In recent months there have been more encouraging signals on house prices. As is normal at this stage of the cycle the reported data is both volatile and variable making a proper assessment fraught with difficulties. We know that actual house purchase and mortgage volumes remain subdued and more importantly constitute a very different mix of transactions compared to 12 or 18 months ago.

The events of the last two years have put economic models and model performance in the spotlight in both academic and policy circles. Serious questions are being asked about how well economic models have coped with the deep recession and the structural and policy shifts we have all experienced in recent years. Academic research highlights that at times of significant change the structural parameters in major economic relationships tend to shift and this requires careful handling.

The increased emphasis on extreme stress testing and risk information has put many organisations in a spin. Keeping track of the latest stress tests and the base data used to produce the results is no easy feat and making the most of the results for your business is even harder. In many cases the process of stress testing and running of scenarios has become rather mechanical and somewhat distant from matters of direct importance to customers. Risk managers and economists really enjoy the process but what is it in for the customer and for the bank in the longer term.