Banks Greed drove house prices up via reckless lending and now their Fear will drive them back down again via NO lending.

..... they are not lending because they think house prices are going to crash.

..... they are happy to enjoy the profits on the way up but now want bailing out on the way down.

Rob, Manchester, UK

Cassandra, spot on. Lenders fueled the fall by restricting lending, perversely reducing the value of their securities in the meantime.Now they are restricting further because they got their forecasts wrong, they must be the only ones suprised. these guys couldn't run a tap.

mark, Surbiton, England

Maybe we should go back to the good old days and save before buying!! Most first time buyers ie the young are only interested in the latest waist of time gadgets and fast cars. Trying to out do each other in who can get in the most debt. Life has to change. i hope what is happening is here to stay

Dean, Lincoln, England

You'd have to be pretty stupid to even THINK of buying property now unless you're trading up/down. Please, please fight the property-porn brainwashing. The NUMBER of people selling is irrelevant - those that DO want to sell will set prices . . . . along with the auctions of repossessions

Justin Thyme, Bangkok, Thailand

Great news for first time buyers? Well given the banks don't wish to lend unless you have 30% down how many have the necessary deposit? Bit of a bad old time all around on this one. If you don't have to sell don't & if you are forced to I guess get out while the gettings good.

Jason Pearson, Toronto, Canada

Several people have said this is not good news for first time buyers.In fact it is excellent news. However, they need to hold off and buy in two or three years, not now! First time buyers need to concentrate on saving money and keeping unblemished credit ratings for when their time is right.

Charles Turner, Kingston, England

what about all the ftb's who found 10% deposits at the peak of the market - working hard to save a substantial deposit - diligently performing with the terms of their loans and mortgages - and for what - falling prices, fuelled by media and property porn commentators gloating at their equity!!!!!!!

tom, hove, uk

With the banking system coming apart at the seems, this has got to be worse than the last crash(30-40%). The Bubble really starts 1999 ±2 years after Blair / Brown made the Bank of England independant. This has only just started, think huge drop (50%)1999 prices, or massive devaluation of sterling.

Steve, Salisbury, UK

Correct Austin. We are "priced out" FTBs and this is finally wonderful news. In a few prices will have crashed and we can get something really nice for half the price. We are saving loads because rents are so cheap - sorry BTLers but in our neck of the woods they are NOT going up.

Davie P, London,

Peter: "Prices unlikely to plummet - sellers unlikely to offer their houses/flats for much less than what they have brought them for"

Well, thanks to 8 years of boom there is tons of scope for people dropping prices and STILL making big profits. Prices are not set by those who don't participate

Donald Taylor, Edinburgh,

FTB's should wait until at least 2010. By then interest rates will decrease and house prices will drop too since they are 30% overpriced. As prices drop people won't use their house to buy 4X4's, furniture etc so prepare for job losses. Plus house prices losing 5% each year to inflation.

Paul, harrow,

House prices are and will continue to fall. Some people may be forced to sell e.g inherited estates, bankruptcy etc.
BTL's will have insufficient equity to purchase more properties. At sometime in the future properties will be low enough so that FTB's will be able to afford to get on the ladder

John, Norwich, England

Steve in Edgeware

This is very good news for first time buyers. Buying a 100,000 house at 10% is MUCH cheaper than a 1000,000 house at 1% - the interest payment is the same but what about the capital???

How can this be good for BTL? Would you buy an "investment" that lost £2,500/month?

Tim , Ipswich, UK

Peter in Swindon, very many people *will* be selling due to unemployment and/or higher mortgage rates. Arthur in Southampton, councils do not have to pay the full rent to benefit claimants if they believe that that rent is set too high, hence landlords may need to lower those rents.

Paul, Coventry,

A change to the tax system is what is needed, why should people who sell houses that are clearly not now their main residence be free from capital gains tax. Raise the threshold to 90% occupancy during the period of any gain, that should ensure that more of these speculative gains attract fair tax.

Steve, Reading,

Isn't it time that lenders factored in this risk by raising their interest rates to new borrowers?

Nan, Reading, UK

They're "surprised"? Unbelievable.

Bruce Robertson, Brighton, UK

Peter, Swindon,
Not every seller bought their house in the last 2 or 3 years! Those who did unfortunately borrowed/paid more than their property is worth today.

barry wiseman, bromley, kent

Mike Bedford: Buyers who have taken out a mortgage, particularly in the last 2 years have helped house prices to spiral, and have themselves to blame if they cannot fund their mortgage.
1st time buyers, your time has come. Be patient!

sophie smith, london, uk

Buy to Let is still the best investment available to most people because these landlords are effectively guaranteed to receive their rent through the Housing Benefit system operated by local councils. When will this scandal be revealed ? Hence, continuing strong demand for these loans.

Arthur, Southampton, UK

Austin, this is actually very bad for first time buyers. No-one in any sector of our economy is immune. What is needed is stabilisation of the property sector and of the wider economy. Until then, unless you are a first time buyer with a rock solid job and are buying for cash, it is bad news.

Bob Donald, London, UK

Sorry to disappoint. Prices are unlikely to plummet as sellers are unlikely to offer their houses/flats for much less than what they have brought them for or what their neighbours sold them for recently. The only reason they would is if they were forced to due to high interest rates or unemployment.

Peter, Swindon, Wilshire

"lenders have been taken by surprise by the rate of borrowers defaulting on their mortgage payments."

Banks were expecting a 50%increase in home repossessions due to bad debt/arrears. Just how bad is the situation now, for the 'experts' to be "negatively surprised"at the levels of default???

Stuart, sheffield, uk

Well not really cause you will not get a mortgage unless you have a sizeable deposit, an income over 30-40k and want a pay rate of 7%+ which means a massive re-payment. This is more like good news to BTL investors to me!!!!

James, London,

Yes Gerry, totally agree.

James, London,

Reducing loan avaliability because of expectations is going to be a self-fulfilling prophesy, no mortgages =no buyers= prices cut, leadeing to fewer mortages and so on and so on until nobody will lend anything because all houses aer worthless. Just how dim are our bankers? No, dimmer than that even.

CASSANDRA, Hitchin, UK

I am constantly amazed by the constant winging off first time buyers. What about the thousands of people who have bought property over the past 2 years and are watching in horror as the value of their properties plunge and the cost of mortgages are soaring.

mike, Bedford, UK

This is not good news for first-time buyers, as they are very unlikely to be offered a mortgage. It may be good news for buy-to-let who can see demand growing for rented accommodation and realise that they will be able to push rents up, with little prospect of their tenants buying their own place.

Gerry, Coventry,

A problem for first time buyers is that the banks won't lend to them to take advantage of the price drops.
I hope i'm wrong but I doubt it

Derek, Macaé, Brasil

Yes i agree prices are going to plummet Austin, but what makes you think its great news for first time buyers! It will great for people with available cash but interest rates are going to go back to double digits and unless first time buyers have a very large deposit it will make no difference.

Steve, Edgware, UK

This is great news for first time buyers. The prices are going to plummet.

Austin Tassletine, South West, UK