Carney, speaking to the Treasury Select Committee, said that he was looking to monitor the market carefully. When asked what actions the Bank could take against rising house prices he said it would begin to monitor lenders more heavily.
“In simple terms, it begins with more intensive supervision of mortgage lending,” he said.
“Making sure underwriting standards are maintained so that we do not see a return to more than 100% loan-to-value ratios and that there are appropriate standards on loan to income.”
He said that ultimately lenders could be made to hold more capital against any loans it perceived as risky but added that the Bank did not possess any powers to limit LTV ratios.
Carney added the Bank of England needed to be ‘vigilant’ over the housing market following fears a house price bubble is forming thanks to government intervention.
Mortgage Solutions reported yesterday that Vince Cable had called on his own government to rethink the second phase of the controversial Help to Buy scheme.
Carney today repeated Cable’s stance that some areas of the country were already under ‘serious housing inflationary pressures’ but said others had yet to see any house price growth.
“There are big pockets of the country where there has not been any meaningful recovery,” the governor said.
