As prices pass their 2007 peak, does the housing market pose a risk to the economy? July 2, 2014 Philip Lachowycz, economist at Fathom Consulting, says Yes. The mortgage lenders are again reporting substantial increases in house prices. And this is not happening from a position where property had become cheap – far from it. The current rises are happening from a base where, relative to incomes, the level of prices was already some [...]
Bank of England sets its sights on landlords’ buy-to-let mortgages July 1, 2014 Buy-to-let mortgages could be the next financial product to face tough new limits, the Bank of England revealed yesterday, as the restrictions announced last week only cover owner-occupier loans. A housing boom and bust could hit landlords just as it would any other home owner, risking a serious blow to banks and the financial system. [...]
Letters to the Editor – 01/07 – Not a new normal, Best of Twitter June 30, 2014 Not a new normal [Re: Is Mark Carney right that the “new normal” for interest rates will be 2.5 per cent?, yesterday] Mark Carney has pointed to financial market expectations to support his assertion that the “new normal” for rates will be around 2.5 per cent. He is wrong. Financial markets do not forecast the [...]
Bank of England mortgage lending cap attempts to stop boom June 26, 2014 The Bank of England announced a new mortgage lending cap yesterday, with the hope that the rule would cool down the housing market if credit became too frenzied. Governor Mark Carney revealed the rule, which will put a ceiling on banks’ riskier mortgage lending. The financial policy committee (FPC) decision means that no more than [...]
Are the Bank of England’s planned mortgage lending restrictions likely to prove ineffective? June 26, 2014 Shehan Mohamed, senior economist at the CEBR, says Yes. Mark Carney’s new measures are unlikely to have an impact. Lenders are already operating within the proposed cap on the number of new high loan-to-income mortgages, and most are already undertaking stress tests on a possible rate rise. The macroprudential tools seek to provide tighter lending [...]
When was London last not No1 for average loan-to-income lending? Less than 20 years ago June 26, 2014 As many people were expecting, the Bank of England (BoE) has moved to control mortgage lending, restricting to 15 per cent the proportion of mortgages that can exceed a loan-to-income ratio (LTI) of 4.5. A look at recent data from the Council of Mortgage Lenders (CML) however shows that nowhere in the UK has ever approached that [...]
Bank of England imposes limits on high loan-to-income mortgages June 26, 2014 The Bank of England has introduced new mortgage controls, in an attempt to contain possible risks to the UK's financial system. New limits will apply from 1 October, and will see that no more than 15 per cent of mortgages issued should exceed a loan-to-income ratio of 4.5. Currently only 11 per cent of UK [...]
Tight mortgage rules slow down lending growth June 23, 2014 TOUGH new affordability checks have knocked mortgage lending, Bank of England data showed yesterday. Lending is still growing, but at a slightly slower pace after the mortgage market review (MMR) rules came into force in April. The number of banks reporting rising demand for prime mortgages outweighed those reporting a fall by a margin of 27.5 [...]
Mark Carney to decide on property market limits June 23, 2014 The Bank of England’s latest report on the country’s financial stability is released this week, with the potential for fresh action to cool London’s frothy housing market. The Bank’s financial policy committee (FPC), which is chaired by governor Mark Carney, releases its twice-yearly outlook in systemic stability on Thursday. The governor and other policymakers have [...]
House lending steady in June after new rules June 19, 2014 MORTGAGE lending held steady in June, with a new set of mortgage regulations helping to cool off the rapid growth of housing credit, according to the Council of Mortgage Lenders (CML). During May, £16.5bn was issued in credit, only £8m less than was approved in April. Lending is still up 12 per cent on May [...]