House prices in UK set to plunge 9%

Halifax Bank of Scotland spread more gloom in the banking sector today as it revealed £1bn (€1.26) in write-downs and warned that house prices could now fall 9% this year.

The grim property price prediction – a near doubling of the bank’s previous expectations – will cause its bad debts to rise as more borrowers struggle with repayments, said HBOS.

Britain’s largest mortgage bank sparked share losses across the banking sector, itself down 6%, while fellow lending giant Alliance & Leicester dropped 6%, followed by Barclays and Lloyds TSB, both shedding more than 2%.