You may think it was the housing bubble and reckless lending in the British domestic mortgage market that were mainly to blame for our present financial crisis. Media stories of 125 per cent loan-to-value mortgages and self-certification of income by borrowers all reinforced this impression, leading to calls for tighter regulation of mortgage lending.

In fact, the supposed housing bubble and “reckless” lending had absolutely nothing to do with the financial crisis in this country. Here’s why. First, the number of British mortgages in arrears as a proportion of all mortgages was lower in 2009 than in most years in the 1990s. Annual repossessions in Britain remain less than 0.5 per cent of outstanding mortgages. Repossession rates in the US tend to be around three or four times higher, suggesting that the American housing market has been vastly more problematic.

This picture of fragility in the US mortgage market and