Carney worried risks building in housing market

Tim Wallace
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BANK of England governor Mark Carney has indicated he fears a new bubble could build in the housing market, ahead of the publication of the Financial Stability Report today.

In a letter to Treasury Select Committee chairman Andrew Tyrie, Carney said he is preparing measures that could stabilise the market, should his intervention be needed.

“The report will set out the Financial Policy Committee’s assessment of the risks posed by recent and prospective developments in the housing market,” Carney wrote.

He will also set out “any actions that the FPC intends to take in light of that assessment, as well as the range of tools that would be available to it and other bodies to address any vulnerabilities that might emerge in the future”.

The governor also distanced himself from the Help to Buy scheme, a guarantee being offered by the chancellor to help homebuyers with small deposits.

The FPC can give a public warning if it fears instabilities growing in the financial sector, including from the housing market.

And the chancellor has asked it to give a verdict on the Help to Buy scheme in each of its three years of operation, and beyond that if the government of the day decides to extend the programme in three years’ time.

However Carney stressed to MPs that the scheme is not his and he cannot veto it – only give a judgement on the impact on financial stability, as part of the FPC’s remit.