Bank of England's deputy governor warns spiralling house prices are 'not just a London problem'

The outer Regions of the UK should brace themselves for potential, rapid increases in house prices. The threat of prospective home-buyers taking on considerable levels of debt is ënot just a London problemí according to the deputy governor of the Bank of England.
Sir Jonn Cunliffe, head of financial stability, said double digit price rises had spread outwards from the capital:
ìIn the country as a whole over the last year, prices have gone up by over 10pc ... House prices in the North West have gone up by over 10pc over the past year.î
There is a growing worry amongst members of the financial community who have speculated that if house prices continued to rise faster than earnings, buyers will struggle to ascend to the first rung of the property ladder. Household debt will pile up which will in turn unbalance the economy leading to potential desolation for consumers across society. This perspective was given weight by Cunliffe's remarks:
ìAs house prices go up faster than the amount of money people earn, the only way people can buy is to take on mortgages at higher and higher rates compared to what they earn," he said. 
"Then debt in the economy goes up and that leaves the economy quite vulnerable to shocks."
Last week, the Bank introduced measures to constrict the amount of high loan-income loans lenders can hand out to 15% of new business. Moreover, banks must heavily scrutinise borrowersí capability to pay their mortgage due to new regulations imposed in the Mortgage Market Review.
Sir Jon said the Bank of England was committed to a preventative cause, whereby it seeks to rein in the market in order to safeguard the economy from sudden, uncontrollable swings. In trying to dampen house prices, the BoE is attempting to reduce the disproportionate ratio of mortgages to peoplesí incomes. The deputy governor implied that the recession wisened banks to the force needed to contest tough economic issues, stating that policymakers are ìmore prepared to use monetary policy to address financial stability risksî.
Nonetheless, Cunliffe underlined the ëhigh costí involved in using interest rates to address financial stability risks, as misappropriation could further destabilise a finely-balanced economy. Cunliffe assured the public that Bank would use its collective might to enhance prudency within the financial system.
Policymakers must be vigilant, according to Sir Jon, and ensure that the economy could ìmanage the known, likely risks it facesî whilst being ìresilient to the risks of events that are improbable but possible and to risks that simply cannot be foreseenî. 
The Bank is conducting ìstress testsî in which contrived scenarios are enacted to examine whether the UKíS renowned lenders are able to endure the toughest of recessions, where unemployment falls to 12% and house prices tumble excessively. Sir Jon implied that in preparing for the unlikeliest of situations, banks will be ready for the wide variety of challenges that they could face.
"We want the financial system as a whole to be able to withstand such a shock without a breakdown in the essential functions on which the economy depends," said Sir Jon.