Bank of England to cap higher income multiple lending

by Aaron Strutt

Jun 26 2014

The Bank of England has moved to cap the number of higher loan-to-income mortgages being offered by lenders in a bid to limit house price increases.

At the June meeting of the Financial Policy Committee, the body recommended than no more than 15% of new lending should be at more than 4.5 times income.

Mortgage lenders said the latest cap would have an impact primarily in London, although they will also need to make additional affordability checks to ensure borrowers can afford a three percentage point base rate increase.  

Paul Smee, director general of the Council of Mortgage Lenders, told the BBC: "Nationally, 9% of new loans are at 4.5 times income or more, but the figure is 19% in London."