BoE given new mortgage powers
Chancellor George Osborne is to give the Bank of England (BoE) new powers to curb mortgage lending.The bank will be able to cap mortgages as either a share of income or house value, he announced. These new powers will be put in place before the end of the current parliament.According to the latest lending data, loan to value ratios remain well below their peak, but loan to income ratios are at a new high.While the chancellor insisted the housing market poses no immediate threat to financial stability, he said it is right to act now to prevent problems emerging.Any changes the BoE does make will also apply to the Help to Buy initiative. However, the chancellor said the scheme is working as intended.Speaking at Mansion House in the City, the chancellor said: "I want to make sure that the Bank of England has all the weapons it needs to guard against risks in the housing market. I want to protect those who own homes, protect those who aspire to own a home, and protect the millions who suffer when boom turns to bust."Mr Osborne also announced reforms designed to boost the construction of new homes on brownfield sites. Councils are to be required to put in place pre-approved planning permissions on brownfield sites that are suitable for housing.Local development orders (LDOs) are to be placed onto sites and the chancellor said the government expects over 90 per cent of suitable brownfield land to be covered by 2020.A £5 million fund is to be established to ensure local authorities are able to create the first 100 sites with LDOs.The chancellor said the changes would support the construction of 200,000 extra homes.BoE governor Mark Carney also spoke at the event and suggested interest rates would rise sooner than anticipated as a result of the economy's continued strong performance. Any rises from the current record low level would be "gradual and limited", he stated.
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