Jan. 15 (Bloomberg) -- Governor Mark Carney said the Bank of England expects a further strengthening of Britain’s property market this year as the economy continues to recover.
“Our general expectation has been for a continuation of current momentum, house-price momentum, and mortgage activity and credit-growth momentum into 2014 before decelerating around the middle of 2015 towards 2016,” he told Parliament’s Treasury Committee in London today. After this, increases in mortgage and total household debt will be more in line with the growth rate of incomes, he said.
Low mortgage rates, a strengthening recovery and government incentives are helping to fuel a revival in Britain’s property market. While the BOE has downplayed concerns a bubble may be brewing, it scaled back a mortgage lending program late last year. Carney described that move today as “taking the foot off the accelerator, not putting the foot on the brake.”
Halifax, a unit of Lloyds Banking Group Plc, has forecast that home prices will increase between 4 percent and 8 percent this year after a 5.7 percent increase in 2013. The BOE reported in its quarterly Credit Conditions survey on Jan. 8 that mortgage availability improved in the fourth quarter and is set to increase further.
On the increase in mortgage activity, Carney said it has been “a snapping-back, and the question is will it snap back through previous averages.”
He said he doesn’t want to see any continued increase in mortgage lending accompanied by a deterioration in lending standards at banks.
Asked by lawmakers about a bonus cap on bankers’ pay, Carney said he agreed it isn’t the right tool to control remuneration.
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