Governor of the Bank of England (BoE), Mark Carney, has restated concerns that a continued increase in house prices will put the UK at risk of a housing bubble.
Official figures show that house prices have increased by 10.5% in the year to May. This figure and high levels of mortgage debt were the major issues raised by Carney when he addressed the Treasury select committee of MPs.
He said: ‘Because history shows British people pay their mortgages, there are very low default rates on mortgages. What happens if households are borrowing at high multiples is they have to economise on everything else in order to pay their mortgages.
‘And if enough people are highly indebted, that has a big macroeconomic impact. It can tilt the economy back into recession, and we start from a position of vulnerability’.
The latest figures from the Office for National Statistics (ONS) showed the average house price for first-time buyers has gone above £200,000 for the first time.
