Credit crunch 'to last to 2010'
Saturday, 06 Sep 2008 15:58
HBOS chief Andy Hornby says credit crunch to last until 2010
The credit crunch in the UK economy is likely to last for a further 18 months before improving, according to the chief of HBOS.
In an interview with the BBC, the head of the Halifax and the Bank of Scotland (HBOS), said the difficulty banks faced in raising funds meant it would take a long time for economic activity to return to normal.
Mr Hornby added that he had "no doubt" that house prices would fall further at a scale similar to that seen in the early 1990s.
He told the BBC: "My personal view, for what it's worth, is that it will take 18 months to play through the system. It's going to take 18 months before US house prices have started to rise again - which is what's required for banks to have the confidence to start lending again.
"It will take a long time to play out," he added.
HBOS, a major mortgage lender, announced yesterday that house prices in the UK had fallen 1.8 per cent since July. It also stated that a double digit fall of 10.9 per cent had been noticed in average house prices since last August.
Such a drastic reduction in the value of properties was last seen in the house price crisis of the early 1990s.
Previously, the Organisation for Economic Cooperation and Development has said it expects the UK to go into recession later this year.