Governor of the Bank of England Mervyn King has sounded a warning that inflation remained a serious threat to the UK economy – in spite of new figures that showed that the housing market was facing the risk of a severe slowdown. Financial Times, The Times, Guardian, Independent
Bank of England figures showed mortgage approvals at their lowest level since early 2005, while the Nationwide building society said house prices fell 0.6% in October, bringing the annual rate of house price inflation down from 9.7% in September to 6.9%
King said that he expected tighter credit conditions to be felt first in the housing and commercial property markets.
He predicted for the first time that the housing market will be hit by the credit squeeze, as a key survey showed prices falling at their fastest rate in 12 years.
King told MPs that the impact for Britain of the turmoil in global financial markets was 'likely to be evident first in the housing and commercial property markets'.