In an interview with Sky, Carney warned that rising house prices represented the biggest current risk to the economy and that the number of large mortgages being approved to house buyers was on the rise. He also noted that the UK was in need of new house building.
He said:
"The issue around the housing market in the UK … is there are not sufficient (numbers of) houses (being) built."
"[More house building] would help us out. We're not going to build a single house at the Bank of England. We can't influence that.
"What we can influence… is whether the banks are strong enough. Do they have enough capital against risk in the housing market?"
"We don't want to build up another big debt overhang that is going to hurt individuals and is very much going to slow the economy in the medium term."
"We'd be concerned if there was a rapid increase in high loan-to-value mortgages across the banks. We've seen that creeping up and it's something we're watching closely."
Mark Harris, chief executive of mortgage broker SPF Private Clients, says:
"Introducing caps on the loan-to-values that lenders can advance would be naïve. MMR was introduced to curb frivolous lending and borrowing and lenders are already stress testing mortgage applications to ensure they are affordable in a higher rate environment.
"Affordability is the key issue and proper risk-based pricing is required for higher risk mortgages, not a ban.
"Borrowers may be persecuted for not accumulating a large deposit at the time they wish to purchase, even though they have good incomes (and/or strong income growth potential) and low expenditure."
Paul Winter, Ipswich Building Society comments:
“I welcome Mark Carney’s warning over the weekend that house prices pose a serious risk to the economic recovery both in the short and longer term. Since our AGM in March I’ve been warning that Help-to-Buy risks artificially inflating house prices and creating a housing bubble in London and the South East. Government urgently needs to address supply, accept the private sector will never fully meet demand and get moving with a nationwide house building programme.”
“Mortgage supply is continually used by Government as a fiscal tool to trigger growth, not only is this a short term fix but it causes longer term damage to our economy. Mark Carney’s scrutiny of high loan-to-value mortgages is symptomatic of that, let’s not write off high loan-to-value mortgages where applicants have passed stringent affordability checks, but instead focus on the actual cause of the problem, a lack of housing supply.”
