The Bank of England is taking steps to reduce house prices, as values in the capital continue to spiral upwards. BoE governor Mark Carney revealed several new measures designed to ‘cool’ the housing market, although initial responses to the proposals have been unenthusiastic to say the least.
The Bank’s proposals include tougher checks on buyers’ ability to repay loans, and a limit on buyers looking to borrow more than 4.5 times their income. These proposals will now be considered by independent regulatory commissions before being put into action.
Responses to the BoE proposals have thus far been resoundingly negative, however. London First Chief Executive Baroness Jo Valentine said: ‘if anyone thinks these tighter rules on mortgage lending will somehow make London prices more reasonable, then they are mistaken.’
Counter to the BoE’s proposals, Paul Smee of the Council for Mortgage Lenders suggested: ‘additional housing supply to help correct the imbalance between supply and demand is the main way of relieving affordability pressure and household indebtedness.’
‘Trumping everything is the issue of supply and demand – we are building less than half the houses we need each year,’ continued Baroness Valentine.
It seems that the expert analysis will be borne out, as shares in housebuilders spiked in response to the BoE’s relatively lax measures.
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