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Bank Of England To Get New Powers To Cap Mortgages

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http://www.bbc.co.uk/news/business-27813232

The Bank of England will be given new powers to prevent the housing market from overheating, Chancellor George Osborne will announce later.

These will include capping the size of mortgage loans compared to income or the value of the house.

The new powers will be given to the Bank's Financial Policy Committee by the end of this Parliament.

Mr Carney, over to you.

But not for another 12 months, ok? We don't actually want you to do anything, after all <taps nose>.

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We need a few more details, e.g. will there be any penalties for lenders who don't comply? In reality I'm sure the practice of lying via IFAs will continue.

As other have said above the powers may never be used. Shame because if they were I would be breaking out the popcorn for the crash.

It will be interesting to see how this affects sentiment and whether it prompts any more supply.

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Wonder what multiple of joint income they might start with. 10?

10-14 would be a safe and sustainable level to try to get back to, because until you get to about 15 it doesn't really count as a bubble, especially if transactions are at historical lows. Any more than that would dangerous though, and might cause overheating in the housing market, which could put the recovery at risk.

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Call me old fashioned but wouldn't it have been better if they had given more powers to someone who could spot a housing bubble?

Feb 2003

The Bank of England has surprised City analysts by cutting interest rates by one quarter of a percentage point.

After 14 months on hold, rates have been cut to 3.75%, taking borrowing costs to their lowest level since 1955.
The move surprised City analysts, who had thought that the Bank would maintain rates at 4% to keep a lid on the housing market and general inflation.
House prices last month were 24.9% higher than in January 2002, Halifax, the UK's biggest mortgage lender, said on Wednesday.
While inflation was, at 2.7%, a "little above target", the Bank attributed the rise to temporary factors.
The cut would help keep inflation "on track", Thursday's statement added.
"This is one of the biggest gambles any central banks has done - cutting rates when house price inflation is close to 30% and inflation is already above target," said John Butler, UK economist at HSBC.
"It is true to say [the Bank is] playing with fire."
Ross Walker, UK economist at Royal Bank of Scotland, said: "I can see nothing in the data that suggests the UK consumer needs further interest rate easing."

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Restricting lending is 30 percent of the issue.

The remaining 70 is not being addressed and that is the fact that sellers are not being compelled to reduce their asking prices.

As proven over the last 6 years these people will not cut their asking prices in the face of a lack of prospective purchasers at the desired asking price.

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Yeah right, like they'll ever do that.

Look a flying pig....

~Yeah! Take out that LIAR LOAN now!!!

NOTHING will change --- They'll fudge this just like they've fudged everything for YEARS..... :rolleyes::rolleyes:

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Osborne should be slated for this...he knows there is already mega bubble in London it was his Fls, htb schemes and media connections that fuelled it...but he refuses to do anything till after an election they won't win!

What sort of a man is he!

Thankfully his bubble will be his undoing.

P.z. Correct me if i am wrong but after the election there will be curbs on lending....so one almighty cash...this is what he is effectively saying....

WHO IN THEIR RIGHT MIND WOULD BUY A HOUSE NOW. He has singled handedly signalled the end to is own bubble if u ask me.

Edited by TheCountOfNowhere

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Limiting the provision of morgages to 3.5 x - 4x annual income. Just looked at my pay packet no chance

No chances....for sellers. The markets falling apart round here now

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No chances....for sellers. The markets falling apart round here now

I hope you are right Count-O-N . Don't want any BTL's, Landlords or investors, stepping in during the meantime.

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Surely this is utter rubbish. Can anyone believe anything the council of mortgage lenders says after this? ( not that I believed them anyway) Or am I missing something?

"The Council of Mortgage Lenders today said first-time buyers were typically borrowing 3.42 times their gross income in April, slightly up from March."

What is the average gross income of first time buyers?

http://www.thisismoney.co.uk/money/mortgageshome/article-2656439/Chancellor-set-hand-Bank-England-power-cap-home-buyers-borrow-bid-curb-runaway-house-prices.html

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Surely this is utter rubbish. Can anyone believe anything the council of mortgage lenders says after this? ( not that I believed them anyway) Or am I missing something?

"The Council of Mortgage Lenders today said first-time buyers were typically borrowing 3.42 times their gross income in April, slightly up from March."

What is the average gross income of first time buyers?

http://www.thisismoney.co.uk/money/mortgageshome/article-2656439/Chancellor-set-hand-Bank-England-power-cap-home-buyers-borrow-bid-curb-runaway-house-prices.html

They'll be richer than average. Something above £40k joint would be my guess. Plus they get their deposit from the taxpayer. It sort of adds up.

Edited by zugzwang

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may be I'm silly..

why the economist want to control? Let the market decide itself.

Those who give away risky loans, let them crash out..

For me even 4 times annual salary is too much risk. This is because 40% tax on your salary net effect means you are putting risk of 7x times !!ccal

ie if my annual salary is 60k, my take home is 38k .. ie borrowing 240K will be almost 7times !! I can never pay that in my lifetime

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We need a few more details, e.g. will there be any penalties for lenders who don't comply? In reality I'm sure the practice of lying via IFAs will continue.

As other have said above the powers may never be used. Shame because if they were I would be breaking out the popcorn for the crash.

It will be interesting to see how this affects sentiment and whether it prompts any more supply.

simple, the more highly levered the failed bank is, the higher the BoE emergency funds...they could be forced to pay, well, anything up to an extra .025%.

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The DailyMash: http://www.thedailymash.co.uk/news/business/bank-allowed-to-put-little-hats-on-mortgages-2014061387592

THE Bank of England has been given special powers to put fancy hats on the top of huge home loans that will destroy the economy.

“It might seem absolutely insane to take out a £400,000 loan, paying back £724,000, for a two-bed flat in Streatham but put a policeman’s helmet on it and it becomes sensible and reassuring."

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The Bank of England will be given new powers to prevent the housing market from overheating, Chancellor George Osborne will announce later.

These will include capping the size of mortgage loans compared to income or the value of the house.

The new powers will be given to the Bank's Financial Policy Committee by the end of this Parliament

After they've reneged on almost everything imaginable it never fails to surprise how politicians including Chancellors still seem to sound convincing about things that in the fullness of time never materialise. Promise promises.

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