Christine likes George. And George likes Christine. The
Or is it? Examination of the IMF's annual report on the state of the
And the day when borrowing costs need to rise is coming closer, the IMF says. Its report on
So, while the IMF had some nice things to say about the
Boom-busts in the property market have been another big feature of the past four decades. An abundance of cheap money leads to higher demand for housing, rising prices, irrational exuberance, excessive debt, policy tightening and a property crash - usually in that order. The IMF does not think this is a credit bubble yet, but is worried that that may be the eventual outcome.
The warning to the Treasury and the Bank on housing was pointed. Action is needed now to head off the risks of another boom-bust. That should start with the meeting of the Bank's financial policy committee the week after next, the IMF made clear. In the first instance, it would like to see limits on the number of high loan-to-income (LTI) mortages. If that proves insufficient, it thinks outright caps on LTIs and on loan-to-value ratios should be considered. It also politely suggested to Osborne that he might want to rein in the mortgage subsidies offered under Help to Buy, and think about whether the scheme really needs to run for its full three years.
The IMF's yearly health check was, therefore, a bit more nuanced than it might have looked.
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