The Bank of England (BoE) will explore ways it can adjust mortgage lending rules to make it easier for first-time buyers to get onto the property ladder, it has been announced.
Publishing its financial stability report this week, the Bank said it will revisit rules which limit the loan amount people can borrow as a multiple of their income and limit the number of high loan-to-value (LTV) mortgages lenders can offer.
Both of these rules were launched in 2014 to prevent people from borrowing more than they can afford to repay.
Commenting on the impending review, Sir Jon Cunliffe, deputy governor at the BoE, said: “The purpose of these tools is to prevent, in aggregate, highly indebted households making a recession worse by cutting back on consumption.”
However, the rules also limit the number of young people who can “take the first step on the housing ladder”, he said.
The announcement of the review comes after it was revealed this month that UK mortgage approvals reached their highest level in 13 years.
According to BoE data, there were 97,500 loans approved by lenders in October – 5,000 more than in September, a third higher than in February, and the highest on record since the 2008 financial crash.
Experts said the Government’s decision to scrap Stamp Duty Land Tax (SDLT) on most properties had “turbo-charged” the market and demand was “likely to stay at high levels throughout the winter as buyers sought to take advantage of the tax break”.
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