4 Nov

Government launches Bank of England housing consultation

Government launches Bank of England housing consultation

The government has begun a consultation to look at the powers the Bank of England should have over the UK's housing market.

Chancellor George Osborne has confirmed the examination of the current abilities of the central bank and whether or not it should be granted more powers.

Last month, the Bank requested new legislation to allow it to control loan to value ratios and set a debt to income ratio for mortgages.

At present, the Bank of England is able to recommend such limits, but the power to introduce the restrictions are currently held with the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA).

"Ensuring the stability of the UK housing market is a crucial part of this government’s long-term economic plan, and I have been clear that the independent Bank of England should have the tools it needs to do this," explained the chancellor.

"That's why the government is consulting on this issue, to ensure that we can bring forward appropriate legislation to give the Bank the powers it needs. The government already works closely with the Bank to ensure the ongoing stability of the UK housing market."

Central banks in a number of other countries such as Canada, New Zealand and Norway already have similar powers, so the Bank of England is stressing it makes sense for them to be granted the new abilities.

The consultation will last until November 28th and consumers and figures within the industry are invited to give their opinion on the topic.

Next year, the government has confirmed it will begin a further consultation examining whether or not the Bank of England should be able to have increased powers over the buy-to-let market.

The deputy governor of the Bank recently stressed that the base rate of interest may remain at its historic low of 0.5 per cent for longer than expected.

Jon Cunliffe, speaking at an event to a mark his first year the organisation, explained that pressure on inflation from pay had been limited.

"The softening in the pay and inflation data, together with the weaker external environment, for me implies that we can afford to maintain the current degree of monetary stimulus for a longer period than previously thought," said the deputy governor.ADNFCR-1222-ID-801758256-ADNFCR

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