THE BANK OF England issued a stark warning today that the dangers surrounding the UK's financial system have risen over the past nine months, reports The Independent.
It said benign economic conditions had made banks complacent about risk-taking, some companies were loading themselves up with worryingly high levels of debt, complex credit derivatives were untested in times of turbulence and some debt-laden households were showing "signs of stress".
It said the recent US sub-prime mortgage crisis was a salutary reminder of how credit risk assessment can go disastrously wrong, and how participants can be hit by sharp reductions in market liquidity.
In its twice-yearly Financial Stability Report, the Bank said the financial system remained "highly resilient". But it urged banks to be alert to the growing risks and take them into account.
It singled out the corporate bond market and its associated derivatives market, which has exploded in size in recent years, as particularly vulnerable.
THE LIKELIHOOD OF a further rise in interest rates was fortified today as house price inflation in April continued in double digits, valuing the average home at £180, 314, reports The Times.
Annual house price inflation in April rose to 10.2 per cent, just below a two-year peak in December when the rate reached 10.5 per cent, but above 9.3 per cent in March.
On a month-by-month basis, house prices increased by 0.9 per cent in April compared to a 0.5 per cent rise in March. In March, the average house was worth £177,073 - in April, that rose to £180,314.
The robust figures, released by building society Nationwide, will add to the momentum of a hike in borrowing costs in May.
THE OFFICE OF Fair Trading has begun an investigation into the cost of personal current accounts, in an attempt to work out whether unauthorised overdraft charges are fair, reports The Guardian.
The market study will consider whether there is transparency over the charges levied on customers, and whether there is sufficient competition in the market. It is due to be published by the end of 2007.
The OFT said in late March that it would conduct an in-depth study of retail bank pricing, after admitting that without this information it could not rule whether bank charges were fair.
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Ceremony will take place 13 November