The International Monetary Fund is urging the British government to rein in risky mortgages to cool the housing market.
It is the strongest warning yet from an international organisation about such risks in the UK.
The IMF’s annual report on Britain’s economy said so far there were few signs of a credit-driven bubble in British property prices.
But it believed that that could change fast and it warned that lenders should stop letting so many home-buyers take out mortgages that are far larger than their incomes.
The UK government and central bank have said they are keeping a close eye on the housing market.
British house prices have risen by more than 11 percent over the past year according to one measure, the fastest rate since the eve of the financial crisis, though London and the south-east of England account for most of the increase.
Last month another index showed its biggest one-month jump since 2002.
The onus for action falls on the Bank of England. It is due to give its own half-yearly assessment of financial stability risks later this month when it could take more measures to control the mortgage market.
IMF managing director Christine Lagarde presented the report alongside Britain’s finance minister George Osborne.
Earlier Osborne said the BoE should not hesitate to act on housing if needed.
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