Sir Jon Cunliffe, deputy governor of the Bank of England, has recently been reported to have told the BBC that the housing market poses the “biggest risk” to the UK economy. He further stated that the high levels of debt make the economy “vulnerable to shocks”.
As house prices continue to rise faster than people’s income, it becomes somewhat of a threat to the economy.
Hence, the Bank of England has decided to take some drastic action and have called for certain measures to be put into place to avoid the housing market from overheating. These include:
- Ensuring lenders check mortgage applicants can cope with a three percentage point rise in interest rates – slightly tougher than current affordability checks
- From October, limiting risky lending by putting a 15% cap on the number of mortgages that banks and building societies can give to people who want to borrow more than 4.5 times their income.
Mark Carney, the governor of the Bank of England, has also previously warned that the rapid rise in property prices could be detrimental to the UK’s economic stability. He went on to emphasise the need to bolster banks so that they hold enough capital to reduce the risk presented by the housing market.
Recently, the Nationwide building society reported that UK house prices had risen above their 2007 peak, with the average value of a UK property climbing to £188,903 and surpassing £400,000 in London for the first time.
But despite the rising house prices, for those of you interested in investing into the property market, feel free to contact us at firstname.lastname@example.org to see what properties we have available for you well below the average market value.
So what do you think? Do you think we’re going to be entering a ‘housing bubble’ as recent reports seem to suggest? Feel free to leave your comments below.