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View the article online at http://citywire.co.uk/wealth-manager/article/a748346

UK banks to face house price crash and rate spike tests

by James Phillipps on Apr 29, 2014 at 08:01

UK banks to face house price crash and rate spike tests

The UK’s high street banks are to be stress-tested to see if they could withstand a 35% slump in house prices or a sudden spike in interest rates to 5%.

The Armageddon tests will be carried out by the Bank of England this year and any banks failing could be forced to raise fresh capital, according to a report on Sky News.

The details of the stress-tests, which were devised by the Prudential Regulatory Authority and the BoE’s Financial Policy Committee, are to be announced later today at 12:30pm.

The European Banking Authority is set to carry out similar doomsday scenario tests on continental lenders.

2 comments so far. Why not have your say?

CoeurDeLion87

Apr 29, 2014 at 09:13

If that isn't a signal of what is to come regarding house prices I don't know what is. Is it any surprising that persistent ZIRP & government property incentives combined with flagrant overseas buying has created a bubble in London of monstrous proportions? Furthermore the whole stress test appetite since 2007-2008 is creating a leaking sieve mentality across all markets. When is everyone going to recognise that these are futile exercises when the end-game looms? ZIRP is the problem.

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Anthony O' Grady

Apr 29, 2014 at 09:44

Yes but don't forget that the Tories have an election to win next year, so they couldn't care less about loose monetary policy and irresponsible fiscal policy. And they think that the British public are by and large, too stupid to recognise economic growth that is built on foundations made of sand. Perhaps they're right!

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