If the mortgage rules are relaxed, thousands more could lose their homes, Reeves warned
If mortgage rules are relaxed, thousands more families could lose their homes each year. Helping first time buyersRachel Reeves has been warned.
Financial Conduct Authority (FCA) chief executive Nikhil Rathi said the push to ease restrictions on mortgage lending Double the number of households.
“If the number goes up from 1,000 to 2,000 … is that going to be an acceptable result in this Parliament, they would be saying, ‘Why on earth did you let it go up?'” Mr Rathi told a select committee hearing on Wednesday. At 100 pc?’
It comes after the chancellor backed plans put forward by the FCA to ease mortgage regulations for the first time since the 2008 financial crash.
The FCA currently restricts banks’ ability to lend to loans worth more than 4.5 times the borrower’s income, and requires lenders to do so. Equivalent tests To ensure that customers can withstand rising interest rates.
The City watchdog outlined plans to ease those rules in a letter to Sir Keir Starmer on Thursday, after the prime minister asked regulators to come up with new ideas on ways to boost Britain’s economic growth.
Ms Reeves said earlier this week that easing mortgage rules would help reverse falling home ownership rates in the UK and boost economic growth.
However, Mr. Rathi pointed out that this poses a higher risk for some borrowers and may lead to additional assets.
He pointed out that it is against the mortgage charter which was signed by the banks in the previous government and which was intended to help borrowers.
Mr Rathi told MPs on Wednesday: “When the mortgage charter came in last year, all the major parties said to downgrade assets, and we did. That is not compatible with the relaxation of credit requirements.
“The benefit on the other side is that you can allow first-time buyers to come into the market while paying very high rents at the moment. So there are positives for the economy to tell them.”
But ultimately that calculus of risk is something we need a little bit of political guidance, a little bit of political discussion.
Lenders repossessed 990 homes in the third quarter of 2024.
The chancellor is currently under intense pressure to boost growth after a flat economy was sent to the public. The cost of borrowing is rising. And they put her at risk of violating her fiscal rules.
Support for courier mortgage regulations is one of several progressive measures taken by the government in recent days. She has also signaled that she will be the chancellor. Support plans to expand Heathrow AirportThe chairman of the Competition and Market Authority should be forced to leave and He was replaced by the former boss of Amazon UK