UPDATE 2-UK housing market has deep problems, says BoE's Carney

Sun May 18, 2014 7:26am EDT
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* Carney points to lack of home building as big problem

* BoE to push banks on lending standards, consider new measures

* Bank considering merits of loan limits based on income - Carney

* Weak euro zone, stronger sterling are risks for economy (Adds quotes from Carney, Cameron, background)

By William Schomberg and Stephen Addison

LONDON, May 18 (Reuters) - Bank of England Governor Mark Carney gave his strongest warning to date about the risks of a housing bubble and said the BoE was looking at new measures to control mortgage lending amid a shortage of home building.

The British housing market has "deep, deep" structural problems, chief among them insufficient construction of new homes, Carney said in an interview with Sky News television broadcast on Sunday.

"When we look at domestic risk the biggest risk to financial stability, and therefore to the durability of the expansion, those risks centre in the housing market and that's why we are focused on that," he said.

Helped by a recovery in the economy, record-low interest rates and government schemes to help home buyers, British house prices jumped about 10 percent in the 12 months to April, raising concerns that buyers will take on too much debt.   Continued...