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Cable: Housing boom must be stopped


Measures need to be taken to stop a housing boom from “getting out of control” in certain parts of the UK, according to business secretary Vince Cable.

Various surveys and reports have revealed that house prices have been rising throughout the country by as much as 8% per year. However, the majority of the country has been outpaced by London, as house prices in the capital have increased by as much as 17% over the last year.

Mr Cable said: “The immediate problem is to stop this boom getting out of control”.

He also spoke negatively about the actions of some banks which could be contributing to the boom. He said that he was “appalled” to find that some banks were lending up to five times a mortgage applicants income and that banks “must not throw petrol on the fire”.

Contradictory statements

However, despite these comments, others have claimed that the mortgage market is showing signs of slowing. For example, Nationwide Building Society said prices are beginning to “moderate” and could face a “natural correction”.

Additionally, the Royal Institution of Chartered Surveyors (Rics) also released similar findings, as they claimed the mortgage market was slowing because “a lack of supply, higher prices, and more prudent lending measures” are making buyers and sellers more cautious.

Some mortgage brokers have also said that Mr Cable’s comments are behind the times, especially given that recently introduced rules by the Financial Conduct Authority mean that mortgage applicants will have to face stricter affordability checks.

Aaron Strutt, of Trinity Financial, said: “The Financial Conduct Authority has just completed the implementation of the biggest set of changes to the mortgage market in 10 years and the lenders are relying very heavily on mortgage affordability.”

He continued to say that until house prices start to come down, buyers will need loans that are considerably higher than their wages, otherwise people “will be forced to rent for longer or rely on the Bank of Mum and Dad."

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