Carney warns fund groups to prepare for rate rise sell-off

Bank of England governor Mark Carney has warned major fund management groups a rise interest rates could spark an investment sell-off among retail investors.

The Sunday Times reports Carney is concerned that homeowners will rush to liquidate holdings in stocks and bonds in order to cover higher mortgage repayments.

The Bank governor is reported to have asked 135 of Britain’s biggest fund managers how they plan to cope with investors wanting their money at short notice.

One senior fund manager told the newspaper: “The Bank wants to make sure we can support the daily prices we offer to investors. They have been asking for a lot of information about liquidity in recent months.

“Their fear is even small investors who have really large mortgages may have to sell their stock and bond portfolios so they can manage their debt.”

Carney has previously said an interest rate rise could happen at the “turn of the year”.