LONDON, Nov 28: The Bank of England moved to head off the risk of a bubble in house prices on Thursday, making a surprise announcement that it would put the brakes on a scheme launched last year to boost mortgage lending.
Shares in British construction firms tumbled after the central bank said it would refocus the Funding for Lending Scheme (FLS) on helping small firms that find it hard to borrow.
Britain’s economy and its housing market have staged an unexpectedly strong turnaround since FLS was launched by the BoE and finance ministry in July 2012 to spur lending to home-buyers and businesses.
Another, much-criticized, government program to aid the housing market, Help to Buy, remains in place.
”We did not see an immediate threat coming from the housing market but we are concerned about the prospective evolution of the housing market,” BoE Governor Mark Carney said.
”The concern is where this could go. We definitely see some short-term momentum,” he said, adding the BoE was prepared to take “larger measures” to tame rising house prices if needed.—Reuters
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