Why I fear the worst (or best) for the housing market

Some months ago I felt that the housing market would continue slowing and then start to fall fairly swiftly over a number of months probably years.

I felt that this was a good thing because first time buyers are priced out of the market and homeowners like myself are prevented from climbing the housing ladder.

I still feel that falls in the housing market are a good thing.

What is concerning me now though is the degree of credit tightening by lenders, much more so than I had ever imagined and the utter waste of space that the government has become.

Firstly on credit tightening - I had assumed that lenders would continue to offer new deals to existing borrowers when their existing deal ends. I was shocked this week to discover that Standard Life bank has withdrawn all deals for existing borrowers. So if your fixed rate ends, you will have to go onto their standard variable rate of 7%+ or remortgage elsewhere. Now remortgaging used to be the norm, but as the credit has tightened, this is now not possible for a number of borrowers.

Secondly on credit tightening - Abbey have confirmed that when your existing deal ends, they will theoretically revalue your property and if you do not have 10% theoretical equity, there are no deals available.

Now both of these mean that a bog standard borrower could be looking at a rate rise of 3% from their deal to the SVR with only a month's notice.

The reason this now concerns me is that I had assumed that homeowners would lose equity, but still be able to pay their mortgages, however it now seems likely that equity will be lost and monthly payments will also go sky high.

Finally on the government - as we know the country is leaderless and rudderless. At a time when we need some inspiration and a clear direction for government, we have this bunch of fools chasing their tales. It is going to be a long hard 2 years.