HBOS warns house prices to fall 9%

In its June trading update released this morning, the lender says it expects the UK economy to slow further in 2008, leading to a 45% reduction in transactions from the previous year. HBOS, which currently writes 20% of new mortgages, has been somewhat buoyed by recent activity – with May a record month for HBOS retail inflows. However, it expects no relief from the Bank of England, accepting inflationary pressures will restrict the Monetary Policy Committee's ability to reduce base rates below current levels. The news follows Bank of England governor Mervyn King’s gloomy speech at the M...