You are here: Home - News -

Policymakers set to decide on housing market action

by:
  • 26/06/2014
  • 0
Central bankers are to confirm later today whether they will act on growing concerns about the housing market.

The Financial Policy Committee met last week, and is due to outline whether it will make any policy changes. At a previous meeting of the committee, it refocused the Funding for Lending Scheme stimulus away from the mortgage market and toward small business lending.

In addition, any decision comes soon after Bank of England Governor Mark Carney warned the housing market has “deep, deep structural problems” and is the “biggest risk” to the UK’s financial stability.

House prices in May were 11.1% higher than the same time last year, according to the Nationwide house price index. All UK regions saw house prices rise in the first quarter of 2014, with London prices leaping 18% on the same quarter of 2013.

What action the FPC may take to cool the housing market remains unclear. In a June speech, the Chancellor outlined plans to allow the central bank new measures to control the market, including capping the size of mortgages. 

Prime Minister David Cameron has said he would consider rethinking the government’s Help to Buy scheme, which some economists have suggested is artificially inflating house prices.

Most policymakers acknowledge raising interest rates may be an overly blunt tool to deal with the housing market. But outgoing Monetary Policy Committee member Charlie Bean described the move as “the only game in town” to combat financial stability risks.

There are 0 Comment(s)

You may also be interested in

Read previous post:
Scotland confirms Right to Buy abolition

The Right to Buy scheme will be abolished in Scotland in 2016 following a vote in the Scottish Parliament.

Close