An upswing in
the UK housing market has sparked fears that the government’s Help to
Buy scheme – a combination of equity loans and guarantees for
higher-risk mortgages – will help to inflate prices and burden people
with debt they might later struggle to repay.
However, the BoE’s Financial Policy Committee said last month that
the housing market’s recovery did not pose a risk to financial
stability, with activity still below its historical average and debt
servicing costs low.
Although he said the BoE would not raise rates until the recovery was “on a secure footing”, he added: “I think there is a fair amount they could go up before borrowers got into great difficulties.”
Other MPC members take a similar view. Paul Tucker, the BoE’s outgoing deputy governor, told the Financial Times last
week that the BoE did not need to address “every boom or boomlet”. His
successor, Sir Jon Cunliffe, told a parliamentary committee: “From where
I am now, it doesn’t look like we are in a bubble.”
Asking prices in October were on average 13.8 per cent higher in Greater London than a year earlier, after fluctuating over the summer, Rightmove said, against an average national increase of 3.8 per cent.
The survey mirrors data published last week by the Office for National Statistics showing that house prices in London rose 8.7 per cent in the year to August, compared with a national rise of 3.8 per cent.
Article Source: http://www.ft.com/intl/cms/s/0/0d0c7148-3996-11e3-a3a4-00144feab7de.html#axzz2iJz6eRHW
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