Despite differing opinions, the Bank of England's Financial Policy Committee (FPC) has said that there were "few signs of house prices rising solely in anticipation of future price increases."
The minutes of the 18 September meeting show that the question of whether rising market rates speak of a better economic outlook or whether they are unrelated has bothered the FPC as much as the MPC. The committee, whilst noting the important role housing has had in credit cycles, was wary of tying house price growth to economic uncertainty:
Not all movements in house prices necessarily had financial stability implications - for example if transactions were largely cash-financed or if lenders had substantial capital to absorb any losses.
The committee will be vigilant of developments in the housing markets and the underwriting of standards by banks, with a focus on developing understanding of how housing developments might affect financial stability.