LONDON, June 28 (Reuters) - The Bank of England cannot and should not control rising house prices in Britain, a senior official at the central bank said in an interview published on the website of the Daily Mail newspaper on Saturday.
The Bank of England said on Thursday it would impose its first limits on how much most people can borrow to buy a home in a bid to stem increasing levels of debt amid double-digit price growth in the housing market.
“It is not our job to control house prices, nor can we control house prices,” Spencer Dale, the bank’s executive director for financial stability strategy and risk, told the British newspaper. “They will be determined by the underlying conditions of the market.”
The BoE’s Financial Policy Committee said on Thursday that from October, it would only allow 15 percent of new mortgages to be at multiples higher than 4.5 times a borrower’s income, and that all lending would be subject to extra affordability checks.
Dale said that people should consider the measures taken by the bank “as insurance for the country’s housing market.”
“When people come to judge the success of this policy in, say, two years’ time, do not judge us on what has happened to house prices, judge on whether we have controlled the levels of household indebtedness.”
The Bank of England governor stressed on Thursday that it was debt levels not price rises that were the main target of the measures imposed by the BoE’s watchdog on financial stability. (Reporting by Costas Pitas; Editing by Lisa Shumaker)