New powers given to the Bank of England to cap loan-to-income ratios are widely supported – and the public think they should be used now
George Osborne announced new powers for the Bank of England last week, to help prevent the housing market from overheating. The powers include controls on the amount mortgage holders can borrow relative to the value of their house and income; the latter having reached highs of five times a mortgage applicant’s income, which may cause repayment issues once interest rates rise.
A new YouGov survey finds majority support for giving powers to the Bank of England to cap the ratio of mortgage loans to house values (53%) and salaries (59%).
Although the Bank’s governor, Mark Carney, has yet to announce use of the powers, British people support the Bank limiting loan-to-value and loan-to-income ratios now by 53-23% and 60-19% respectively.
All demographics support capping loan-to-income ratios by at least 50% (bar 18-25 year-olds, who are more likely to be unsure). Even Londoners support the idea by 54-22%, although lower ratios would put London houses out of reach for many first-time buyers.
George Osborne also announced measures to boost the supply of housing, the low levels of which, many argue, are the root-cause of house price inflation. Mr Osborne said: “in effect development on these [brownfield] sites will be pre-approved – local authorities will be able to specify the type of housing, not whether there is housing. And it will mean planning permission for up to 200,000 new homes – while at the same time protecting our green spaces."