Summary
HAVE a guess: has the total amount owed by property companies to UK banks gone up or down since the peak of the market in June 2007, when it stood at Pounds 177 billion? Up, is the answer, by Pounds 73 billion to Pounds 250 billion by the end of 2008. The fact that this 40% rise mirrors the 40% fall in the value of UK real estate is just a coincidence. The grim truth drawn from the Bank of England figures is that lenders carried on doling out money in boom-level amounts right up to September 2008. Last year Pounds 25 billion was loaned, about the same as 2005 and 2006. All but Pounds 2 billion was lent in the first nine months of 2008.
Only after the Lehman's crash did the lenders take fright.See the full content of this document
Extract
Grim Truth of Lending Spiral
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