Cable’s announcement follows the British Bankers Association (BBA) announcement, they have stated that mortgage approvals had fallen to an all-time low; the Lib Dems has added that repossessions are likely to increase dramatically in the near future. Cable has made claims that these BBA figures suggest that the housing market in the UK is in a severe slump, he also expects further falls.

Cable has also said that the banking industry is to blame for the current bubble in house prices, he said “I wish the BBA, which is now facing up to reality, had been equally clear-headed several years ago when it was already becoming clear that reckless, indiscriminate lending was feeding an unsustainable boom in house prices. This was bound to come to a sticky end.”

The Liberal Democrats are now calling on BBA to work towards developing mechanisms so that they can cushion the effects of the current house price crash and to help those suffering negative equity and those at risk of repossession.

However; The Liberal Democrats are blaming the government for the current situation, they said that they allowed for Britain’s housing boom to go too far, and now we all have to face the consequences. Liberal Democrat Treasury Spokesman, Lord Oakeshott, has said “Gordon Brown let Britain’s house party get out of control. Now Alistair Darling has been left with a £5bn Stamp Duty hangover.”

He also added “The Chancellor had hardly sat down on Budget Day before the housing market fell off a cliff in early April.” The Lib Dems has forecast that the Government’s revenues will fall by at least £5.2bn in 2008; this has been based on projections that property prices will fall by at least 15% as well as transactions falling by 50%. If we was to be a little more optimistic about the projection of house prices and said that they would only fall by 10% as well as transaction volumes dropping 40%, then the Treasury would still face a shortfall of £4bn. Oakeshott has said that Britain could now be facing a mortgage faming.

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