Julian Knight: You don't need to panic – just get your house in order

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The Independent Online

'House price crash" is one headline that has a chance of knocking the Princess Di inquest off the front pages. And last week there was plenty of opportunity for editors to splash it on their front pages. Most notably, the International Monetary Fund added its voice to those worried that the UK is at serious risk of a US-style housing slump. Mean- while, the Shelter charity said up to a million households are relying on expensive credit card debt to meet their mortgage repayments.

There is so much uncertainty – from the US sub-prime collapse, the credit crunch, the botched introduction of home information packs, warnings of lower growth – that confidence is draining away from the housing market. And confidence, after all, is crucial when it comes to such an important commitment as buying a home.

But the truth is that no one knows if there is a crash around the corner rather than a slowdown. After nearly 10 years of writing about housing, I can count the number of correct market predictions on the fingers of one hand. This year's crop of forecasts range from 15 per cent price growth to sharp falls. It's a game of pin the tail on the donkey.

However, if there is one core mantra in personal finance, it is better to be safe than sorry. If you have been putting off sorting out your finances, now is the time to grasp the nettle. After all, a dramatic fall in house prices can soon feed through to the wider economy as consumers stop spending and jobs are shed. First, take a close look at your mortgage. If you are on your lender's standard variable rate then you are almost certainly paying over the odds, so consider remortgaging as a priority.

Next comes dealing with card debt. There is growing evidence that lenders are retrenching. Barclaycard, for one, has been trimming credit limits for custo- mers. A provider can do this almost whenever it likes, so it would be best to start paying down debt or face the possibility of a shock.

Finally, ensure you have a "rainy day" fund. Financial advisers recommend the equivalent of six months' income on deposit – a huge ask for all but the very well off but the more you save, the greater the cushion. Some Britons do seem to be waking up to this need and savings rates – for a long time in the doldrums – are picking up again. What's more, new credit card debt is not rising as fast as it once was, though there is a long, long way to go.

All these measures are sensible at any time, but when the "house price crash" headlines start proliferating, it's especially true.