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Is It Time For The Government To Bail Out Banks Again?

News that mortgage approvals are down 32% for the year ended June 2008 has prompted calls for more assistance from the authorities as the situation in the housing market continues to worsen. The Council of Mortgage Lenders (CML) has also voiced fears that a rise in interest rates to try and subdue inflation would literally kill the UK mortgage market overnight.

The true problems in the mortgage market are clearly shown by the fall in business of 11% in the first three months of 2008 and the fact that it increased to 21% in the second quarter. Noises from within the industry also suggest that the rate of slowdown could rise yet further as money markets tighten and buyers flee the housing market.

While the recent mortgage rate reductions by Nationwide and Halifax to name but two were well received they do not mask the underlying problems of the industry. Whether these reductions were implemented to try and entice more people back to the market or finance is becoming cheaper remains to be seen, but there will surely be more pain before we hit the bottom of the UK housing market.

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