Barclays boss ‘is talking down market’

THE HEAD of Barclays Bank was accused today of "talking down" the housing market after claiming property prices will drop by a further 15 per cent next year.

John Varley, the high street bank's group chief executive, said in an interview that Britain was only half way through a house price slump.

The claims, to be broadcast on television tonight, were immediately attacked by finance experts who said his comments could do more harm than good.

Melanie Bien, director of mortgage brokers Savills Private Finance, said: "He doesn't need to say it. Why come out and effectively talk down the market? The reason nobody is buying is there is no confidence. Now you have a chief executive saying that. It doesn't help."

Mr Varley admitted it had been "madness" for lenders to approve 100 per cent mortgages, and that it was time to apologise for the role of banks in the recession.

In an interview to be broadcast tonight on Sky News, he says: "Our view was that from the top to the bottom, you would see a fall of something like 25 to 30 per cent.

"I suspect we're about halfway through that at the moment, so in other words we've got another 10 to 15 per cent to fall between now and the end of next year."

He said the level of mortgage borrowing in the past 10 years, in which customers were offered loans far greater than their incomes, had been a mistake.
He added: "The last 10 years will be seen as an anomaly rather than a normalcy. The loan-to-value ratios... were available at 100 or 115 or 125 per cent of the value of the house."

Jonathan Cornell, of mortgage brokers Hamptons Mortgages, said today Mr Varley's comments could
"aggravate the situation".

Mr Varley's bleak prediction also extended to the jobs market.

He said: "An additional 700,000 people unemployed over the course of the next 12 months is certainly possible to contemplate. It is possible unemployment will be worse in 2010 for a period than 2009.

"Our expectation is the UK economy will grow again in 2010. We've got to ensure that by behaving responsibly as a banking industry, we support that."

He added: "If you look at the players who were involved in what's happened to the world... they would include central banks. The banks have to acknowledge that and to say sorry."