make every nervous buyer peek out of this rented house and think “D’you know what, not today”. Now, the Nationwide leader, fresh from his turn in the sun has predicted that house prices could fall as much as 25% from their peak.

His own survey last month said that prices had fallen 10.5% so Graham Beale seems to be suggesting that he feels that they have a further 14.5% to go. When you are thinking of putting a 25 year mill stone round your neck, the last thing that most people want is the man handing them the cash to say “oh, by the way, you know it’ll be cheaper in 12 months time”.

Confidence in any market is crucial but we must suppose that these great financiers are playing a longer game. Rather than telling their own borrowers as well as potential customers that they are about to step through the negative equity trap door perhaps these eminent brains are actually trying to pile on the bad news to get the pain over quicker?

The gamble is that by putting off potential buyers in this way the banks and building societies are hoping that values will plunge and that a new market will start again quickly at this new, lower level. If it fails then I for one will be keen to hear from these two ‘leaders’ just what their justification is for once again pushing the market back just when the Government and the industry is trying hard to it going again.
When the head of Northern Rock messed up there were fat redundancy payments and pension payoffs’. I wonder if there is still the prize for getting it staggeringly wrong?