Most industrialized countries have seen sharp and often unprecedented widening in the spreads between rates in short-term credit markets, such as the 3-month London Interbank Offered Rate (LIBOR) or Canadian Dollar Offered Rate (CDOR), and expected overnight interest rates. (Chart 4 shows how short-term spreads have widened significantly since last August.
For example, since it is not their home, investors might be more inclined to sell investment properties in an environment of falling house prices in order to minimise capital losses. This might exacerbate the fall in prices, impacting the housing wealth of all home owners.