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06/06/2014
IMF Warns Over Housing Bubble Risk
The International Monetary Fund has issued a warning to the UK over the fast growth of the housing market and mortgage lending in it latest report, saying it could be a risk for the recovery.
The report which was outlined at a news conference by the fund's managing director Christine Lagarde explained the threats of the potential housing bubble and recommended the Bank of England clamp down high-debt mortgages.
The IMF said: "House price inflation is particularly high in London, and is becoming more widespread. So far, there are few of the typical signs of a credit-led bubble. Nonetheless, a steady increase in the size of new mortgages compared with borrower incomes suggests that households are gradually becoming more vulnerable to income and interest rate shocks.”
The report also said the Help to Buy scheme, which offer mortgage guarantees and loans for those struggling to find a deposit, may need to be cancelled early.
However Mr Osborne said the Bank of England's Financial Policy Committee had the tools it needed to tackle risks.
Ms Lagarde said that the Treasury briefing of UK had been “pretty much all good” but added: "We have recommended that some macro-prudential measures be considered by the UK authorities and that this be done with a view to addressing not so much house prices but financial risk.”
(CVS/MH)
The report which was outlined at a news conference by the fund's managing director Christine Lagarde explained the threats of the potential housing bubble and recommended the Bank of England clamp down high-debt mortgages.
The IMF said: "House price inflation is particularly high in London, and is becoming more widespread. So far, there are few of the typical signs of a credit-led bubble. Nonetheless, a steady increase in the size of new mortgages compared with borrower incomes suggests that households are gradually becoming more vulnerable to income and interest rate shocks.”
The report also said the Help to Buy scheme, which offer mortgage guarantees and loans for those struggling to find a deposit, may need to be cancelled early.
However Mr Osborne said the Bank of England's Financial Policy Committee had the tools it needed to tackle risks.
Ms Lagarde said that the Treasury briefing of UK had been “pretty much all good” but added: "We have recommended that some macro-prudential measures be considered by the UK authorities and that this be done with a view to addressing not so much house prices but financial risk.”
(CVS/MH)
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Gross mortgage lending totalled an estimated £11.3 billion in May, according to new data from the Council of Mortgage Lenders (CML). This represented a 12% increase from the £10.1 billion lent in April and was 1% higher than in May 2010. Gross mortgage lending includes lending for both house purchase and remortgage.
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