If I have understood the situation, lenders were happy to lend during the credit boom so long as the they could pass the debt to a third party. Now lenders are less willing to lend as they are compelled to hold more of the debt themselves. The overall amount that can be lend is reduced.

UK property prices were set at the margins of affordability. So, if the credit crunch continues property prices will fall.

Costas, Larnaca, Cyprus,

You ain't seen anything yet. Learn your history if you want to know the future. If house prices really start to fall by any worrying degree...... the banks will really put their shields up and restrict lending.

In the 1939 survey (Great Depression) over 50% of the reason given for credit refusals were "bank policy".

With falling house prices, it lowers the market value of real loans. Banks, just like their predecessors after 1929, will not want to write new loans to see £1 of their safe cash go into a loan which will only have a market value 80p or 60p or worse.

David S, Manchester, UK

Boffin 3.2.08 3.40pm
I was one person that came from a large family and was brought up to only buy when you could see your way clear to pay for it, The problem has been that money has been to easy to borrow, and the majority of borrowers did not go into things deep enough, and i am glad to see that the banks and financial organisations are suffering now for the incompetance of offering all the incentives to people to make them borrow.

Stanley stephens, Gamlingay South Cambs., England

I'd say it crunch time for lenders.Borrowers can declare themselves bankrupt and walk away.Do lenders have this option?

stephen hulton, eure, france

"Is the UK property market about to undergo an absolutely humungous correction as a result of over-lending and Greed? Looks like the supply and demand arguement is dead in the water! ...Sam Smith, Liverpool, UK"

Sam - I was never convinced by the supply and demand argument.

Partly from choice, partly from not finding it easy to buy something affordable, I've been in rented accomodation for the last 3 years. (Something I would have no problem going with for the long term).

The thing that struck me is how low the rent was relative to the property price - about 4 percent.

That, to me, demolishes the "supply and demand will keep prices high" argument. If there was a huge demand, we wouldn't get low rental prices.

I think the rental market was feeling the pain slightly ahead of the buy/sell market, which is just about to get an about-time price adjustment.

Clive, Surrey,

"Daniel Marks, 28, and Jackie Combine, 30, were fortunate to make it on to the housing ladder." - Ha Ha Ha "FORTUNATE" when house prices are going to drop by at lease 30% over the next few years. Waiting first time buyers who have the common sense to see the huge house price bubble about to burst and are waiting in rented accommodation for the sound of the pop are the fortunate ones. The gap between the have's and have not's is about to get a lot narrower in the housing game.

David Turner, Tenby,

A very alarming statement I heard on Bloomberg News last week "Housing debt in the UK now represents 2/3rds of the household debt on the European Union".

Tony, London, UK

And all those poor saps who have followed the media line over the last 2 years are about to be whacked - big time! The credit crunch has only just started. Other 'shoes' will fall as the sub-prime crisis spreards everywhere in the banking business.

Banks are on the verge of insolvency and we haven't even seen the beginning of the losses UK banks will take on over the next couple of years with bad debt in both the secured and unsecured market.

Rob, Isle of Wight,

As Sam Smith points out, the shock of a huge rise in mortgage servicing costs for the large number of debtors whose fixed rates are due for review, is going to generate the sharp fall in prices that the likes of Halifax and Nationwide are pretending isn't going to happen. The biggest danger comes from the BTL sector where the owner is not the occupier who will either decide to cut their losses and run or; as falling prices racks up their gearing, be forced to do so by their banks. Note the fact that there are more than a million of such properties overhanging the market.

figurewizard, petresfield, UK

The supply and demand arduement was only valid until August 9th last year( the start of the credit crunch ).The chancellor said at the time that no UK bank was involved.I thought that the NR was a UK bank,am I missing something or did the chancellor know something that I didn't.

stephen hulton, eure, france

Whilst many have been lamenting for poor old FTBs recently (unneccessarily in my view, a good old hard house price crash will help them out), what is going to happen to 1) IO mortgage debtors 2)125% mortgage debtors (as featured by the now deceased Northern Rock Liar LOan Trading Co.) and those who now find themselves close or into negative equity?

I am guessing that once their Fix rate period lapses (as 40% of mortgages are doing at the mo) they are going to get whacked by a huge increase in payments as they wont be able to remortgage. They will, in other words, be forced to sell up and downgrade. This, in turn, will of course drive prices down, further compounding the problem, with even more homeowners unable to refinance once their fix rate lapses.

Am I missing something here, or is the UK property market about to undergo an absolutely humungous correction as a result of over-lending and Greed? Looks like the supply and demand arguement is dead in the water!

Sam Smith, Liverpool, UK

How can people think they were "fortunate" to get on the housing ladder recently? They will be looking at 25% loss on their "investment" in the short term.

The "fortunate" ones are the ones who currently feel let down because they CANNOT buy a house. They will be very very very glad of this in 12 months time.

Barry, London, England

So if people can't get loans for six times salary, and average wages aren't increaseing yet to the right levels, theres only one direction for house prices, even the make believe ones the estate agents keep putting on propertys.

hmm... whats that dull thudding noise i hear in the background?
Duck its the herd changing direction..!!

Rob, ex Notts UK, Vancouver BC