Rates could go up a fair amount before getting into great difficulties: BoE’s Broadbent
(Reuters) – The Bank of England has some leeway to raise record low interest rates without hitting borrowers buying homes with the help of government lending schemes, BoE policymaker Ben Broadbent said on Sunday.
The government launched a flagship loan guarantee plan earlier this month to help people buy houses, prompting criticism it could fuel a property bubble and burden buyers with unsustainable debt once rates return to normal levels.
Asked on Sky News whether he worried how borrowers will cope with higher rates, Broadbent said: “The numbers entering the scheme are relatively low. And although interest rates will at some point start to rise, you’ve got to remember quite how low a level we are starting from.
“I think there is a fair amount they could go up before borrowers got into great difficulties.”
The central bank has kept interest rates at a record low of 0.5 percent since 2009 and has pumped 375 billion pounds ($600 billion) of new money into the economy since the financial crisis.
A cross-party committee of lawmakers has warned that the government housing schemes risk raising prices rather than supply.
In August the central bank committed to keeping rates on hold until unemployment falls to 7 percent – something it forecast would take at least three years – unless inflation threatens to get out of control.