Posts tagged Bubble

With house prices rising in recent months due in part to the Government’s shared-equity scheme for first-time buyers and also the Bank of England’s subsidies to lenders’ borrowing,the Royal Institution of Chartered Surveyors (RICS) are calling for the Bank of England to cap annual house-price inflation in order to avoid a debt bubble. (It was news to me that the Bank’s Financial Policy Committee have a suite of regulatory powers to make mortgage lending scarcer and more expensive).

The RICS want the Bank of England to limit the amount people could borrow in relation to income and also demand larger deposits from first-time buyers.

Now it may be me but surely the Government’s incentives were intended to provide a double bonus, not only to help first-time buyers to get onto the property ladder but also to generate house building and thereby help our beleaguered construction industry, the latter surely also benefiting the very institution that is suggesting this cap.