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BOE Will Tackle Price Bubble

Written By On 28/08/2013

The new governor of the Bank Of England Mark Carney, announced three weeks ago that the BOE intended to hold base rates at 0.5% and it is anticipated that will last for at least three years more. If the prediction is correct, then rates will have been at their lowest for nearly a century.

But concerns are now rising as mortgages become easier to get holf of and also at their most competitive rate for some time, that a price bubble may be created.

However Mr Carney made it quite clear earlier today whilst attending a business leaders conference that he intends to use any means at his disposal to prevent that from happening and 'help keep interest rates low'.

The governor said

The Bank of England is now in a position, to make recommendations to banks and building societies to restrict the terms on which new credit is provided, or even to raise capital requirements on mortgages or other types of lending.
He felt that if these loan restrictions are required then he will have no hesitation in doing what needs to be done.

Since the start of the year property prices have increased by approximately five per cent and mortgage acceptance rates have risen by around twenty per cent. The governor believes that this is of little concern as he added

Mortgage approvals are currently running at only a little more than half of pre-crisis levels,and transactions are at a little more than two- thirds.
He said that the BOE will be keeping an eye on the situation.

Melvyn King, the previous governor along with other experts had already they were worried about extending the government's Help to Buy scheme. He felt it could be problematic and help cause a property price surge.