The British housing market has "deep, deep problems" and is the biggest risk to the country's financial stability, the governor of the Bank of England said Saturday.
"When we look at domestic risk, the biggest risk to financial stability, and therefore to the durability of the expansion -- those risks centre on the housing market," Mark Carney told Sky News in an interview.
The Bank this week hiked its 2015 growth forecast and said the British economy was heading "back towards normal" as the recovery from a long and deep recession picks up speed.
But fears are growing of a new housing bubble, after prices rose 10.9 percent across Britain in the year to April, and 18 percent in London, according to mortgage provider Nationwide.
Carney said a key issue was the lack of homes being built, an issue that falls outside his responsibility as governor.
But he said the Bank was watching to ensure banks had enough capital to withstand the risks involved, and was trying to ensure that people were only given mortgages that they can afford.
"By reinforcing both of those we can reduce the risk that come from a housing market that has deep, deep structural problems," the Canadian said.