Bank of England responds to surging UK housing prices

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Bank of England responds to surging UK housing prices

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Britain’s central bank is moving to put the brakes on surging property prices in the UK.

From October, the Bank of England is to cap the number of home loans higher than four and a half times a borrowers’ income.

From this week there will be tougher checks on whether people can afford to repay their mortgages when interest rates go up from the current low 0.5 percent.

UK policymakers have become more and more concerned about the housing market.

Prices have been increasing at around 10 percent annually in Britain and at nearly double that rate in London, where cash buyers from abroad are also fuelling demand.

The stellar recovery in the housing market is thanks to record-low interest rates, falling unemployment and government-sponsored property purchase schemes.

The BoE has said it does not aim to curb house prices directly, but instead it is focused on ensuring that lending does not get out of control.

with Reuters