BoE has no control of housing market

Appearing before the Commons Treasury Committee Carney admitted that the central bank has no direct control over rapidly increasing house prices.

Carney also expressed fears that the lending practices of both banks and building societies could deteriorate as the market continues to recover.

He said: “Our concern would also be that a rising housing market, occasioned in part because of the dynamics in prime central London, would encourage individuals to take greater risk without fully incorporating entire interest rate cycles that would transpire over the life of a mortgage.”

Carney made his claims as some economists continue to express fears of a housing bubble which could envelop the whole country.

He also said that interest rates could see a sixfold rise over the next three years to 6%. But Carney added that any rise would be gradual.

He said: “When the time comes, a welcome time, to raise rates, we expect it to be gradual and the degree to be limited.”