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What will be the impact of King&#39s warning?

Mervyn King, the governor of the Bank of England, warned last week that a sharp reverse could be on the way for house prices and that he fears a property slump.

Coupled with rising interest rates, King said the instability of the housing market could pose a real threat to our economic future.

So, Mortgage Strategy asks: What is the likely impact of the warning from Bank of England governor Mervyn King that house prices could fall?

John Wriglesworth, Hometrack

It will have little impact on the market. Mervyn King&#39s comments simply reflect what everyone has become aware of over the past few months – that the boom is over and prices are moderating due to a combination of higher interest rates and higher house prices.

Jim Gillespie, Independent Financial Services

This warning combined with the two recent interest rate rises will definitely put the brakes on the market. But I don&#39t think there will be a crash – just that it will slow down.

John Stewart, PMI Independent Financial Adviser

I remember the late 1980s and early 1990s when there was a crash and many people were suffering from negative equity. The economic conditions were vastly different then and I don&#39t think two small interest rate rises signify a significant hike. There will not be a huge crash but there will be a slowing down of the market.

Colin Jackson, Baronworth (Investment Services)

I don&#39t think we are due a disastrous slump but prices will level out. It&#39s a double-edged sword for first-time buyers with interest rates on the rise and house prices due to slow.

Bob Riach, Riach Independent Financial Advisers

This warning is a ploy to slow the market down. A slump definitely isn&#39t on the way. What will really cool things is that first-time buyers won&#39t be able to get on the ladder as wages aren&#39t increasing but house prices are.

Paul Banfield, Best Advice Financial Planning

I don&#39t think there will be a collapse but more of a sideways move. This is just an attempt by King to hit the headlines.


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