The Bank of England should prevent house prices from rising by imposing mortgage restrictions on buyers in the UK, according to a new report from an influential thinktank.
Left-of-centre thinktank The Institute for Public Policy Research (IPPR) said that those on Threadneedle Street should be given new powers to freeze property price inflation just as the central bank has inflationary targets of two per cent, as the cost of houses continues to rise in many parts of the UK.
The recommendations come as part of a wider call from the IPPR to rebalance the economy away from financial services with greater focus on science and manufacturing.
The paper, which is titled "On Borrowed Time", argues that the Bank of England’s financial policy committee, backed by the Treasury, should insist on higher initial deposits and stricter ceilings on loan-to-income ratios, as well as steps to increase house building.
Grace Blakeley, the IPPR author of the report, said: "Since the 1980s, the UK’s business model has rested on attracting capital from the rest of the world, which it has channelled into debt for UK consumers."
Blakeley added: "The 2008 crisis proved that this is unsustainable. We need to move towards a more sustainable growth model, one built on production and investment rather than debt and speculation."