October 18, 2007 (LPAC)--The housing bubbles in Britain, Ireland, Spain and the Netherlands are even more extreme than in the U.S. before the recent crash, says the IMF World Economic Outlook, issued yesterday. "Could a housing correction in western Europe be as deep as in the US? The extent of house price over-valuation may be considerably larger in some national markets in Europe than in the US, and there would clearly be a sizable impact on the housing markets in the event of a widespread credit crunch," the IMF report says.

Today, UK Chancellor of the Exchequer, Alistair Darling, told the Daily Mail that there would be a "slowdown" in the property market, and said that mortgage lenders had set off an "unsustainable" boom in house prices. "An unsustainable house price inflation is not good for individuals, is not good for the economy, so I think it will slow down," Darling said. British mortgage lenders have been issuing loans up to five-six times the applicant's salary. Britain already underwent a severe property crash in the early 1990s, which led to tens of thousands of evictions and plunged even more householders into negative equity.

The BBC reports today that the Council of Mortgage Lenders (CML) said that gross mortgage lending fell by 12% from August to September, to £30 billion, although the overall amount was higher than September 2006. The monthly drop was higher than usual, which was 5% last year. CML director general Michael Coogan said that "In the coming months, we expect to see monthly lending levels dip below their 2006 levels for the first time this year as rate effects are exacerbated by the recent liquidity problems in the mortgage market."