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30 | 06 | 14

Lest we forget History repeats itself

Posted by: katalysis

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A lot of lazy reporting has given the impression that the BoE is fixated upon house price increases. In fact its focus is firmly upon the ramifications of raising interest rates. In the first 3 months of this year the proportion of mortgages issued at a loan to income ratio of over 4 crept up to 22%. More than the previous peak in 2007. Apparently, if interest rates rise by a meagre 3% then “nearly 20% of households with mortgages would need to take some form of action, such as curtailing significantly their spending or seeking to earn more” so its unsurprising that the Bank needs to rein in lending at high income multiples. On the lack of houses coming onto the market it says “This could reflect some prospective sellers holding back properties from the market in anticipation of higher prices.” Hmmm!  

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