The Bank of England is considering new restrictions on mortgage lending as it watches the UK housing market with growing unease.
The Bank's concern about the housing market has risen since the last meeting of its Financial Policy Committee (FPC) in June, and it is now considering what action it could take.
Options under consideration include limiting maximum LTVs or loan-to-income ratios, in a bid to keep mortgage affordability in check, according to the minutes from the FPC's November meeting, published yesterday.
The minutes said that committee members "had become more concerned about the potential risks to financial stability that might arise from developments in the UK housing market".
Bank governor Mark Carney announced the early scrapping of the Funding for Lending Scheme (FLS) for residential mortgages shortly after the meeting.
The FPC also discussed its options for cooling the mortgage market, such as forcing banks to hold more capital. This could be done "to specific types of mortgage lending, just to new lending or to the entire portfolio of loans", the minutes said.
Yet the Bank may struggle to cool the market, if the recent scrapping of FLS is a guide.
Analysts say the house price surge is set to continue despite the decision to withdraw FLS, with the economy set to boom in 2014.
Yet the UK remains a two-tier market, with strong price rises in London and the East failing to translate in strong growth elsewhere, especially in the north of England.
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