House Price Slump Shocker! Cut interest rates now! Don't panic!

There has been a 2.5% drop in house prices, according to the Halifax since last month. This is not good new for people who bought houses last month. However it is better news for first time buyers.

Thing is times are tough. For years people, like me, have been saying that house prices are out of control and that will cause a problem, for first time buyers if no one else. We have also been saying that there is a problem with the way the economy has grown on debt alone.

The banks (or rather the mortgage lenders) are saying "cut interest rates now!".

I would love to think that would help, it would if the money that the banks needed to borrow was lent by British savers. The problem is that with the lowest savings ratio for nearly 50 years, the banks are borrowing money from overseas, sovereign wealth funds, and the like. They see no need to pay attention to our central bank rates and will demand, and incidentally get, what ever interest rate they like. After all they could invest their money somewhere where property prices are on the up.

Gordon Brown says "Don't panic!"

He is right in that, after all there will be a Conservative government along in a while, who will sort out the massive mess an ignorant Labour government has created.