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