Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
subscribe to our newsletter

UK lending limits spark local fears

The Bank of England has introduced limits on high LVR lending and imposed stress testing on prospective home-buyers.

In an effort to cool the UK’s overheating housing market, the BoE’s Financial Policy Committee (FPC) last week announced that lenders must ensure no more than 15 per cent of new mortgages are given to people borrowing more than 4.5 times their income.

British banks will also have to stress test borrowers’ ability to repay loans in the event of a three per cent rate hike.

Advertisement
Advertisement

Commenting on the recommendations, a Financial Conduct Authority spokesperson said the prudential regulator would consult on general guidance that will provide details on how it proposes to follow the recommendation on LVRs.

The news has sparked concern for mortgage lending back home, with fears that APRA could follow in the FCA’s footsteps.

Last week Business Spectator highlighted the ‘neat coincidence’ of the BoE measures and the release of a report by credit ratings agency Moody’s warning that Australia’s housing market is overheating.

“The BoE’s concerns are near-identical to those that have been voiced here,” according to the Business Spectator.

“The ultra-low interest rate environment coupled with a constricted supply of new housing, population growth and the growing presence of DIY investors and foreign buyers is driving up the prices of established homes – and is leading to higher loan-to-valuation and loan-to-income ratios.”

UK lending limits spark local fears
mortgagebusiness

 

Latest News

Home owners and renters are spending the lowest proportion of their income on housing in more than a decade, according to new research. ...

Older Australians are less inclined to sell up and leave the family home, despite government incentives to do so, according to a new report....

The Reserve Bank is set to continue carrying the burden of stimulating consumer spending, amid continually weak wages growth, according to A...

FROM THE WEB
podcast

LATEST PODCAST: Best interests guidance and pre-approval suspension

Do you think the mortgage market will see more consolidation this year?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.