The Bank’s recent Financial Stability Report included the list of key points which will be monitored to prevent any house price bubbles or other unwanted market changes.
The six areas of the market being monitored by the Bank are:
– Changes in house price inflation, relative to indicators of affordability and sustainability
– Growth in the “tail” of heavily-indebted borrowers
– Exposure of lenders to highly-indebted households
– Underwriting standards in the residential mortgage market
– Underwriting standards on construction and commercial real estate loans
– Reliance by lenders on short-term wholesale funding.
These points were highlighted in the latest edition of the Council of Mortgage Lenders’ News and Views bulletin.
The Bank said it would monitor both the individual and combined impact of these areas and judge whether interest rate rises would affect these areas in an adverse way.
