The Governor of the Bank of England, Mark Carney, has said the institution must remain ‘vigilant’ for signs of a housing bubble.

While being grilled by the Treasury Select Committee, Carney said the Bank could impose “more intensive supervision” on banks if the market started to overheat, and that caps on loan-to-value ratios could be imposed.

But the Governor pointed out that there was no sign of a boom as yet, saying there “has not been any meaningful recovery” in large parts of the country.

There are increasing concerns from some quarters that Government initiatives such as the Help to Buy scheme are risking the creation of a housing bubble, most notably from the business secretary Vince Cable who has cast doubt over the scheme. Barclay’s Group Chief Executive Antony Jenkins has also talked about the “risk of a property-driven boom”.

In words that will warm the hearts of those in numbers 10 and 11 Downing Street, Carney sounded positive about the UK economy, saying it has “now picked up. There are signs that the growth is relatively broad based.”

However, while stating that data on the economic recovery showed it was “strengthening and broadening”, he also said it was “early days”.
Carney’s discussion with the TSC primarily related to explaining the Bank’s latest guidance – namely that interest rates would remain at the current rate until unemployment falls to 7 per cent, which the BoE estimates will be in late 2016.

“Our job is to make sure [the recovery] is not another false dawn,” said the Governor.

Perhaps you’re one of our home or landlords building insurance customers keeping a keen eye on property prices. Do you believe we are heading for a housing bubble? Or is Vince Cable mistaken? As ever, leave your thoughts below.

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