At the outset, it is important to highlight that financial stability is a necessary condition for achieving the goals of prosperity and sustainable growth. That these goals are shared by all is amply reflected in the current mandates of central banks with their emphasis on price stability, support for the general economic environment and, more recently, the safeguarding of financial stability.
This substantial blow to household wealth has significantly weakened household spending and consumer confidence. Another result of the fall in house prices is that around 12 million households are now underwater on their mortgages – that is, they owe more on their mortgages than their homes are worth.