The week ahead

This week Nationwide and Halifax will release data measuring house prices for June, the Bank of England will reveal household borrowing figures and St Mowden Properties, Persimmon and construction management specialist Carillon will post trading updates. St Mowden is expected to report yearly net asset growth of 2.3%, from 9.6% to 11.9%, while sales are forecast to fall to £109m, down from £133m, with pre-tax profit dropping from £34m to £14m.

Bank of England cracks down on mortgages

The Bank of England has taken fresh steps to prevent people from taking on unaffordable mortgages. Under the proposals, lenders will not be allowed to lend any more than 15% of residential mortgages at more than 4.5 times a borrower’s income. In addition, the Bank’s Financial Policy Committee recommends that lenders check mortgage applicants can cope with a 3% rise in interest rates – slightly tougher than the current affordability checks. The new measures are designed to cool the housing market without derailing the economic recovery. Mark Carney, the BoE’s Governor, stressed that controlling debt, and not prices, was the Bank’s biggest concern. He noted that while “history shows that the British people do everything to pay their mortgages,” this had knock-on effects for the rest of the economy. “That means cutting back deeply on expenditures when the unexpected happens, potentially slowing the economy sharply. That's why recessions that follow periods of rapid growth, like the record one from which the UK is emerging, tend to be deeper and longer lasting,” he said. Mr Carney also stated that house prices could rise another 20% over the next three years, without posing a significant risk to the economy, a phenomenon which he would “tolerate”. Meanwhile, the Treasury has announced that it would stop any new loans larger than 4.5 times income from being issued to borrowers under the mortgage element of Help to Buy. Separately, theFT notes a 3% rise in interest rates would add around £3,600 a year to the average person’s mortgage costs

Carney plays down rate rise

The Bank of England is behaving like an “unreliable boyfriend” and is using “smoke and mirrors” to keep changing its message on interest rates, MPs have claimed. Bank Governor Mark Carney appeared to play down speculation of an imminent rate rise yesterday, as he stressed that soaring employment and robust UK growth were not matched by higher wages and rising productivity. MPs on the Treasury Select Committee reminded Mr Carney that less than two weeks ago he said the MPC could vote to raise rates from a record low of 0.5% “sooner than markets currently expect”.

House prices will rise faster if Scotland votes No

House prices will rise more quickly if Scotland remains in the UK than they would if there is a Yes vote, a leaked document from Savills has suggested. A presentation given by the estate agent this month, titled Financing Property 2014, obtained by the Better Together campaign, estimated that Scottish house prices would rise by 25.2% in the years between 2014 and 2018 in the event of a No vote. According to Savills, if Scotland leaves the UK, the house price rise over the same period to 2018 would be only 10.9%.

Construction slowdown expected

A survey by Barbour ABI has found that Britain's construction industry is expected to slow during the summer. The study shows that a rise in contract signings between April and May of 5.3% was not enough to offset a fall over the spring that left the value of contracts down 3.7% on the same time last year. The survey found that residential housing starts accounted for around a third of the entire sector's work amid signs of weak activity in the infrastructure and civil engineering industries. Michael Dall, lead economist at Barbour ABI, said London was the UK's hotspot for construction activity in May, accounting for 24% of the UK total.