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PPI: BoE could restrict mortgage lending

The Bank of England (BoE) could restrict mortgage lending in an effort to reduce the risk of another financial crisis, it has been revealed.

Homebuyers could be required to put down deposits of between 10 per cent and 25 per cent in order to secure a mortgage.

Charlie Bean, the deputy governor of the BoE, claimed restrictions may be implemented to help ensure economic stability.

He said: "There is the option of introducing direct constraints on the terms or availability of credit, for instance imposing maximum loan-to-value ratios in the mortgage market."

He claimed that lenders shifted to riskier forms of lending prior to the credit crunch and this needed to be kept in check.

Prior to the recession, lenders advertised increasingly larger loan-to-value ratios, with some deals offering 125 per cent of the property's value to customers.

Mr Bean announced the potential limits in a speech to the Jackson Hole Economic Policy Symposium in the US over the weekend.

Posted by Charles Baker

Charles is a reputed financial analyst with almost decades of experience under his belt ADNFCR-2776-ID-800046331-ADNFCR

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