This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.bbc.co.uk/news/business-28016952
The article has changed 12 times. There is an RSS feed of changes available.
Version 2 | Version 3 |
---|---|
Cap on mortgage lenders proposed by Bank of England | |
(about 3 hours later) | |
A cap on the proportion of home loans that can be lent at high multiples of income has been proposed. | |
The plan was outlined by the Bank of England as governor Mark Carney said the housing market was a threat to the UK economy's stability. | |
Under the proposal, lenders will not be allowed to lend any more than 15% of residential mortgages at more than 4.5 times a borrower's income. | |
Affordability checks on borrowers will also be strengthened. | |
The Bank's Financial Policy Committee (FPC) has a remit is to tackle any threat to the stability of the UK's economy. | |
Some lenders, notably Lloyds Banking Group and RBS, have already limited mortgage lending to four times income for loans worth more than £500,000. The average new mortgage for a house purchase is £135,200. | |
This was specifically aimed at curtailing "inflationary pressures" in the London housing market. | |
The latest official figures on the housing market showed an annual property price increase of 18.7% in London, where a small proportion of buyers pay in cash. | |
Excluding London and the South East of England, the cost of a home was 6.3% higher in April than 12 months before, the Office for National Statistics (ONS) said last week. | Excluding London and the South East of England, the cost of a home was 6.3% higher in April than 12 months before, the Office for National Statistics (ONS) said last week. |
But various surveys have suggested that the heat might be coming out of the market, with mortgage approvals - a sign of future sales - having slowed in recent months. Some areas outside of London and the South East have seen relatively little increases in activity among buyers and sellers. | |
Lenders are already using new affordability checks - known as the Mortgage Market Review - which test people's ability to repay were interest rates to rise. | |
This will be added to, under the Bank of England's plans, as lenders will need to assess if borrowers could still afford to repay their mortgage if interest rates were three percentage points higher than at the time the loan was approved. | |
Are you currently trying to buy or sell a home? Do you work in the property business? You can email us at haveyoursay@bbc.co.uk using the subject line 'housing market'. | |