The sharply rising prices of housing in London have completely shattered the property market in UK and now, since the Londoners are all whacked with the existing rocket prices of Houses in UK, the bank of England is now ready to do some official intervention in the property Industry and ready to rein in the market with its powerful weapons.
The hard-wired market has impelled the governor of the Bank of England, Mark Carney to intrude in the housing market. Now, he has been granted to look into this matter and he, with the support of Bank of England is all set prevent the continuing rising property market in the region. Now it’s a time to see, how effectively they are going to work on this issue and what does the bank mean by its ‘Help to Buy’ schemes and how it’s gonna use the potential property buyers?
The Financial Policy Committee (FPC) is likely to focus on much of its meeting on house prices and announce plans to normalize (decreasing prices of property) the market when the Bank releases its Financial Stability Report on 26 June. So what can the FPC along with the Bank of England do to take the heat out of the market?
Having learnt a lesson from 2008, He claims that, there were full chances to prevent the 2008 housing crisis but we missed it out due to have less powers from Bank of England, especially for the authority to restrict the high lending. With heated up housing prices in UK, more home owners have come to the conclusion to sell out their properties whilst they still can, and this dreadful selling has led to supposition that the UK housing effervesce is set to disintegrate.
Help to Buy Scheme Review
The latest report of BOE has also included a review of the ‘Help to Buy’ scheme. Introduced last year, it was launched to help you the first time buyers to have their purchase subsidised by the UK Government. The scheme prove to be successful in increasing the activity in the housing market, but, along with the same, it also got negative reviews based on the trepidation, that it would hasten to the level that would spur another housing burst. The first time buyers in the region will be rather happy to know that the Bank of England report suggests otherwise.
Carney’s report states that the scheme does not sham material risks to the financial stability under the current market conditions. He said that ‘Help to Buy’ was not the cause for increasing house prices and accounted for just 5% of mortgages. So it appears that the fears were speculative and government subsidies will remain on option for the first-time home buyers for a little more time to come.
Under the new legislation, the BOE will have authority to take the crucial actions to settle down the activity in the property market, by this means, subordinating the house prices before things get uncontrollable. According to chancellor George Osborne, the BOE will now have powers to “Direct” while earlier, it had the power only to recommend. This direct power will help the BoE to limit the amount that property investors can borrow on their income.