Osborne says must be alert to housing debt

LONDON Fri Jun 6, 2014 9:13am BST

Britain's Chancellor of the Exchequer George Osborne delivers a speech at the ConservativeHome spring conference in central London May 24, 2014. REUTERS/Neil Hall

Britain's Chancellor of the Exchequer George Osborne delivers a speech at the ConservativeHome spring conference in central London May 24, 2014.

Credit: Reuters/Neil Hall

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LONDON (Reuters) - Britain must be alert to rising house prices and indebtedness, Chancellor George Osborne said on Friday, hours before the release of an International Monetary Fund report that is likely to raise concerns about this.

British house prices are rising at their fastest rate since the eve of the financial crisis, and in April Osborne said it was necessary to keep a close eye on the market.

Bank of England Governor Mark Carney has since called the housing market the greatest domestic risk at present to Britain's financial stability.

IMF managing director Christine Lagarde will present the Fund's annual assessment of Britain's economy later on Friday, and in a BBC radio interview, Osborne said she too was looking closely at Britain's property market.

"I agree with Christine Lagarde that we need to be alert to the build-up of debt in the housing market. We need to be alert when we see house prices rising," Osborne said.

"I have given the Bank of England tools to do the job, and they should not hesitate to use those tools if they see these developments turning into a risk to the British economy."

The BoE's Financial Policy Committee will publish its half-yearly stability report later this month. It may take further steps to require lenders to set aside more capital against certain types of home loans, and to assess borrowers' ability to repay mortgages more stringently.

(Reporting by David Milliken; Editing by Catherine Evans)

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Comments (1)
IGOKORJI wrote:
What’s all this interventionist socialist ideology of fixing the market by the State or Central Bank. The market should be allowed to play out. Furthermore, the bank bailout of the past benefited who? We can also do without a bank bailout by me and you in the future.

The doctrine of utility maximisation should be allowed to manifest without intervention. In any event, intervention in the market may only bring about a distorted economy and will yield no positive result in the end.

I will not want to see the State engage in any house building scheme either, the private sector should be given the incentives to continue building more if they deem it profitable.

A return of the Council building should be a thing of the past and indeed, all Council properties should be privatised. I see no benefit why the Council should be providing free accommodation in prime locations up and down the land simply to garner votes (Labour party in particular are the main culprits).

Jun 06, 2014 9:43am BST  --  Report as abuse
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