BoE to use other tools to address housing bubble

Since severe financial crisis in the U.S., when investors and market participants were blaming Greenspan, officials have been prodding policymakers to address housing market. Nevertheless, it is incorrect to blame borrowers for their wish to buy a home, especially amid weak inflationary pressure. Any overheating housing market that may turn into a bubble should be pinned on the government, who should address it by using a wide range of tools in order to slow the rush into cheap home loans. 

Amid growing signs of another housing bubble in the U.K., Bank of England policymaker David Miles stressed out that interest rate adjustments is not the best weapon to use against a build-up of risks in the property market, hence, the BoE should be using it only when other tools have been exhausted. While Mark Carney pledged not to raise interest rates until the unemployment reaches 7%, he also mentioned this pledge is conditional if financial stability is not being threatened. One of the possible tools to address housing market could be capital requirements on mortgage lending, while another option is to limit a level of borrowing by homebuyers, as use of these funds outside equity may help counteract some of the problems created by excess leverage. In addition to that, Miles refrained from any comments of a contradictive Help to Buy scheme.