LONDON—The U.K.'s two chief financial-policy makers warned Thursday of a potential real estate bubble as the government moved to enact new powers to curb mortgage lending amid a gathering boom.
Britain's concerns highlight a central challenge to policy makers in the era of low interest rates: how to curb bubbles without slowing economic recovery.
The U.S. and euro zone have also established new bodies to keep watch over the financial system, but the U.K. has gone furthest in equipping its central bank with specific tools to tackle housing-market risks.
The U.K. is trying to control housing prices without resorting to raising interest rates.
The BOE will have wide new authority to restrict lending by limiting how much home buyers can borrow relative to their incomes and how much they can borrow as a proportion of a property's value.
The International Monetary Fund warned Wednesday the U.K. was one of many countries that need to guard against housing-market booms, for fear a bust could lead to a systemic banking crisis.
Australia, Canada and France were also highlighted as countries where housing markets appear overvalued in relation to average incomes.
Britain's concerns highlight a central challenge to policy makers in the era of low interest rates: how to curb bubbles without slowing economic recovery.
The U.S. and euro zone have also established new bodies to keep watch over the financial system, but the U.K. has gone furthest in equipping its central bank with specific tools to tackle housing-market risks.
The U.K. is trying to control housing prices without resorting to raising interest rates.
The BOE will have wide new authority to restrict lending by limiting how much home buyers can borrow relative to their incomes and how much they can borrow as a proportion of a property's value.
The International Monetary Fund warned Wednesday the U.K. was one of many countries that need to guard against housing-market booms, for fear a bust could lead to a systemic banking crisis.
Australia, Canada and France were also highlighted as countries where housing markets appear overvalued in relation to average incomes.
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