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WWB offers bespoke recruitment solutions for
professionals from Accountancy, Finance,
Banking, Insurance and Human Resources
for local, national and international
clients and candidates.

With a local presence and a global reach, we
have successfully been servicing the needs
of clients and candidates from all over the
world since 2001.

Hot Topic: Property

This week’s hot topic has been all about the Bank of England (B0E) tightening its rules to cool the property market.

In its Financial Stability Report the BOE says it doesn’t believe there’s an immediate concern. But even so they want to try to insure against the risk of a significant rise in people tying themselves to too high a debt.

The repercussions on economic stability from how the housing market performs is common knowledge. In the end, it affects us all.

Which is why the Financial Policy Committee of BoE recommended that mortgage lenders should limit the proportion of mortgages at loan to income multiples of 4.5% and above to no more than 15% of their new mortgages.

Essentially the Bank is restricting mortgage lenders to prevent their customers from borrowing at a potentially risky loan-to-income ratio. Although we’re not sure why this hasn’t happened previously.

Finally we are realising that people shouldn’t borrow more than they can pay. Seems so simple.

Mark Carney, the governor of the Bank of England, told the media that draconian measures won’t be imposed to cool the housing market unless house prices rise by more than 20% over the next three years.

And the FPC said mortgage lenders should apply an interest rate stress test that assess whether borrowers could still afford their mortgages if, the bank rate were to be 3% points higher than the prevailing rate during first five years of the loan.

If people take on too much debt then it poses a direct risk to the resilience of the UK banking system.

Hopefully this will make sure there’s no longer a shift from responsible to reckless in the property market resulting in a severe housing shock.

The result of these developments is simply that people can still get mortgages, but have more confidence in them in the future. And that must be good news all round.

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