Categories: Industry| Products
Topics: LTV| George Osborne| FPC| Bank of England
Limits on loan-to-value (LTV) mortgages were back on the agenda last night after George Osborne told MPs the Bank of England could intervene to prevent another housing crisis.
Speaking in the Commons, Osborne said the Financial Services Bill would give a new Bank of England committee powers to "alter the maximum loan-to-value ratios in mortgage lending to curb a sharp, unsustainable rise in house prices," the Telegraph reported.
The new Financial Policy Committee (FPC) would also be empowered to force banks to hold more capital to stop another credit bubble in progress.
"This FPC should act symmetrically... Its job is not just to try to moderate a credit boom but to try to alleviate a credit bust,” said Osborne.
“The precise tools we give to the FPC are yet to be determined. I freely accept that we are largely in unchartered territory in policymaking here or indeed anywhere in the world.
"But surely the experiment of making no attempt to moderate the credit cycle, let the bubbles grow and burst and then clean up afterwards, has been an unmitigated disaster and I think we would be failing if we didn't look for an alternative approach."
The committee, which will assume responsibility for "monitoring risks across the system", would be chaired by the Governor of the Bank of England.
Osborne revealed the proposals as MPs discussed the second reading of the Financial Services Bill.
The FPC, which has already been set up, will report back on the exact nature of its allotted powers in March.
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Teachers rules
What is the point George? That horse bolted along time ago and the s**t hit the fan. Lets face it, the banks are not lending OUR money that the last government gave them anyway. I don't mind saying due to personal circumstances i HAD to take out a large mtg on my property which I wouldn't have got today but guess what, I've paid it year on year for the last 5 years. It was my choice and I committed to paying it. It is peoples rights to be able to say what they want and it is up to the lender to be responsible and ensure they can afford it. We have gone from one extreme to another and the fact that the greedy banks will not lend OUR money is killing this country. That is the problem and George needs to tell the banks to lend money not put more rules and regulations in.
Posted by: R Whitehead
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Bang another nail in
It is so getting to be fun out here in the wild frontier of mortgage broking, every Charlie in the land seems determined to stick the boot into the market. I don't think you have to be a rocket scientist to see that the next waves of housing/mortgage crises are rolling in like the breakers at Newquay! No amount of tinkering around the edges will do right now. All these thinkers and great minds need to get in a room for a while and join up their thinking end to end. I feel so low at the moment I'm considering studying the RO exams, crossing over to the dark side and getting RDR ready!
Posted by: Steve "I used to be a one stop mortgage shop"