View more on these topics

MPs question why BofE does not want mortgage powers

The Treasury select committee is calling on the Bank of England to justify its view that the bank should not be given the power to restrict mortgage lending during housing booms.

The Financial Times reports the TSC is undertaking an inquiry into how the BoE can maintain stability and examine why it has shied away from blocking riskier mortgage lending.

Last week the International Monetary Fund said the BoE should have the power to place limits on loan-to-value and loan-to-income ratios.

BoE deputy governor for financial stability Paul Tucker recently wrote that such powers should be limited to politicians.

Chancellor George Osborne is yet to decide what tools to give the BoE’s Financial Policy committee but is expected to come under pressure from the TSC to give it a full range of powers.

Speaking to the FT, TSC chairman Andrew Tyrie said: “The interim FPC has said that having the power of direction over loan-to-value and loan-to-income restrictions could be beneficial to financial stability and the IMF agrees.

“But the interim FPC did not ask for this power on the ground that the use of these tools would require a high level of acceptability. That reveals a lot.”

Recommended

BlackRock defends performance fees for UK absolute alpha

BlackRock has defended using performance fees on its £1bn UK absolute alpha fund. The fund, managed by Mark Lyttleton and Nick Osborne, has a performance fee of 20 per cent of any outperformance of the fund’s cash hurdle, which is set quarterly. To get this fee, the managers must also outperform a high water mark, […]

Resolution considers £1.2bn bid for Dutch fund Robeco

Resolution is considering a £1.2bn takeover bid for Dutch fund management firm Robeco, according to The Sunday Times. The report suggests Clive Cowdery’s acquisition vehicle is one of a number of financial firms considering an offer for the business, which has been put up for sale by its parent company Rabobank. The Sunday Times says […]

LEBC makes £580k loss after £730k restructure

National IFA LEBC made a £580,000 pre-tax loss for the year ending September 30, 2011 after spending £730,000 on a restructure of the business. The £580,000 loss compares to a £62,000 profit the previous financial year. The firm’s accounts show its turnover increased by 8 per cent to £10.2m compared to £9.5m the previous year. […]

2

FTSE blog: FTSE 100 down almost 2% at close

European markets have tumbled today amid fears over Spanish debt. At close, the FTSE 100 had fallen by 1.74 per cent to stand at 5297.28. The German Dax and the French Cac 40 were also down by 1.8 and 2.2 per cent respectively. The falls come as the difference between the cost of Spanish and […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. I cannot understand why the Bank of England will not take responsibility for the mortgage market and bring in proper lending rules everybody would know and can stick to. After all this would have automatic stabiliser to the housing market as it would reintroduce a link to income and property value particularly for the average house.

    If you have a maximum loan to value of 90% and a maximum income multiple of four times salary house prices would stabilise at a reasonable affordable level. Yes there would be a correction which some would argue is well overdue but house prices going forward would be linked to the real economy rather than having overinflated house prices that in effect does nobody any good.

  2. I can understand why they don’t want to. Imposing rules would limit the number of mortgage approvals, and reduce house prices to their proper level. This would cause the real financial crash that Britain needs to have before we can move forwards

  3. So after claimin that they couldn’t pevent the financial crisis because they didn’t have the tools…….they don’t want to be given the tools!

    Could that be because they’ve already got 9 of them on the MPC?

  4. Louise Temple 30th May 2012 at 2:10 pm

    And the two comments above explain why the MPs don’t want to have to impose it, and want to pass the buck…

  5. Julian Stevens 31st May 2012 at 8:55 am

    MP’s might also ask the FSA to explain why it doesn’t want responsibility for the regulation of CMC’s, give that it seems obsessed with micro-regulating everything else under the sun.

Leave a comment