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The Bank of England has moved to cap loan to incomes on new mortgage
The Bank of England has moved to cap loan to incomes on new mortgage lending in a bid to cool the housing market.
At the June meeting of the Financial Policy Committee, the body recommended to the Prudential Regulation Authority and the FCA that no more than 15% of a lender’s new mortgage lending be more than 4.5 times income.
The recommendation applies to all residential mortgage lenders that lend over a £100 million a year.
Whilst the rules will come into effect on 1st October, any mortgage that completes after this date will be subject to the proposed rules, regardless of whether the application or the decision in principle was completed prior to this date.
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