Bank of England rejects risk floor in mortgage market clampdown

By Owen Sanderson
26 Jun 2014

The Bank of England is proposing changes to its regulatory regime to put a hard 15% limit on new mortgages at more than 4.5 times loan to income, in an effort to clamp down on what it sees as an increasingly overleveraged UK housing market, and limit the downside macro risks if it falls apart.

But it stopped short of using its powers to set risk-weight floors across the mortgage market, as it had widely been expected to do and as Scandinavian jurisdictions including Norway and Sweden have already done to cool their own housing bubbles.

The limit on high loan-to-income lending is ...

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