The new Bank of England boss warned lenders that they could be asked to restrict mortgage borrowing terms or be forced to hold more cash on their balance sheets to dampen an over-heated market. He still maintains interest rates would stay at a record low of 0.5 per cent for the next three years.
Mark Carney says he is ‘acutely aware’ of the risk of a house price bubble and is prepared to curb the property market if necessary.
The Bank’s plan to keep rates at rock bottom levels is the key message of Carney’s flagship ‘forward guidance’ policy. It has received a poor reception in the City.