Report from the latest BOE FPC meeting of 26 Sept
- says housing market still a risk
- would like legal power to cap mortgage loan-to -value and debt-to-income ratios
- would like legal power to cap interest coverage of ratios for buy-to-let mortgages
But says:
- Help to Buy scheme has not materially driven house price rises or led to looser lending standards
- house prices look set to moderate sooner than previously thought
It might be a little after the event but the added initiatives to tighten mortgage lending are welcome nonetheless even if first time buyers won’t thank me for saying so right now.
The Chancellor of the Exchequer announced in June that HM Treasury wanted to grant the
Bank of England’s Financial Policy Committee (FPC) additional powers to guard against financial stability risks from the housing market before the end of this Parliament. The FPC therefore discussed this at its meeting on 26 September and is announcing today its recommendation to HM Treasury on the form of these powers:The FPC recommends that HM Treasury exercise its statutory power to enable the FPC to direct, if necessary to protect and enhance financial stability, the PRA and FCA to require regulated lenders to place limits on residential mortgage lending, both owner-occupied and buy-to-let, by reference to:
a) Loan-to-Value Ratios;
b) Debt-to-Income Ratios, including Interest Coverage Ratios in respect of buy-to-let lending.
Full meeting statement here
