Bank of England warns of risks in relaxing mortgage limits

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Governor of the Bank of England warns that the government -backed proposals to reduce the limit on risky mortgage NDing can start the restoration of more homes and fail to help the first time buyers, even after he announced the plan to review the policy.

Andrew Bailey told MPS on Wednesday that he was “very happy to have a very open public debate” about the UK mortgage NDing ban, but he said that it should be considered “better results” when it was to be considered a recent push to avoid home loan. Default.

“They have helped to avoid creating a large tail of mortgages, which when our inevitable cycle recession or the economy is hit in the economy becomes a true problem we have seen in the past,” Bailey Dr. “So I think it has been beneficial.”

His comments indicate that the BOO British banks are reluctant to relax the ban on the mortgage of the mortgage as recently as November. Boe’s sister regulator financial behavior authority Proposed More on the beginning of this month.

UK Chancellor Rahel Reeves has supported the FCA’s proposal, Guys Financial Times last week he “was absolutely open to see ideas that could increase home ownership and help working families to get housing stairs”.

Reeves and Prime Minister Sir Care Starmar, including BOE and FCA, have called for more to do to support the country’s stagnant economy goal by simplifying the rules on the business of all the UK regulators.

Bailey told the Treasury Select Committee that he supported the starmer’s push to raise growth, but said it was “no trade” within the initial purpose of preserving BOE’s financial stability.

The mortgage of the UK is controlled by the Central Bank’s Financial Policy Committee and the FCA, most of which were launched after the financial crisis of 20 when several banks were granted bail by the state.

The FPC limits banks above a certain size that does not provide more than 15 percent of the mortgage price of 4.5 times higher than a family’s income. It changed the end of the NDing to the limit in November so it was applied to low banks.

Banks need banks to conduct affordable examinations on applicants for FCA mortgage to ensure that they can still afford the monthly AY payment if interest rates increase in the future. BOE created a similar affordable test in 2022 as it overlap with the FCA rules.

The FCA said a letter to Starmer this month-in response to a call from the government for the regulators’ veteran ideas-it “will start the nDing of the mortgages, simplifying home ownership and the balance of consultation, and opening the balance of the NDING. In the level “.

Bailey said that the potential benefits of making these limits easier need to balance against the profit from keeping them. He warned that it could do very little to help buyers for the first time who had the main obstacle to buying a home often difficulty providing necessary deposits.

Bailey said, “The survey that is conducted, when you ask the main obstacle to enter the mortgage market, it is submitting it to the deposit,” said Bailey.

Nathanal Benjamin, executive director of BOE for financial stability strategy and risk, told MPs that banks in the mortgage NDing “It is not a hindrance” still has “lots of headrooms” before hitting the limit, adding the first -time proportion to the new mortgage NDing. Buyers were at the highest level for 20 years.

He also warned that reduces the limit of the new home could increase the price of the home, which would “make the housing stairs more difficult for the family.”