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Bank of England to stress test lendersThe Bank of England is set to launch a new stress test to examine whether banks and building societies will need bailing out if the property market crashes.

This follows news that the housing market got off to a bullish start to 2014, with the average price rising £2,000 in January alone to £175,546, according to Halifax.

The new stress test, to be drawn up by the Bank's Financial Policy Committee, will examine eight banks and building societies.

These will include the big four, and Barclays, HSBC, Lloyds Banking Group and RBS, which the Bank must already stress test for the European Banking Authority.

And it will extend to four other lenders: Nationwide, Santander, Standard Chartered and The Co-operative Bank.

The results could be published by November, but the FPC has not yet decided if it will make them public, according to a report in The Mail on Sunday.

On Wednesday, Bank governor Mark Carney is set to defend his controversial forward guidance policy, and is expected to say that the UK isn't strong enough to withstand an early interest rate hike.

The Bank's Inflation Report is expected to play down the policy, which originally stated that it wouldn't consider a rate hike until unemployment dropped below 7%, most likely in 2016.

Unemployment has plunged rapidly since then, and is currently 7.1%.

It remains to be seen whether the forward guidance targets will be scrapped altogether, or new indicators will be introduced.


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