Alex Bannister, Nationwide's chief economist, says house pricesare being driven by the unexpectedly sharp rises in London and theSoutheast, which were filtering out into East Anglia and theSouthwest. 'Despite the news of a global slowdown, few peoplebelieve it will affect them,' he says.

Mortgage lenders also came in for criticism by encouragingbuyers to borrow more than they could afford. Traditionally, banksand building societies have advanced three times a singleindividual's salary, although this has started to nose upwards overthe last 10 years. Now, three and a half times income is more thenorm, although in certain cases anything up to nine times has beenlent, particularly in the case of those working in finance andbanking where huge bonuses can be earned.

Lenders in June gave the green light to 125,000 home loans,worth a total of £9.6 billion, the highest monthly figure in fouryears. The Bank of England's Monetary Policy Committee meets today(Aug. 1) to decide on the future path of interest rates, with anyincrease threatening severe hardship for buyers.