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-29457607
The article has changed 4 times. There is an RSS feed of changes available.
Version 2 | Version 3 |
---|---|
Bank of England asks for extra powers over housing market | |
(about 7 hours later) | |
The Bank of England has asked formally for new powers to prevent a housing boom and bust. | |
Under the powers, the Bank would be able to limit how much people can borrow to buy a home, according to their financial circumstances. | |
The Bank has also given a clean bill of health to the government's Help to Buy mortgage scheme. | |
Its Financial Policy Committee (FPC) can already make recommendations about loan amounts. | |
Earlier this summer the FPC recommended that banks and building societies restrict lending of large loans - by which it meant loans greater than 4.5 times income - to 15% of mortgages. | |
In June, George Osborne promised that the Bank's powers to "recommend" would be beefed up to powers to "direct", in order to prevent a dangerous bubble developing. | In June, George Osborne promised that the Bank's powers to "recommend" would be beefed up to powers to "direct", in order to prevent a dangerous bubble developing. |
Buy-to-let measures | Buy-to-let measures |
The FPC also noted that high loan-to-value lending now accounts for just 9% of mortgages - compared to 25% in 2007, during the boom - suggesting that riskier lending has not got out of hand. | The FPC also noted that high loan-to-value lending now accounts for just 9% of mortgages - compared to 25% in 2007, during the boom - suggesting that riskier lending has not got out of hand. |
But the Bank said it wanted its new powers to cover both residential and buy-to-let mortgages. | But the Bank said it wanted its new powers to cover both residential and buy-to-let mortgages. |
On buy-to-let, it wants to make sure that the income that landlords receive is greater than the interest payments on their mortgages. | On buy-to-let, it wants to make sure that the income that landlords receive is greater than the interest payments on their mortgages. |
Placing such controls on professional investors might help cool the housing market, by preventing landlords speculating on hefty rises in house prices. | Placing such controls on professional investors might help cool the housing market, by preventing landlords speculating on hefty rises in house prices. |
The stronger powers are expected to be in place before June next year. | The stronger powers are expected to be in place before June next year. |
Help to Buy | Help to Buy |
Last year, the Bank of England was asked to report back on whether the government's Help to Buy mortgage scheme posed a risk to the economy. | Last year, the Bank of England was asked to report back on whether the government's Help to Buy mortgage scheme posed a risk to the economy. |
The Bank's governor, Mark Carney, has now written to the chancellor stating: "Under current market conditions, the committee assesses that the scheme does not pose material risks to financial stability." | The Bank's governor, Mark Carney, has now written to the chancellor stating: "Under current market conditions, the committee assesses that the scheme does not pose material risks to financial stability." |
The Bank also confirmed that Help to Buy was not to blame for rising house prices. | The Bank also confirmed that Help to Buy was not to blame for rising house prices. |
It said both parts of the scheme accounted for only 5% of total mortgages, and they had been most popular in parts of the country where prices had risen least. | It said both parts of the scheme accounted for only 5% of total mortgages, and they had been most popular in parts of the country where prices had risen least. |
"The scheme does not appear to have been a material driver of growth - for example, take-up of the scheme has been weak in London, where house price growth has been strongest," the FPC said. | "The scheme does not appear to have been a material driver of growth - for example, take-up of the scheme has been weak in London, where house price growth has been strongest," the FPC said. |
It also said house prices appeared to be cooling sooner than the FPC had expected when it met in June. | It also said house prices appeared to be cooling sooner than the FPC had expected when it met in June. |
Earlier this week, the Nationwide said annual house price inflation had fallen to 9.4% in September from 11% the month before. | Earlier this week, the Nationwide said annual house price inflation had fallen to 9.4% in September from 11% the month before. |
Help to Buy loans are already restricted to 4.5 times a borrower's income. | Help to Buy loans are already restricted to 4.5 times a borrower's income. |