Sir Edward remains optimistic

Sir Edward, in an interview with BBC Radio 4's Today programme, said house prices were "beginning to moderate", but were unlikely to fall sharply.

The governor, who steps down at the end of the week, also told the BBC he was optimistic the UK economy was entering a period of more balanced growth, and that the government should not raise taxes in the near future.

Sir Edward said: "I think there has been a lot of rather strong language used about a house price crash.

Mortgages and the euro

"In fact what is happening is that although we are seeing house prices fall in some areas, like the very high end of the London market, the overall picture is of a moderation in the rate of increase, which is what we needed to see as it was clear the rate of increase could not go on forever."

Sir Edward said he was broadly supportive of the idea of more mortgages being taken out at a long term fixed rate, but that the choice was for consumers to make.

He said if that were to happen, it would make it easier to live with a single European interest rate policy and make it easier for the UK to adopt the euro.

However, he said it was still unclear how close the UK economy was to being ready to join the eurozone.

He said: "There is still great uncertainty about the situation, the eurozone is going through a pretty weak period which we have managed so far to avoid."

Public spending

Sir Edward said there was no need for any tax rises at the moment.

He said: "On the whole, fiscal policy going back over 10 years has been much sounder than it was earlier, and in terms of the amount of debt relative to GDP [gross domestic product], we are one of the lowest countries in the world.

"I welcome the fact public spending is increasing. If it were not, we would be even more dependent on growth in consumer spending which I don't believe can go on at the recent rate forever."

Sir Edward steps down on 30 June, after six years at the helm of the Bank of England, and will be succeeded by the current deputy, Mervyn King.

Your comments:

Spot on and solid as a rock. He must be worth at least two Gordon Browns. Why not offer him the Chancellor's job?
Andrew Waldron, England

I think Sir Edward has done a remarkable job for the country as a whole whilst being at the helm of the BoE, aided greatly by GB's initiative to place rate changes under him. House prices and mortgages are clearly the most important factors to the majority of household finances and, under 'Steady Eddy', we have avoided the suicidal roller coaster of high inflation last seen during the eighties.
ian barden, uk

As a saver I think that Sir Edward's handling of the economy is a disaster. Savings income cut by 80% in 10 years. Stock market in freefall. Housing unaffordable by normal people. We need a MAJOR increase in interest rates - to around 10% pa NOW!
Brian, UK

Like others with a vested interest in the housing market, he is unable to form an objective view of the market conditions. He will also not appreciate the impact that the pensions crisis and the loss of high-end city jobs will have on the wider economy.
Adrian, England

The Governor of the Bank of England cannot control exchange rates. 'If' the pound were to fall heavily the B of E would have to put up interest rates to meet its inflation targets (unless these are abandoned). This would cause the housing market to crash. It is not under B of E control, so he can't be sure.
Peter Davis, England

On the whole, I agree with Sir Edward's assessment. I think he has done an excellent job as Governor and deserves the thanks of the country. He smoothly managed The Bank's move to independence, which has led to a more stable and long-sighted approach to interest-rate policy. I hope that Mr King is as successful.
Nick, UK

I agree with Sir Edward's comments on the housing market. With first time buyers struggling to get on the ladder, the rate of house price inflation will moderate or fall to zero. Interest rates are low, employment is good and housing supply is not keeping up with demand, so there is unlikely to be a price crash. However if there was a hint that interest rates were to rise or unemployment to become a serious issue then house prices would most likely come down or even crash in extreme circumstances. As we've seen in the past, no one can reliably predict sudden swings in the economy and so while things are OK right now, there can be no assurance that there will not be a house price crash in the future.
Mothy, UK

I think that the housing market will crash. There is a lack of affordable housing for first time buyers so how will the present inflated prices be maintained? Also Government borrowing to fund its ridiculous overspending on public services will lead to higher interest rates which will also bring down the house market.
Ashley Stephenson, England

It was good that a top spokesperson for the Uk economy has given a clear indication of house prices. After months of conflicting reports we finally have a reliable opinion. I now feel much more confident about buying property.
Nathan Reeves, UK

House prices will fall, whether its a crash or a slow, prolonged spiral down is yet to be seen. As for the lowest debt per GDP - I take it he forgot about consumer debt??
Pedro, England

Of course the housing market will crash. It has always followed a boom and bust tendancy in the past and it is naive to think that this time will be any different. History will repeat itself!
C Hall, UK

Sir Edward is not only suggesting that there won't be a property crash based on economic data but trying to influence the market too. It would be quite embarassing for the BoE if there were a crash as it is their policy which influences the demand in the housing market.
Paul, UK

I don�t think Eddie George�s comments will pacify anxious house owners desperately trying to sell their homes in London. As a first-time buyer myself, I was pleasantly surprised to find a sense of panic amongst the real estate agents � some said they would consider offers more than 20% off the advertised asking prices. In my opinion, there is an unmistakable feeling on the streets that we are heading for a price collapse and we know how these things usually end up as self-fulfilling prophecies. But then again, I would say that wouldn�t I!
Jonathan Charles, UK

I agree completely. The only thing that will trigger a crash is an increase in interest rates. Since the rates will probably come down again, it won't be a problem. I think a lot of people have already re-mortgaged and moved based on lower rates, so that is why the market has slowed down. I also think that a lot have gone as far as they are prepared to risk their monthly payments, so we would have to see a significant decrease to trigger another boom, so stability will come from people waiting for the market to catch up.
Richard Jackson, UK