BSA comments on Bank of England loan to income ratio cap
Commenting on the proposal from the Bank of England to limit new mortgage lending above 4.5 times income to 15% of a lenders total mortgage lending, Paul Broadhead, Head of Mortgage Policy said:
"On the face of it the loan to income cap will have little immediate effect. However it is important that the Bank of England has chosen to consult. This type of blunt instrument is untested in the UK market and there is a risk of unintended consequences, particularly for first time buyers. This group naturally need to borrow at higher income multiples, and can do so provided they meet affordability criteria. It is important that they aren't pushed towards more expensive credit, despite being able to afford a mortgage.
"The Bank of England has tools to moderate demand in the housing market, but can't affect supply. For decades successive Governments have failed to address the problem of housing supply which is the single biggest issue we face."