Bank of England's Carney warns house-buyers on rates: newspaper

LONDON (Reuters) - Bank of England Governor Mark Carney has warned would-be British homeowners to consider the risks of higher interest rates, amid concerns that rising house prices could create a property market bubble, a newspaper reported on Friday.

"Think about the mortgage you are taking on, the debts you are taking on," Carney was quoted as telling The Guardian.

"Are you going to be able to service that mortgage five years from now, 10 years from now, if interest rates are higher?"

On Thursday, the BoE unexpectedly said it would put the brakes on a scheme launched last year to help boost mortgage lending and would refocus it instead squarely on lending to businesses.

Earlier on Friday, data showed British house prices in November rose at their fastest pace in three years and mortgage approvals hit a nearly six-year high last month.

Carney told The Guardian he wasn't worried about the British housing market as the BoE's Financial Policy Committee was taking action and had powers to prevent a bubble, including the ability to recommend to banks that they do not offer mortgage loans that are too large.

"I'm less concerned about the housing market, given the steps the FPC has taken," he was quoted as saying.

Carney reiterated his view that raising interest rates - currently at a record low of 0.5 percent - would be "a very blunt tool" for controlling the housing market and could hurt the wider economy.

The BoE has stressed it will be in no rush to raise interest rates even when unemployment falls to its threshold level of 7 percent for considering a tightening of monetary policy.

Carney also told The Guardian he opposed a European Union cap on bankers' bonuses which is due to come into force soon.

(Writing by William Schomberg; Editing by Andrew Heavens)

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