View more on these topics

LTVs could be capped to cut risk

Bean: ‘Direct constraints’

Bank of England deputy governor Charles Bean has hinted that regulators may be considering caps on loan to value as part of a range of measures to tackle risky lending.

Speaking at the Federal Reserve Bank of Kansas City annual conference in Wyoming last Saturday, Bean said “direct constraints” on lending are one of a number of tools that regulators can use to try to stave off credit booms. He said: “There is the option of introducing direct constraints on the terms or availability of credit, for instance imposing maximum loan-to-value ratios in the mortgage market.”

But he added: “The best approach seems likely to involve a portfolio of instruments.”

Bean said higher interest rates would not have been enough to prevent the credit boom which led to the crunch. He said: “Monetary policy seems too weak an instrument to reliably moderate a credit/asset price boom without inflicting unacceptable collateral damage on activity.”

First Action Finance head of communications Jonathan Cornell says: “The Bank of England and the FSA are trying to create a financial system that is robust and does not lead to excess.”


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm