Bank of England to determine shape of mortgage market ?

Tough new rules to ban unsustainable mortgages and prevent another housing bubble are to be handed to the Bank of England, the Chancellor signalled last night.

George Osborne told MPs the Bank of England was set to win powers to vary what mortgages customers can buy to prevent overheating in the housing market.

A new Financial Policy Committee at the Bank would be able to set loan-to-value ratios on mortgages to burst credit bubbles before they become too big.

This could mean that when house prices are soaring, buyers could be forced to put down large deposits - for example, around 25% of a home’s value - before being approved for a mortgage by banks or building societies.

But the Bank would also be able to intervene when the economy is in the doldrums, encouraging more attractive mortgage packages that would require deposits of only 5 or 10%.

As always , thanks for your attention.

Mark (mark@themortgagemonkey.co.uk)