The Bank of England is to be given powers to restrict the income-to-lending ratio of mortgages. In a move that was announced yesterday by the UK’s Chancellor of the Exchequer, the Bank, headed by Canadian Mark Carney, would be empowered to stop banks lending at the kind of levels seen currently. Some lenders are agreeing mortgages five or six times salary. Although this a new power for the central bank, experts say that it has always had the option to ‘suggest’ that banks should restrict lending, which would not have been ignored. It is not expected that the Bank will use its new power any time soon. The governor has hinted though, that interest rates may rise ‘sooner’ than analysts expect, a hint that rates could go up this year rather than next. Although the bank is independent, it would sit better politically to push a rise through this year, as there is a general election next year. The rate rise hint pushed the pound to a near five year high. Read the full story.
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