Help to buy
Osborne also defended his Help to Buy scheme, which he began last year and which broadens access to high loan-to-value mortgages, although he said it would not be immune if the BoE did choose to impose loan-to-value or loan-to-income caps.
But the BoE will not be able to use its new powers quite yet. They will need to be turned into law, which Osborne said he would do before the next national election in May 2015.
The FPC only gained formal powers last year, as part of a revamp of Britain's bank regulation after the financial crisis. Allowing it to set caps on mortgage loan-to-value and loan-to-income ratios was seen as too politically sensitive, since it risked putting the BoE in the position of effectively denying prospective home-buyers a mortgage.
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Earlier on Thursday, business minister Vince Cable said he was "concerned" about rising house prices. Previous housing booms showed that mortgage loans of around 3 to 3.5 times people's incomes were stable, he said, and he was "appalled" to see some banks lending as much as five times income.
"This is the key area that Bank of England has got to operate into and make sure that this boom in house prices, particularly in the south of England, doesn't destabilise the whole economy," Cable told BBC Radio's Today program.
Lloyds Banking Group and Royal Bank of Scotland both said recently that for loans over 500,000 pounds ($839,500), they will no longer give mortgages of more than four times a borrower's income.
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But views differ among policymakers on the importance of rising house prices as a risk to Britain's financial stability.
BoE policymaker Ben Broadbent, who in July will become deputy governor, said on Wednesday the housing market upturn bears little resemblance to the debt-fuelled booms of the past, adding that it was more important to watch leverage than prices.