Property Hawk the landlord's homepage since 2006
Free Tenancy Agreement FREE tenancy agreement
Free Landlord Software FREE landlord software
Home | Property Manager | Free ASTs | Landlord Forms | Mortgages | Insurance | Inventory | Magazine | Landlords Bible | Directory | Forum | Training | News / Blog |

Thursday, September 26, 2013

FPC vigilant on housing bubble

The Bank of England has dismissed calls to act to slow rampant property market inflation. All pins are been kept hidden at this point in time, although they are monitoring the potential growth of another housing bubble.

The Financial Policy Committee concluded that it would remains "Vigilant to potential emerging vulnerabilities,"

If the FPC does begin to see the emergence of a dangerously inflated market then it could force changes in banks lending criteria, regarding deposit amounts and affordability multiples.

Read the full FPC statement here


Search the whole BTL mortgage market free

Bookmark and Share

2 comments:

Anonymous said...

On the same day as this was posted, David Cameron announced that his scheme to guarantee 95% mortgages was being brought forward.

He denied that this would contribute to a house price bubble, saying that people can't afford to get on the property ladder.

Does he even know what a house price bubble is? Can he not see that the fact that people can't afford to buy houses is evidence of a just such a price bubble?

The FPC base their interest rate deliberations on CPI, which doesn't include mortgage payments, so conveniently excludes house price inflation. They are therefore unlikely to raise interest rates because of house prices rising.

So it is very likely that house prices will continue to rise. The last thing this Government wants is millions of people defaulting because they can't afford their mortgages and being left with negative equity. That would be disastrous for the economy.

Their dilemma is that they desperately want to increase interest rates. The solution they favour is to continue to fuel house price inflation. This gives them the best of both worlds. Defaulters will not go into negative equity, so their properties can be sold to repay their debts.

Apart from the people who have their homes repossessed, everyone's happy. Until the next downturn that is, which will inevitably follow muddle-headed policies like these.

Hawkeye said...

As you say 'anonymous' there is a depressing predictability about the situation, but it seems that house price inflation is all that Governments have to keeps this country afloat. Labour relied on it and now so to the Conservatives - for now.