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Mark Carney: Housing market has deep problems

Robyn Hall

May 19, 2014

In an interview with Sky News yesterday, Carney said the number of lenders offering 4 x income or more to borrowers was creeping up, adding: “We don’t want to build up another debt overhang that is going top hurt individuals and is going to very much slow the economy in the medium term. We would be concerned if there was a rapid increase in high loan to value mortgages.

The governor said the Bank would act to rein in mortgage spending to make it more difficult for homebuyers to get a property loan.

But he added: “We could limit amounts of certain types of mortgages that banks could undertake.

“The Chancellor has asked us if we would provide advice on changing the terms of Help to Buy – all those things are possibilities.”

He added that the Bank was closely monitoring Help to Buy and the scheme could be changed if necessary.

And he admitted concern at the lack of UK housing supply.

The UK housing market has “deep, deep structural issues,” he said, pointing out how twice as many homes are being built in his native Canada.

“There are not sufficient houses being built in the UK. [There are] half as many people in Canada as in the uk, [but] twice as many houses are built in Canada every year than in the UK.”

Canada builds about 200,000 new homes a year but there were just 133,000 similar properties built in the UK last year.

Speaking on yesterday morning’s Andrew Marr Show on the BBC, Deputy PM Nick Clegg said: “If he [Mark Carney] says that we need to pare back on some of the government schemes like Help to Buy then I think we should do so…. He is certainly right when says that we simply do not build enough homes.”

Secretary of state for culture, media and sport Sajid Javid also supported Mark Carney’s statement.

He said: “Governor Carney is absolutely right to be vigilant about the housing market.

“It is in nobodies’ interest to have a housing boom and bust and he’s right to point this out.

“We’ve made it clear to the Bank of England that we do want them to monitor the scheme and if they come to the government and suggest some changes then the government will make those changes in terms of the parameters they have control over.”

Paul Winter, chief executive of the Ipswich, said today: “I welcome Mark Carney’s warning over the weekend that house prices pose a serious risk to the economic recovery both in the short and longer term.

“Since our AGM in March I’ve been warning that Help-to-Buy risks artificially inflating house prices and creating a housing bubble in London and the South East.

“Government urgently needs to address supply, accept the private sector will never fully meet demand and get moving with a nationwide house building programme.”

And he added: “Mortgage supply is continually used by Government as a fiscal tool to trigger growth, not only is this a short term fix but it causes longer term damage to our economy.

“Mark Carney’s scrutiny of high loan-to-value mortgages is symptomatic of that, let’s not write off high loan-to-value mortgages where applicants have passed stringent affordability checks but instead focus on the actual cause of the problem, a lack of housing supply.”


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