This article, which has been prepared mainly by E P Davis and I D Saville of the Bank's Economics Division, argues that:
Now the banks have entered the housing market in a major way, the market for mortgagers likely to be cleared mainly by interest rate movements rather than by rationing.
The recent sharp rise in mortgage lending reflects the removal of restrictions, allowing persons to increase their capital gearing, and probably does not reflect a significant rise in the demand for housing.
A substantial part of mortgage lending does not ultimately finance new or improved housing, but is available for the acquisition of other assets or other spending.
House prices are somewhat low in real terms, and may recover in the course of the next few years.
Mortgage lending and the housing market