From: Ronald Raygun 
Subject: Re: 2007 Predictions?
Newsgroups: uk.finance
Date: Mon, 01 Jan 2007 09:31:54 GMT

Terry Harper wrote:

> On 31 Dec 2006 09:56:35 -0800, "Ed_Zep"  wrote:
> 
>>The last crash in the early 90s was due to Britain's position in the
>>Exchange Rate Mechanism which meant that the pound was allied to the
>>Deutsch-mark and we had to raise interest rates to 15%. Different ball
>>game now but I think interest rates will go up in 2007, if only because
>>adults these days weren't taught how to budget properly at school,
>>which is why UK is drowning in debt.
> 
> The real reason behind the crash circa 1990 was the withdrawal in the
> Budget of the rule which allowed multiple mortgage applicants to get
> the full MIRAS tax relief for each applicant. This was not changed
> immediately but announced that it would end in August, and predictably
> this led to a rush to take advantage of the rule, which drove property
> prices to unrealistic levels. The following fall in prices was equally
> predictable.

In other words there wasn't really a crash at all, but a blip.