40% UK Financial Institutions Say Housing Market a Key Risk

Leading British banks, hedge funds and asset managers are increasingly worried about the impact of the housing market on Britain’s financial system, according to the Bank of England.

The Bank’s latest systemic risk survey of executives at hedge funds, banks and other financial institutions found that 40% cited falling property prices as a key risk. Their concern focused on residential property rather than the commercial end of the market and is likely to fan fears that house prices in some parts of the country are getting dangerously high.

It was the third time in a row that the biannual poll has seen an increase in the proportion of financial executives worried about house price falls. The poll also revealed rising concerns about geo-political risks against the backdrop of tensions in Ukraine and executives continued to highlight worries over the robustness of the eurozone.

But overall the Bank’s risk survey showed fears of a fresh financial crash continued to diminish. The perceived probabilities of a high-impact event in the UK financial system continued to fall, setting new lows since the survey began at the height of the financial crisis in 2008.

The poll of 72 market participants found almost two-thirds now consider the probability of a high-impact event to be low or very low over the next year. At 64%, that was up nine percentage points from half a year ago. Confidence in the UK financial system on average has also risen, but only slightly, the Bank said.

via The Guardian

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