HEADLINES:

Sarah Skelding can't get a mortgage. Last week, the 24-year-old PR executive explained to our readers how she started looking last year, but found the 100% mortgage she wanted was turning into a mirage, and that "my deposit was not up to scratch at all". Now, living with her parents, slogging into central London every day and sleeping on friends' floors, she's managed to save £18,000 - not bad going out of her £25,000 salary, but she still talks blithely about needing a mortgage of £210,000.

Perhaps she's not typical, but if she is, there's still a long, long way to go before the property market returns to stability. At least she should be grateful for the disappearance of the 100% mortgage. Had she bought her flat a year ago by borrowing nearly 10 times her salary (even Northern Rock might have baulked at that), she would have lost rather more than her total savings on the fall in value, and be saddled with repayments too steep to allow her to eat.

These sums show that the central problem of this crisis is not the difficulty in getting mortgage finance, but the fact that houses are grossly overpriced. It's hardly surprising the mortgage providers, builders, surveyors and landlords howled last week for something to be done - unless Sarah and her friends keep buying and selling, they don't eat - but their proposal is just poorly disguised self-interest.

Writing en masse to the papers, they urged the Government to guarantee bonds backed by new mortgages, to make these troublesome instruments attractive enough to bring in the buyers. Essentially, the writers want to see Britain create a version of Fannie Mae and Freddie Mac, the underwriters of half the US mortgage market.

Yet Fannie and Freddie are terrible role models. They have $5000 billion of debt, and are afloat today only thanks to the government putting up new capital. This week Larry Summers, a former US Treasury Secretary, approved the rescue, but said it should wipe out stockholders, preferred stockholders, and "probably subordinated debt holders" as well. The duo cannot be counted a success, and we'd be mad to copy them here.

Fortunately, Sir James Crosby, in his interim report on the housing market, seems unattracted by the idea. Even at the best of times, our Government could not afford a nationalisation on the scale required to "get the mortgage market moving again", as those in property pain are urging. The budget deficit is already threatening to be £40 billion higher than the estimates made only four months ago; dishing out government guarantees like confetti will eventually undermine the currencyand cause a lot more pain than falling house prices.

The mortgage market is not frozen. Good borrowers with equity in their property can find the money easily. It's closed to the likes of Sarah Skelding because there's a mismatch between what the buyers and their lenders will pay and what the sellers think their properties are worth. As sellers become more desperate, prices will fall, giving the lenders more confidence in new borrowers' ability to keep up payments. The process will work out over the next couple of years, until homes become affordable again. Meanwhile, she is getting the message: "I'm trying to save more, but it's such a slow process."

Guess who cleaned up in this Shell game

Royal Dutch Shell would like to give you some money. No, not a rebate at the pumps, however welcome that might be on the day it reveals its winnings from the oil price rise, but a payment to those who bought shares between April 8 1999 and March 17 2004. These misguided people would have bought after carefully studying the figures for Shell's reserves, only to discover on 17 March, 2004, that all was not what it seemed. Shell had got lost in the maze of "proven", "probable" and "possible" categories of its oil and gas, the chairman was fired and the American lawyers have cleaned up.

Now, as part of the settlement of a class action resulting from this mistake, those misguided buyers are to get $90 million in compensation. Shell has placed newspaper ads which look like those impenetrable messages from Kim Il-Sung of North Korea, so you may have missed them.

That $90 million is going to be spread pretty thin, and the real winners (of course) are the lawyers, who make $30 million plus expenses for their Herculean efforts. So who, the shareholders might ask, is paying for all this? You are, of course. You are being paid with your own money, at the expense of those who bought before or after the five-year window.

It's a bit like a dividend, paid to only some of the shareholders, but unlike a dividend, you have to claim, and the amount depends on how many others do so, and when you bought. It's all pretty crazy, but that's US justice for you. Just get that claim in before the 18 November deadline.

Look what's on offer at Tesco now

As if the banks didn't have enough worries, here comes another, which threatens their hold on millions of semi-captive customers, the ones who contribute £2.5 billion to profits from unauthorised overdrafts or who earn pitiful sums on credit balances. Tesco has taken advantage of Fred's fire sale at Royal Bank of Scotland, and spent £950 million to buy the other half of their personal finance joint venture.

The grocer is putting clever Andrew Higginson, finance and strategy director, in charge, and plans to open branches in its bigger stores. Big retailers have had a mixed record in personal finance. Marks & Spencer and Sainsbury both failed to make much impact, but Tesco's timing might be rather better. It has a brand people trust at a time when that matters much more than it used to, and the competition is severely weakened by the credit crunch.

Tesco has recruited Benny Higgins to run the business. He's the man who was bundled out of HBOS for cutting back Halifax mortgages in the first half of 2007, and had the directors heeded his caution their bank wouldn't be revealing such dismal figures today.

Tesco reckons it can raise the profit from personal finance from £400 million today to £1 billion within a decade. Given our big banks' contempt for their customers, it looks possible.

It's cheaper, but not for you...

Here's a chart to warm you as you contemplate your new, £100-a-month energy bill. Last week EDF Energy, the French-owned supplier to five million British homes hiked its gas price by 22%, and yesterday British Gas trumped that with a 35% jump. Weeping crocodile tears, they explained that the wholesale price of gas had risen by 70% in 2008, and that they had to pass the pain on to their customers.

The five million can switch to one of the other four big suppliers, but many of us have more interesting things to do, especially since the rest are likely to follow suit as soon as they can get away with it. Yet something's happening in the energy market. Despite pipeline explosions in Nigeria and the start of the hurricane season, the oil price is falling, and the wholesale price for spot gas has taken a dive as a result. The two are getting more closely linked, but gas is more volatile, and warm weather and the completion of some North Sea maintenance shutdowns have caused the slump this week. It seems that the law of supply and demand applies, and higher prices are starting to choke off demand.

The gas suppliers do compete, but it's hardly cutthroat. A committee of MPs claimed last week that poor liquidity in forward gas markets keeps new entrants out, and many consumers get a poor deal. The danger of half-hearted competition is that it provides an excuse for a desperate Chancellor to levy a crowd-pleasing windfall tax on the energy companies, so do not expect a cut in your gas bill.

Spanish fly into BA's bed

BABERIA may not be the world's, or even Europe's, favourite airline (that's Air France/KLM, if you measure popularity by number of passengers) but it might at last satisfy British Airways' endemic urge to merge.

It's been trying to get into bed with its rivals for decades, and has had lucky escapes by the failure to consummate deals with American Airlines, USAir, Sabena, Qantas and KLM. At least some of those deals would have crashed BA into Chapter 11 failure, along with its North American partner.

Iberia has the unusual distinction, for an airline, of having money in the bank, which is just as well. The new combine - if this one ever comes off - will have to finance redundancies and the bottomless pit of BA's pension scheme, while high fuel prices deter the customers.

Despite Willie Walsh launching the deal in Spain, this has got to be a BA takeover of Iberia, or it will never work. Madrid provides a gateway to Spanish South America, and Iberia made profits last year, so it could have been worse for BA's shareholders.

It could have been Alitalia.