Bank of England boss Mark Carney warns of “deep, deep” problems in the UK’s housing market

19th May 2014

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The Governor of the Bank of England has warned that the UK’s housing market has “deep, deep” problems.

In an interview with Sky’s Murnaghan show, Mark Carney said that rising property prices are the biggest current risk to the economy.

He asserted that the number of large mortgages being approved to house buyers was on the rise and that the UK was in need of new house building.

He said: “The issue around the housing market in the UK … is there are not sufficient (numbers of) houses (being) built.”

“We’re not going to build a single house at the Bank of England. We can’t influence that.

“What we can influence… is whether the banks are strong enough. Do they have enough capital against risk in the housing market?”

Carney said they could also check lending procedures “so people can get mortgages if they can afford them but they won’t if they can’t”.

He said in the Sky interview: “By reinforcing both of those we can reduce the risk that comes from a housing market that has deep, deep structural problems.

“We don’t want to build up another big debt overhang that is going to hurt individuals and is very much going to slow the economy in the medium term.”

In the Bank of England’s quarterly inflation report, issued last week, Carney took many by surprise as he suggested interest rates may be kept low for longer than some anticipate despite the current state of the housing market where prices are rising at more than 10% a year across the UK.

In an interview with the BBC’s Andrew Marr, Deputy Prime Minister Nick Clegg said that the Government’s Help to Buy scheme which helps those without a large deposit to get on the housing ladder, could be “pared back” if the housing market started to overheat.

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