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BoE warns of threat to housing recovery

Bank of England (BoE) governor Mark Carney has warned that the booming housing market poses the biggest threat to the UK's economic recovery.In an interview broadcast on Sky News, Mr Carney said there are "deep, deep structural problems" in the housing market, as demand for homes continues to outstrip supply by a significant amount."The biggest risk to financial stability, and therefore to the durability of the expansion - those risks centre in the housing market and that's why we are focused on that," he said."We don't want to build up another big debt overhang that is going to hurt individuals and is very much going to slow the economy in the medium term."Mr Carney said the BoE is monitoring the housing market closely and is aware of the possibility that people may be taking out large mortgages they will be unable to repay when interest rates rise.Measures that could be taken to cool the housing market include limiting the types of mortgages lenders are able to issue. The BoE governor said it could also provide advice on changing the terms of the Help to Buy scheme.Mr Carney said some of the higher loan-to-value mortgages, which are over four times the borrower's salary, are on the rise and could destabilise the recovery.While the rate of housebuilding is now at its highest since 2007, it is still far short of the level needed to meet demand.The BoE governor pointed out that twice as many houses are being constructed in his native Canada than are currently being built in the UK.Figures from the Department of Communities and Local Government show 36,450 new homes were started in the three months to March. This is 11 per cent higher than in the previous quarter and a third higher than during the same period last year.Also speaking on Sky News, the prime minister said Mr Carney was "absolutely right" to address the issues in the housing market but stressed that government initiatives are helping to boost the rate of construction. 

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