BOE Mortgage Market Reform: Targeting Risk Development
In a notable innings, BOE lended the mortgage to support development while maintaining financial stability.
Individual lenders may now exceed the last 15% high loan-from mortgage cap, although the sector-wide range remains unchanged. The current total share of these loans sits at 9.7%, which is under CAP, with BOE to about 11% by the end by -2025.
The adjustment, the first major change for the subsequent mortgage regulations since 2008, is aimed at supporting buyers for the first time, although BOE stated that deposits requirements, not a loan-to cap, remain the primary obstacles for most borrowers.
Outlook: Carefully stable with focus on global debt
For traders, BOE’s stability report suggests a flexible banking system and a careful stable-term approach supported by the operating gilt market.
However, ongoing global debt pressure and geopolitical risk bond markets can maintain nervousness, gilt yield is sensitive to fiscal signals.
The upcoming review of BOE of bank capital requirements in December will be a major watchpoint, but for now, the system capital level is considered to be “roughly appropriate”, which provides a supportive background for credit markets, focusing on external risks.
More information in our economic calendar.
