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1 Jul 2014
BoE publishes Financial Policy Committee meeting records
FXStreet (London) - The Bank of England today published the record of the Financial Policy Committee meeting held on 17 June. In the FPC meeting, the committee agreed on measures to try and restrain the UK mortgage lending market.
The FPC agreed two recommendations and set the countercyclical capital buffer rate:
1. When assessing affordability, mortgage lenders should apply an interest rate stress test that assesses whether borrowers could still afford their mortgages if, at any point over the first five years of the loan, Bank Rate were to be 3 percentage points higher than the prevailing rate at origination.
2. The Prudential Regulatory Authority and the Financial Conduct Authority should ensure that mortgage lenders do not extend more than 15 percent of their total number of new residential mortgages at loan to income ratios at or greater than 4.5. This recommendation applies to all lenders which extend residential mortgage lending in excess of £100 million per annum. The recommendation should be implemented as soon as is practicable.
3. The FPC set the countercyclical capital buffer rate for UK exposures at 0 percent.
The FPC agreed two recommendations and set the countercyclical capital buffer rate:
1. When assessing affordability, mortgage lenders should apply an interest rate stress test that assesses whether borrowers could still afford their mortgages if, at any point over the first five years of the loan, Bank Rate were to be 3 percentage points higher than the prevailing rate at origination.
2. The Prudential Regulatory Authority and the Financial Conduct Authority should ensure that mortgage lenders do not extend more than 15 percent of their total number of new residential mortgages at loan to income ratios at or greater than 4.5. This recommendation applies to all lenders which extend residential mortgage lending in excess of £100 million per annum. The recommendation should be implemented as soon as is practicable.
3. The FPC set the countercyclical capital buffer rate for UK exposures at 0 percent.