Bank of England calls for new powers to curb mortgage lending
The Bank of England (BoE) on Thursday called for new powers to curb mortgage lending amid concerns over the housing market.
The central bank has asked the government for permission to enforce a limit on the loan-to-value ratio of their mortgages to prevent the risk of a destabilising housing bubble.
It would allow the BoE to cap the amount home buyers can borrow relative to the value of the property they want to purchase.
The BoE has also requested power to set a limit on overall household debt relative to income, on top of mortgage borrowing. It would include the ability to set an interest-coverage ratio for landlords, limiting the size of their loan repayments relative to the rent they charge.
The request follows a move in June to crack down on riskier types of mortgage lending in response to soaring property prices and concerns that Britons were taking on debts they may have had difficulty in repaying. Under the rules, lenders must ensure that no more than 15% of new mortgages are given to people borrowing more than 4.5 times income.