Bank Governor warns on overheating housing market

Bank of England governor, Mark Carney, warned that the UK housing market has deep problems that pose the biggest threat to the UK’s economic recovery and that the bank stands ready to use its powers to curtail lending.  To many, the most obvious action he could take would be to raise interest rates but Carney has ruled this out as a last resort due to the fragility of the UK economic recovery.  Instead, the bank could put pressure on lenders by requiring them to hold more capital against mortgages. Another approach could be to get the Financial Conduct Authority to impose tougher affordability measures. Mortgage to value ratios could also be targeted.  Either way, the government is now under severe pressure to curtail or close its Help to Buy scheme. The 10-year Gilt yield was unchanged at a 7-month low of 2.56%