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Bovis CEO dismisses fears of UK housing bubble

Despite growing fears of a housing bubble, the chief executive of Bovis Homes told CNBC that a future rise in interest rates has been priced in by lenders as the homebuilder posted a 50 percent increase in housing operating profit.

"The people that are buying are typically trying to borrow around 90 to 95 percent [of the value of the home] and mortgage rates for those people are still relatively high at 5 or 6 percent...people are having to contend with a reasonable cost of debt," David Ritchie told CNBC Europe's "Squawk Box."

"Clearly if the base rate and LIBOR were to move then interest rates would react and we'd have to see exactly how they'd react but we must remember that lenders always have to put in a stress test [to see] whether a first-time buyer will be capable of dealing with that first time rise."

On Monday, the home builder posted a 50 percent increase in housing operating profits (excluding land sales) in the first half of the year, to £20.4 million ($31.8 million). Average selling prices were up by 15 percent to £188,500.

Ritchie said home buyer sentiment had been helped by government lending schemes such as the "Help to Buy" program, a scheme that has been accused of creating a housing bubble by sparking more risk taking in housing at a time when housing supply remains tight.

On Monday, the U.K. property website Rightmove reported that house prices were 5.5 percent higher than a year ago.

(Read more: UK housing recovery spurs 'bubble' warnings)

"With increased levels of mortgage availability people now think they can come and do a transaction," Bovis Homes's Ritchie said. "They can now get in the market and buy a home and we've seen an increased level of confidence from consumers coming to our sites on a day-to-day basis."

Ritchie said the important thing for the housing industry was an increase in activity, not prices. A rise in transaction levels would allow companies like Bovis to be more confident in buying up land and creating more homes, he said.

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