The Building Societies Association (BSA) chairman has said that mortgage markets will take two years to recover from the credit squeeze. Iain Cornish added that once recovered, the market will be very different to the early years of this decade, and that a more ‘sensible’ market should return in the long run. The credit crisis has not caused building societies as much pressure as the banks, as the former generally do not have the same reliance on wholesale funding as some of the major banks – they are ‘well capitalised, highly liquid and prudent’.
However the Financial Services Authority (FSA) said that building societies were accumulating too much risk in buy-to-let mortgages and failing to understand the risks, while warning some of them had been too slow to react to the credit crunch. The chief executive of the FSA said that building socieites were not preparing for ‘extreme stress scenarios’ and may need to tighten their lending criteria.
In America, the US Treasury Secretary Henry Paulson has said that the worst of the credit crunch may have passed. The turmoil in the financial markets that had lead to massive worldwide losses has eased, however he acknowledged that the US economy was facing tough times still with soaring petrol prices and a weak job market.
Rural communities are being destroyed by an ‘urban exodus’ of middle class families unable to buy in city centres. A report by the Campaign to Protect Rural England (CPRE) said that villages are struggling to cope with the extra pressure placed on services and greenfield land. It calls for the problems to be tacked by reviving urban communities through the building of high-quality, high-density housing. The report estimates that London has lost 800,000 people to the surrounding areas, most of them because of housing concerns.
And finally, peers in the House of Lords are calling on the government to review inheritance tax laws regarding exempting cohabiting siblings. The issue was raised in question time following the story of the two unmarried sisters who had lived together for decades, who failed in their battle to avoid paying tax on the death of the other. Baroness Hollis of Heigham said that death duties should be deferred until the death of the second relative.