When the UK finally limped out of a deep recession in the last quarter of 2009, a long and painful period came to a close. During the eighteen-month long economic contraction, hundreds of banks across the UK were forced to close their doors as thousands of homeowners defaulted on their mortgages.
But banks are not out of the woods just yet. In fact, most economists are projecting tough times ahead for banks in London, as home prices continue to fall and buyers remain apprehensive.
According to the latest industry reports, housing prices are off by a full quarter and the banks have put a virtual freeze on lending. That's right! After years of lax lending practices, banks in the UK have finally learned their lesson. It is safe to say that Christmas parties London will be decidedly dour this year.
The crisis began in earnest with the sub-prime mortgage meltdown. During this period tens of thousands of home owners simply could not afford their mortgage payments and they were forced to surrender their homes to the banks. At the same time, however, the UK was blindsided by a global recession that resulted in a massive economic slowdown.
When the smoke cleared, the banks were left with huge inventories of properties that nobody wanted. The slowdown in the housing market, which was obviously prompted by the recession, lead to a rapid decline in prices, which meant the banks were left holding depressed assets. Though things have improved a bit over the past few months, the housing market is still stagnant and banks are desperate to unload unwanted homes.