Carney states we "do need to be vigilant on house prices"

Graham_Devon

Bank of England governor Mark Carney has told MPs "we do need to be vigilant" on house prices.

Addressing the Treasury Committee he said the central bank had a "considerable range of policy options" that would start with "more intensive supervision of mortgage lending".

There have been some concerns that government measures to support the housing market could lead to a bubble.

Mr Carney said not all of the country had seen a recovery in house prices.

He stressed that across the nation, house prices in many areas were only at two thirds or three quarters of pre-crisis levels.

"There are big pockets of the country where there has not been any meaningful recovery," he added.

He added that dealing with a house price bubble would be the job of the Bank's new Financial Policy Committee.

If tighter supervision did not work, he said that in an extreme situation the Bank could force mortgage lenders to set aside more capital, which would reduce the amount they were able to lend.

But he said that the central bank did not have the power to order lenders not to offer mortgages above a certain percentage of the value of a property.

All just words IMO, but at least it's being raised at BOE level.

http://www.bbc.co.uk/news/business-24060130

ILW

I remember when IRs were the main mechanism. Think Carney has been a bit daft to in effect disable the main weapon he had.

chucky

ILW wrote: »

I remember when IRs were the main mechanism. Think Carney has been a bit daft to in effect disable the main weapon he had.

That's not true.

Controlling the money supply to combat inflation has been used before. Trying to manipulate the Exchange rate has also been used.

And the government always has to be vigilant on house prices, it's not rocket science that property should be affordable.

Loughton_Monkey

A rather stuttering performance, but my take on what he is trying to say is that house prices are recovering and that they will continue to go up. If/when there are signs of danger, then there are now adequate controls in place to control house prices.

Whilst I have far less than 100% confidence in any/all of the triad of Government, BOE, and Regulators, their intentions seem to be honourable. Seems they want prices to go smoothly up for a bit, and then perhaps maintain them at reasonable CPI-type levels.

If, at any time during his address he had hinted at the possibility of a bubble, I'm sure the BBC would have reported it. They didn't, so he didn't. The nearest he came was to say that house prices and activity are "improving" and will continue to do so back to pre crash levels, but he might do something if he sees "acceleration".

So in the meantime, I am going down for my large Gin & Tonic to celebrate continued improvement in prices, safe in the knowledge that the Canadian boy is totally on top of the situation.

Thrugelmir

Graham_Devon wrote: »

All just words IMO, but at least it's being raised at BOE level.

Problem is how does the BOE influence a fragmented market. Where one size doesn't fit all.

All the artificial intervention somehow has to be unwound. Otherwise the UK will lurch from one local mini crisis to another.

thor

Considering that we have artificial:

record low(by far) interest rates in our history
help to buy scheme &
funding for lending bribes
as well as foreign buy to let money inflating the London market

the HPI we are seeing is unremarkable. So I don't think we are seeing a bubble. It appears that the Tories are against all state subsidies except those for the housing market. Maybe the cabinet had ploughed all their expenses cash into property? Perhaps they need to protect their banking chums? In return, after they retire from parliament, they'll be offered a seat on a banking board to 'earn' hundreds of thousands of pounds for coming in half an afternoon a month for a cup of coffee while giving access to their 'expertise'.

chucky

Thrugelmir wrote: »

Problem is how does the BOE influence a fragmented market. Where one size doesn't fit all.

All the artificial intervention somehow has to be unwound. Otherwise the UK will lurch from one local mini crisis to another.

Yet again, another urban myth.

Forumonics at work yet again,

Loughton_Monkey

thor wrote: »

............Perhaps they need to protect their banking chums? In return, after they retire from parliament, they'll be offered a seat on a banking board to 'earn' hundreds of thousands of pounds for coming in half an afternoon a month for a cup of coffee while giving access to their 'expertise'.

..and the irony is, not a single one of them would ever notice a single bubble in their capuccino even if they spilt it down their old school tie....

nickj_2

we know that house prices are over valued now , where are the affordable housing that "normal" people can afford , in my local town they have been building several housing developments , i don't think any of them are for sale for less than £350k , one ad in the local paper are for a stunning new delopment with prices starting at £1/2m for 2 bedrooms .and these are not london prices

if house prices are under control let's have an increase of interest rates and then see what happens

CLAPTON

nickj wrote: »

we know that house prices are over valued now , where are the affordable housing that "normal" people can afford , in my local town they have been building several housing developments , i don't think any of them are for sale for less than £350k , one ad in the local paper are for a stunning new delopment with prices starting at £1/2m for 2 bedrooms .and these are not london prices

if house prices are under control let's have an increase of interest rates and then see what happens

which town do you live in?

nickj_2

fortunately i don't live in it , but saffron walden or grid lock and road works as i like to call it