New loan rules to slow mortgages; BUILDERS' SHARES FALL AFTER BANK WARNING.
Bank of England research found lenders are set to rein in home loan approvals - despite strong demand.
The warning wiped hundreds of millions off the stock market value of the country's major housebuilders yesterday.
The prediction came as new rules force banks to quiz would-be borrowers in greater detail about their finances.
Lenders are also under pressure to limit supersize loans to stop customers overstretching themselves.
The Bank of England could announce measures to force lenders to do just that later this week, with caps on how many times their income borrowers can get.
Taxpayer-saved lenders Royal Bank of Scotland and Lloyds have already put in place limits and Santander are rumoured to be preparing to do the same.
Yesterday's Bank of England survey confirmed lenders expect the number of super-stretch mortgages to come down in the next three months.
The action is part of efforts to cool the housing market.
Figures from the Office for National Statistics last week showed house prices soared nearly 10 per cent in the last year across the country, and by 18.7 per cent in London.
Shares in housebuilder Barratt Developments dropped three per cent, Persimmon were down two per cent, Taylor Wimpey fell 1.9 per cent and Bovis Homes sank 1.3 per cent.
Brian Murphy, head of lending at the Mortgage Advice Bureau, said: "Wider availability of credit is a welcome sign that the mortgage market is returning to normal and it would be a travesty if this overdue pick-up after years of stagnation is quashed by over-eager efforts to keep house prices in check."
The Bank of England survey found business demand for loans rose for a second straight quarter, with lenders saying firms wanted loans to fund mergers and acquisitions and for investment in property.
Matthew Fell, of business group the CBI, said: "Confidence in the recovery continues to grow and it's positive to see demand for credit increase."
" Bank of England governor Mark Carney is expected to be quizzed on the bank's" Bank of England governor Mark Carney is expected to be quizzed on the bank's mortgage plans and when rates will rise when he and senior officials appear at the Treasury select committee today.
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|Publication:||Daily Record (Glasgow, Scotland)|
|Date:||Jun 24, 2014|
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