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eric pebble

Bank Of England Calls For Legal Power To Cap Loan-To-Value Ratio On Mortgages

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Telegraph: Bank of England calls for legal power to cap loan-to-value ratio on mortgages:

The Bank of England has called for legal powers to limit the loan-to-value ratio on new mortgages.

Under rules recommended by the Bank's Financial Policy Committee (FPC) in June, lenders must ensure that no more than 15pc of new mortgages are given to people borrowing more than 4.5 times income.

Banks also have to stress-test borrowers' ability to repay loans if their mortgage rate was 3pc higher than the rate at the time the loan was approved.

It said these stress tests were currently "sufficient and expedient" to test borrowers' ability to repay their loans.

The plans, which will also cover the buy-to-let market, will be enshrined into law by 2015 following a response by the Chancellor and a Treasury consultation.

15-20 years too late???? :unsure::rolleyes:

http://www.telegraph.co.uk/finance/bank-of-england/11135234/Bank-of-England-calls-for-legal-power-to-cap-loan-to-value-ratio-on-mortgages.html

Edited by eric pebble

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Wise idea so basket cases like Nationwide can't start offering 100% or 125% mortgage again this causing misery on millions of people.

Far more important for laws like this to be introduced than some of the more recent laws that only affect a handful of people.

Capping at 90% LTV should do the trick.

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They dont need a law.

All they have to do is withdraw lifeboat status to offending banks and close the emergency lending facility.

Sorry guys, but you are on your own.

Laws are set up to be avoided.

Actual threats and action cant be.

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They dont need a law.

All they have to do is withdraw lifeboat status to offending banks and close the emergency lending facility.

Sorry guys, but you are on your own.

Laws are set up to be avoided.

Actual threats and action cant be.

Exactly.

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They dont need a law.

All they have to do is withdraw lifeboat status to offending banks and close the emergency lending facility.

Sorry guys, but you are on your own.

Laws are set up to be avoided.

Actual threats and action cant be.

Yep. The call for a law is just to make it look as though they are doing something.

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Window dressing, like the loan to income ratio.

They have the 'legal power' to raise interest rates too.

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They dont need a law.

All they have to do is withdraw lifeboat status to offending banks and close the emergency lending facility.

Sorry guys, but you are on your own.

Laws are set up to be avoided.

Actual threats and action cant be.

Thatll be that pesky capitalism stuff you talk of that ruins corporations profits.

Itll never catch on.

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They dont need a law.

All they have to do is withdraw lifeboat status to offending banks and close the emergency lending facility.

Sorry guys, but you are on your own.

Laws are set up to be avoided.

Actual threats and action cant be.

If they could fail on their own then they wouldn't have offered them the emergency lending facility in the first place

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Yep. The call for a law is just to make it look as though they are doing something.

Same as proposing to introduce new laws to deal with LIBOR and FX rigging, when there are already laws to deal with FRAUD.

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Of course, it should really read as follows:

"Bank Of England Calls For Legal Power To Cap Loan-To-Value Ratio On Liar Loans/Mortgages"

:rolleyes::rolleyes:

What on earth is a liar loan?

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Is controlling LTV a more powerful tool than interest rates in controlling HPI, discuss.

Depends....if the government are going to start giving every man and his dog an equity subsidy (a la HTB 2) then LTVs are made optically lower and capping them will do diddly squat.

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What on earth is a liar loan?

There is a lot of information about that in Eric's sig - best bet is to read / watch it, and then post everything you write from then on in three foot high bright red text.

nb - not being sarcastic about Eric here - I have much respect for him.

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Yeah, and it doesn't say they want to cap it lower !!!!

They just will not raise interest rates.

Fitch came to the same conclusion about Canadian house prices: The only way to prevent the Canadian economy from imploding disastrously is to keep interest rates at near zero forever.

https://www.fitchratings.com/gws/en/fitchwire/fitchwirearticle/Canadian-Home-Price?pr_id=839277

Canada-BOC-High-house-prices_1981_2014.p

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There is a lot of information about that in Eric's sig - best bet is to read / watch it, and then post everything you write from then on in three foot high bright red text.

nb - not being sarcastic about Eric here - I have much respect for him.

3 foot??? :D:P ?

300 foot! B):lol:

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The Bank of England has called for legal powers to limit the loan-to-value ratio on new mortgages.

Under rules recommended by the Bank's Financial Policy Committee (FPC) in June, lenders must ensure that no more than 15pc of new mortgages are given to people borrowing more than 4.5 times income.

What good are legal powers to help impose a faux limit?

It's like saying it's going to be illegal for horses to bolt from stables except it's OK for a few to do it.

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Hugh Hendry once pointed out the difference between rules and consequences- you can either have a rule against speeding or a large spike in the steering wheel pointing at the drivers chest.

The only way to force the Bankers to behave responsibly is to make them personally liable for any losses if a bailout is ever needed- so before a penny of taxpayer money is spent to rescue any institution the people in charge are stripped of everything they own as a down payment.

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When Investment Banks were proper partnerships that is actually how it used to work....when the red braced muppet at the next desk trading kumquat futures or whatever was playing with your house and all your savings then there was a real incentive to make sure he was properly supervised and kept within limits.

Now it's shareholders (and then taxpayers) money underwriting his ****-ups the incentives are all out of whack.

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