Christine Lagarde, the head of the IMF, called for measures to be taken to reduce high loan-to-income ratio mortgages, increasing pressure on the Bank of England to act on the housing bubble.
The IMF also urged ministers to consider an early end to the flagship Help to Buy scheme and said that if preliminary steps do not work, the BoE would need to raise interest rates.
Figures from Nationwide showed average house prices have risen above the pre-financial crisis peak to a record high of £186,512.
Two large part-state owned British banks, Lloyds Banking Group and Royal Bank of Scotland, have already stated that they will no longer lend more than four times a borrower’s income for mortgages of more than £500,000.
New analysis by property agents Savills shows that difficult mortgage conditions now mean only wealthier first–time buyers or those with financial support from parents are able to get on the property ladder.
It seems as though calls to end the borrowed time the housing market has been living on are finally being heard. With the IMF weighing in on the issue the only item left to speculate on is by how much and how fast interest rates will rise.