The Bank of England will have new powers to control the real estate market

The Bank of England will have the exclusive authority to control the size of mortgages issued in the UK. Such measures will be taken in order to prevent the emergence of a bubble in the real estate market, which can become an obstacle to economic recovery in the country.

About these office has announced the UK Chancellor George Osborne in his annual message. In response, the Bank of England Governor mark Roots has declared that does not exclude raising interest rates even this year.

Raising interest rate possible, despite the assurance of many real estate experts that the bubble in the real estate market can take place only in the real estate market of London, but in other areas of the UK the price increase is small. Moreover, in some areas of the UK, particularly the North-East and Northern Ireland residential property prices still not recovered from its post-crisis fall.

Previously, the Roots stated that, most likely, it is unlikely the interest rate will rise before 2015. Now, however, he believes that such measures are inevitable in order to prevent spontaneous price increases.

The market is already quite a lot of speculation about when it will be raised the interest rate by the Bank of England. Meanwhile, it is possible that it will be increased even earlier than current market expectations.

Osborne said that the UK government need to agree on the new powers of the Bank of England until the elections in 2015, as these measures are necessary in order to cool the overheated real estate market.

The Bank of England should be given powers, so he could take action against risks in the housing market. First and foremost is the control of the acquired mortgage loans, which shall correspond to the current income families. Still, the Bank of England could influence the size of mortgage loans. After the introduction of the new rules, the Bank will have no powers to directly limit the size of mortgage loan depending on the value or amount of income received by the borrower.

Finance Minister George Osborne said that now the real estate market in the UK poses no threat to the financial stability of the economy. But you must learn from the past and take steps in advance to not get problems in the economy in the future. New powers for the Bank of England needed to ensure financial stability.

® Alice Morgan 13.06.2014 g.

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