Regulators to monitor hedge funds, housing market

Regulators to monitor hedge funds, housing marketThe financial policy committee (FPC) of the Bank of England has said that it will monitor hedge funds and the UK housing market due to potential vulnerabilities even as it dismissed suggestions that the housing market is heading towards a property bubble.

FPC said in a statement that the hedge funds might be affected by long-term interest rate increases and needs to be monitored. They said that the hedge funds needs to be monitored due to this vulnerability and also asked banks in the country to prepare themselves for higher stress due to higher interest rates.

The FPC also said that it will closely watch the housing market and the banks underwriting standards in order to note developments that may lead to a collapse and prevent emerging vulnerabilities. The FPC appears confident and calm over the improvements in the housing market backing the stand taken by Governor Mark Carney. It said that housing market activity and loan-to-value ratios on new mortgage lending remains below market levels.

The central bank and the Financial Conduct Authority (FCA) will work to gather more information for the authorities relating to the hedge funds allowing a comprehensive risk assessment of the financial industry.