Belfast Telegraph

Thursday 24 July 2014

Bank of England may restrict mortgage lending

A cap on mortgage lending is planned by the Bank of England in order to prevent another credit crisis, it was reported last night.

Risky lending could be cut back so that prospective buyers would have to put down deposits of between 10 per cent and 25 per cent to get a mortgage.



Bank may restrict mortgage lending

Charlie Bean, the Bank's Deputy Governor, said constraints may be needed to restrict the scale of lending as part of a multifaceted package to stabilise the economy.



The measures, reportedly set out in a speech to other central bankers in America at the weekend, would also include setting interest rates and making sure banks had enough capital to keep them afloat.



This is the first time an official of his rank has suggested the Bank may intervene directly with loan to value ratios in mortgage lending.



It would mean the return of a scenario Britain last saw in the 1980s, when credit controls, which were later scrapped, made it difficult for borrowers to get a mortgage.



Under new laws expected to be introduced by the Chancellor, George Osborne, the Bank of England would be responsible for regulating the banking market from the autumn.



Mortgage experts have voiced concerns that the proposals would stop first-time buyers getting on to the housing ladder.

COMMENT RULES: Comments that are judged to be defamatory, abusive or in bad taste are not acceptable and contributors who consistently fall below certain criteria will be permanently blacklisted. The moderator will not enter into debate with individual contributors and the moderator’s decision is final. It is Belfast Telegraph policy to close comments on court cases, tribunals and active legal investigations. We may also close comments on articles which are being targeted for abuse. Problems with commenting? customercare@belfasttelegraph.co.uk