Mortgage ratios 'may be capped'

Posted: 07 Feb 2012 16:56:21 GMT

The Bank of England may cap maximum home loans.

Caps may be put in place for the maximum mortgage ratios available to borrowers in a bid to prevent another credit crisis in the UK, it has been suggested.

George Osborne explained the Bank of England may implement the changes after noting the new Financial Services Bill would grant its committee the power to alter the top loan-to-value rates for home loans in an effort to curb any house price rises that may be unsustainable.

As such, banks and building societies may be blocked from providing loans to would-be purchasers who can only stump up the money for a small deposit.

In addition, the new Financial Policy Committee (FPC) also has the ability to hold more capital and keep the situation under control.

Mr Osborne - who is also the Conservative MP for Tatton - said: "This FPC should act symmetrically ... Its job is not just to try to moderate a credit boom but to try to alleviate a credit bust."

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