Experts predict that intervention by the Bank of England’s Financial Policy Committee (FPC) will help to slow down the rapid pace of house price growth in the UK.
Reuters carried out a poll of 30 property analysts and they found that a significant amount feel that there will be a follow up to the warning by Sir Jon Cunliffe and that the FPC will have to enforce changes to slow down the rapid growth.
The Governor of the Bank of England, Mark Carney, also gave responsibility for curbing the rising house prices to the FPC, stating that the first line of defence against risks to the economy from the housing market is through restricting mortgage lending, also the responsibility of the FPC.
Mortgage lending has reportedly dropped since the new regulations came into play t the end of April, the regulations that require lenders to carry out in-depth questionnaires into borrower’s spending.
House prices are rising in the recovering market due to a high level of demand, something the Help to Buy scheme has certainly helped, opposing a lack of supply. It takes time to build houses, and so the demand isn’t being met by the surge in post economic crash house buyers.
FPC is likely to use its large array of regulatory powers to impose further restrictions on mortgage lenders, possibly including making them demand higher deposits. This would be worse for potential house buyers who will have to raise much larger sums in order to acquire a mortgage, but overall would help to stabilise the housing market.
