The Bank of England governor warned that raising borrowers’ mortgage loans to income limits without increasing their housing supply risks to raise housing prices.
“I think it’s important. We’ve said that the main limit we think is housing supply, not mortgages,” Andrew Bailey appeared before the Treasury committee this morning.
Carolyn Wilkins, the Financial Policy Committee, also appeared before the committee, agreed.
Wilkins added: “When you own a home price is so high relative to income, there is no way to go.
There is a decrease in regulation that cannot resolve the issue. This will be about the growth of housing supply and sustainable growth in revenue. ”
Since 2014, previous FPC guidelines have ruled that the overall new residential mortgage on any large lender is greater than 4.5 times the borrower’s income.
In fact, this sees lenders limit this type of loan below this level. This puts some larger lenders well below this level, while others have to reduce such loans to remain in guidance.
However, regulators are under pressure from governments and agencies to raise this cap to allow writing more home loans, especially for first-time home buyers.
Prime Minister Rachel Reeves welcomed the move, adding that this, along with other home loan reforms, would result in an increase of 36,000 first-time home buyers’ mortgages in the coming year.
