After the longest and biggest boom in post-war history, it is payback time for Britain's ever more troubled housing market. As shares in homebuilders wilt following the failure of Taylor Wimpey, the country's largest, to raise urgently needed capital (see story on next page), there are wider worries that Britain may revisit the trauma of the early 1990s, when a housing bust led to a deep recession. With activity in the services sector at its lowest since October 2001, the economy looks perilously vulnerable to falling housing wealth and the collapse in mortgage finance, residential investment and property transactions. The mortgage market has already plumbed unprecedented depths. Figures released this week revealed that a mere 42,000 loans had been approved to buy homes in May, well under half the number a year earlier and below even the trough reached in the early 1990s.
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