The governor of the Bank of England has said that mortgage to salary ratios could be capped. One of a number of responses being considered by the Bank to control house prices, https://www.beaconfinancialtraining.co.uk/wp-content/uploads/2020/06/cemap-online-and-classroom-training-uk.jpg Carney said there was more that could be done to ensure people can afford the home loans they take out.
The recently revamped affordability test, Carney said, will minimise the number of people accessing mortgages to the value of vastly more than their annual salaries. With the Bank’s boss warning that spiralling house prices were the country’s single biggest economic risk at present, Carney said:
“We could do more, we could take steps around affordability to test whether or not individuals can test mortgages at much higher interest rates.
“We could limit amounts of certain types of mortgages that banks could undertake.”
Discussions at the Bank have, according to Carney, seen a move to limiting mortgage values no higher than four and a half times an applicant’s salary.
He also went on to say that the successful Help to Buy scheme could be amended.
With mortgage advisers helping many people get on the housing ladder through the scheme since its launch, many buyers can currently access state cash to fund house purchases up to the value of £600,000.
As well as such measures being discussed, Carney said the crux of the problem was housing stock shortage across the UK.
Saying that there is not enough building work going on, he gave the example of Canada, which is currently building twice as many homes as the UK despite its smaller population.