Bank of England seeks new powers over mortgages

Reforms have been proposed to expand the powers of the Bank of England over mortgage lending. A consultation has been launched by the UK government, which closes on November 28th 2014.

The Bank has asked for new authority to control mortgage provision, including the ability to set  a debt-to-income ratio for mortgages and control loan-to-value ratios. These new powers, alongside the reforms to mortgage lending already implemented this year, could mean that providers are more restricted in terms of who they can lend to. 

Reform has been underway since April of this year. The Mortgage Market Review introduced new requirements for lenders in an attempt to clampdown on irresponsible lending. More comprehensive financial assessments and stress tests for candidates now need to be carried out. New rules have also capped the number of loans above 4.5 times income which can be offered. 

Concern has been raised that these changes could lead to a decline in lending and have a dampening effect upon the UK housing market.

Stephen Ludlow, Chairman of ludlowthompson, comments: “The impact of regulation introduced so far has not been the disaster that many feared - the outlook for the UK housing market remains positive and mortgage lending levels have remained high. However, the new rules have had an impact.

“The request for these new powers, along with introduction of the Mortgage Market Review earlier this year, suggest that UK regulators are becoming more involved in the day-to-day running of the UK mortgage market."