November 29, 2007 (LPAC)--Inflated house prices in Britain are falling at the steepest rate in 12 years. Prices were down 0.8%, just in November, the sharpest decline since June 1995, which was just after the big housing bust of the early 1990s. Then, prices fell some 35% across Britain, and there were 75,000 repossessions in 1991 alone. British mortgage lender Nationwide put out the November figure, and had already warned earlier this month that 10 years of house price inflation is over. House purchase approvals are way down, from the peak of 128,000 a month at end-2006 to 88,000 in October, the lowest in three years, according to Bank of England data.

There are various estimates now coming out, of just how much British house prices are overvalued. Yesterday, HSBC bank announced that house prices are 30% overvalued, while last month, the IMF put the figure at 40%. The Times today quoted HSBC chief economist Karen Ward warning that the property crash will also take down the pound and force the BoE to cut interest rates. Ward wrote: "There is around 30% of the current house price level that cannot be explained." The report warns that consumer borrowing will shrink, forcing interest rate declines and a pound crash to less than $1.80. With three-month inter-bank interest rates at 6.59% again, lenders just cannot issue mortgage loans. The Council of Mortgage Lenders warned yesterday that these high rates are a severe blow to smaller lenders in particular, the Financial Times reported.