House prices will crash soon
Over-valued house prices: IMF has warned that house prices will have to be corrected
House prices are 30 per cent too high in the UK and could soon crash, the International Monetary Fund warned yesterday.
After a decade-long housing boom, it fears Britain is one of the most vulnerable countries in the world to suffer a devastating price collapse.
In a further blow, both the Bank of England and mortgage brokers warned that the mortgage meltdown is going to get even worse.
The number of mortgage deals available has collapsed 13 per cent since Monday and 70 per cent since last summer's credit crunch began.
David Hollingworth, a mortgage broker at London & Country, said: "It has got to be one of the most rapidly changing and volatile weeks any of us can remember. The credit crunch has really got a grip on the mainstream mortgage market and there is nothing you can look to that shows the situation is going to improve in the near future."
The Bank of England is widely expected to cut interest rates by 0.25 per cent to 5 per cent on Thursday.
But experts say this will make very little difference as lenders have been increasing their rates rather than passing on cuts to customers.
Ray Boulger, of Charcol mortgage brokers, said a cut of 0.75 per cent was needed just to put people in the position they would normally be in if interest rates were at 5.25 per cent.
The IMF said the UK has experienced one of the world's "largest unexplained increases in house prices" over the past decade.