David McWilliams has blogged about how the credit crunch will happen.

It is an interesting piece of reading and he makes the point that what will shake out soon is how some lending institutions were lending to people that should not have been given the money.

I have to say that I was nearly in the same boat. My bank approved me for a load 18 months ago that I declined to take out. At that time, I might have been able to deal with it, but for sure with the interest rate increases, I would not.

I’m a civil servant and it is my only income.

Apart from being a catwalk model.

Modeling underwear. But, I digress.

I don’t believe that house prices will fall by the 40-60% that some predict. Right now, rental incomes are pretty close to mortgage payments and employment is still high. I’m thinking that people still need to live somewhere.

The recent census indicates that a lot of houses in Ireland were empty on the night of the census and many are likely to be unoccupied. These include new builds that haven’t had an owner yet, houses that are on the market and second homes. Arguably, this might mean that we have a housing oversupply and this, along with interest rates, along with the credit oversupply of recent years will keep prices from going up for some time to come.

Comments welcome.