Ben - you've missed the biggest news story in mortgage-land today:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aQKWd1Xc2Vt4&refer=home

1. Bear Stearns funds reveal true loss
2. Lots of other funds have to revalue accordingly, revealing more huge losses
3. Mortgage-backed securities much harder to sell than before
4. Banks and building societies have to offer far better yields on these securities, which means much higher mortgage rates for their customers
5. Housing market stalls
6. More people get into arrears/repossession
7. More losses on mortgage backed securities
8. Securities even harder to sell
9. Lenders need to offer even better yields, leading to even higher mortgage rates
10. Housing market falls
11. Go back to 6.