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No more wild house parties?

Posted by: katalysis

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With the property market outside the posh parts of London still on life support it appears that, nonetheless, the powers that be are looking forward to a return to healthy exuberance. But what of the over indulgence that got us into the mess in the first place? A former Head of the US Federal Reserve famously said that its job was “to take away the punch bowl as the party gets going”. Central banks traditionally do this by raising rates. However, expect more targeted measures to be deployed in future to prevent the UK housing market overheating. Making banks hold more capital against higher ltv and/or income multiple mortgages could well have the desired effect of preventing inebriation without harming the wider economy.      
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