The Bank of England is set to be given more power to tighten mortgage lending practices as the government seeks to rein in rising property prices. At the last half of 2014, property prices were rising so quickly that homeowners admitted to frequently checking online to watch their property values rise. Experts feared the UK was on the cusp of a housing market bubble.

There has been a natural correcting as demand declined and house prices cooled. The forecasts are for the average house price to rise by 3% to 5% over the course of this year with slow but steady increases expected. Should that expectation not be met and demand rise quickly for property purchases, the Bank wants to have control of the situation to protect the economy.

The government will now allow the Bank of England to overrule lenders rather than offering guidelines in limiting mortgage lending.

In a statement, UK Chancellor George Osborne said, “We're confirming that the Bank of England will have further powers to safeguard the stability of Britain's financial system from any future risks posed by our housing market or banks.”

The average UK house price in October last year was at £271,000, according to the Office for National Statistics. This reveals that there was a cooling down period from the end of the summer when the average in August was £274,000 and in September it was £273,000.

For the year house price inflation for England was at 12.5%, 10.9% for Northern Ireland, 7.6% in Scotland, and 5.8% in Wales.

In April last year, the Financial Conduct Authority issued new guidelines to lenders to assure that homeowners could afford the mortgage loan they were seeking. Along with revealing their spending and saving habits, the borrower’s finances are put through a stress test to assure they can afford the loan even when interest rates increase.

The current standard rate set by the Bank is at 0.5% and has remained unchanged since 2009. However, there is expectation that the rate will likely see its first change this year.

House prices may be cooling down due to a drop in demand, but seasonal buying time is around the corner and with a low supply of housing on the market for sale, the house prices could be in danger of rising quickly once more. The government is hoping that new guidelines will protect home buyers and remortgaging homeowners from the perils that hit so many during the recession.