Bank of England to take action to slow housing market

The Bank of England is poised to take fresh steps to hinder Britain's housing market if the pickup in prices and mortgage demand steer us toward a property bubble.

The Bank of England is poised to take fresh steps to hinder Britain's housing market if the pickup in prices and mortgage demand steer us toward a property bubble.

In the light of "increasing momentum", the Bank is ready to take "proportionate and graduated action" if it proves necessary.

The Bank's focus on the recovery in the housing market is highlighted in a statement published following last week's meeting of its financial policy committee - tasked with preventing the economy from derailing due to wild swings in asset prices.

The statement notes that mortgage demand was up 40% in the year to January, while surveys by the main mortgage lenders suggested prices were around 10% higher in February than a year earlier.

"In a continuation of a longer-term trend, mortgages at loan-to-income ratios above four times accounted for a higher share of new mortgages in the third quarter of 2013 than at any time since the data series began in 2005. New mortgage lending at high loan-to-value ratios remained low by historical standards, though the number of mortgage products offering higher loan-to-value ratios had doubled over the previous six months. Given the increasing momentum, the FPC will remain vigilant to emerging vulnerabilities, will continue to monitor conditions closely and will take further proportionate and graduated action if warranted."