Turmoil in UK markets raises threat of a housing crash

After several days of huge UK financial market volatility, the BoE intervened at the long end of the gilt market and postponed the beginning of its programme of gilt sales. The intervention appears to have brought greater stability for the time being. But with the government showing few signs of heeding markets’ message, further instability remains a significant risk.

What you will learn:

• Though the BoE’s temporary bond buying programme triggered falls in swap rates, they remain high, and a number of banks have already responded by significantly increasing interest rates on their mortgage products. A scenario whereby house prices crash, adding to the already-strong headwinds on consumer spending, is looking increasingly likely.