The incoming deputy governor of the Bank of England has said that the central bank will be keeping a close watch on the government’s Help to Buy scheme.
Sir Jon Cunliffe, who is joining the Bank as its most senior official with responsibility for financial stability, said: “If it contributed to house prices going up at an unsustainable rate and that contributed to a threat to financial stability, that is something one would have to look at.”
Speaking at the Treasury Select Committee, Cunliffe, who is currently the UK’s permanent representative to the European Union, added that he was yet to see signs of a housing bubble.
“It’s too early to say we are entering into a bubble. […] Looking from where I am now it doesn’t look as if we are in a bubble,” he said.
Cunliffe’s comments followed a warning from Lloyd’s Banking Group chief executive Antonio Horta-Osario, who has said that the government needs to ensure that housing supply constraints do not mean that the Help to Buy scheme will contribute to a boom in house prices.
“It is important that planning permits, building authorisations and social housing projects are [liberalised]so that the increase in [mortgage]transactions does not lead to a substantial increase in house prices,” said Horta-Osorio in an interview with the Financial Times.