Bank of England Worried About Overpriced Housing Sector

Bank of England Worried About Overpriced Housing Sector
Bank of England Worried About Overpriced Housing Sector

Bank of England Worried About Overpriced Housing Sector

According to reports, the Bank of England is aware that Britain’s housing market is about approaching “warp speed.”Market observers opine that the housing market with a tendency to go suddenly from lukewarm to scalding hot can generate trouble for the national economy and for that the national bank will have to take timely action.

The Governor Mark Carney warned this past week that Britain’s housing market had a history of moving “from stall speed to warp speed” and it is a major problem; his warning has been shared by several other market experts who view that the overpricing will hurt the market big time. Moreover, record low mortgage rates and a sharp economic upturn is a major reason behind it.

Overpriced Houses: The Bank of England Taking Measures to Curb the Problem
Market observers believe that low mortgage rates and better economic growth are the two major factors that have lifted annual house price inflation in Britain to almost 8 percent and according to them anything above the five percent marks concern. Additionally, according to mortgage lenders London and parts of south-east England are notching new prices.

It is believed that the housing prices have gone to record levels and that is why there is a risk of a bubble, which may further cause economic instability. Market observers believe that keeping property price gains in check without crimping growth in the rest of the economy should be a major concern for the national banks.


Mark Carney’s Plans to Curb Overpricing

A couple of weeks ago, Carney cleared that he wanted to use so-called macro-prudential tools rather than interest rates to rein in the property market and then he had announced that the BoE would scale back a scheme to boost mortgage lending. His decision came after it was reported that he was struggling to prevent Britain’s housing market from reaching what he calls “warp speed.”

According to some market observers Carney has though already taken a first tilt at the market, ending some incentives on mortgage lending in a program the central bank started last year to boost credit, it is not enough. They believe that house prices rose to a record in November, and may grow further this month and the next year, as they apprehend overheating which they have been warning for quite a lot of time.

To contact the reporter of this story: Jonathan Millet at