BOE to cap lending

BoE given new powers to cap mortgage lending

13 June 2014 | By Robert Thickett

The Chancellor George Osborne announced last night he had given the Bank of England new powers to cap loan to incomes and LTVs.

In his Mansion House address yesterday evening Osborne said he wanted to protect those who own homes and aspire to own homes when “boom turns to bust”

He said: “If the Bank thinks some borrowers are being offered excessive amounts of debt, they can limit the proportion of high loan to income mortgages each bank can lend, or even ban all new lending above a specific loan to income ratio.
”And if they really think a dangerous housing bubble is developing, they will be able to impose similar caps on loan to value ratios – as they do in places like Hong Kong.”
The last crisis was an example he said of the “dangerous temptations” for politicians to “leave the punch bowl and keep the party going on too long”.
He added: ”The Bank of England should not hesitate to use these new powers if they think it necessary to protect financial stability.”
At the same event Bank of England governor Mark Carney used his speech to hint at an early interest rate rise and warn that would-be sellers were already deliberately holding back properties from the market in anticipation of higher prices in the future.
This he said was an early sign of ”extrapolative price expectations”.

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