BoE Dismiss Property Bubble But Warn Borrowers

The Bank of England has warned it is keeping a close eye on developments in the housing market and said borrowers and lenders should be careful not to overstretch themselves.

Paul Fisher, Threadneedle Street’s executive director of markets, rejected the idea that a property bubble was emerging but stressed that the Bank was alert to the risks to the economy from another boom-bust.

Fisher said the housing market was clearly gathering momentum after years in the doldrums and prices had again started to hit the headlines.

“I must say that don’t see any evidence of bubble behaviour as yet, with mortgage lending still subdued relative to what is likely to be normal levels of activity. The housing market is recovering from a number of years of very low transactions, with house prices having risen well below the inflation rate.”

Recent house price surveys have shown that the cost of property is increasing by around 5% for the UK as a whole and by 10% in London

via The Guardian

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