LONDON, June 26 (Reuters): The Bank of England (BoE) sought to put the brakes on Britain's surging housing market on Thursday by announcing a cap on home loans and tougher checks on whether borrowers can repay their mortgages.
The Bank's Financial Policy Committee said that from October, it would only allow 15 per cent of new mortgages to be at multiples higher than 4.5 times a borrowers' income.
Britain's housing market has seen a stellar recovery thanks to record-low interest rates, falling unemployment and government-sponsored schemes.
But policymakers have become increasingly concerned about momentum in the housing market, with prices growing at around 10 per cent annually in Britain and at nearly double that rate in London where cash buyers from abroad are also fuelling demand.
"(These measures) will prevent lending getting too far ahead of income growth and they'll prevent a slide into riskier lending and higher indebtedness that could undermine the economic expansion over the medium term," BoE Governor Mark Carney said at a news conference to present the measures.
Share prices in British house building companies rose by more than 5.0 per cent after markets judged the measures were less harsh than feared, and British government bond prices hit a day's low as Carney said the measures would not affect rates.
BoE caps home loans
FE Team | Published: June 27, 2014 00:00:00 | Updated: November 30, 2026 06:01:00
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