A member of the Bank of England’s Monetary Policy Committee (MPC) has cast doubt on the idea of a continued recovery of the UK housing market.
Addressing the Treasury Select Committee earlier this week, Kate Barker stated a personal view that mortgage finance could be “quite restrained” in the months ahead, leading to the possibility of “adjustments in the housing market”.
She added: “I was quite surprised by the strength of prices last year. It is possible the housing sector will continue to be quite weak.”
Ms Barker is leaving the MPC at the end of May after nine years as one of the Bank’s base-rate setters.
In related news, Moody’s recently warned of the risk of a mortgage famine next year.
According to the credit ratings agency, from the start of 2011 UK lenders need to begin repaying a collective £319 billion borrowed from the Government during the credit-crisis stricken years of 2007 and 2008.
The sum amounts to one-quarter of the UK’s entire £1.3 trillion residential mortgage book and Moody’s is expecting banks to limit their lending by imposing ever tighter criteria for borrowers.
If the forecast is accurate, and banks are still unable to raise cash for their mortgage businesses on the wholesale money markets, UK house prices could take another knock.
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