What Will be the Outcome When Novel Bank of England Credit Control Legislation Come into Force
Soon the UK government will announce plans for the Bank of England to assume powers to manage banks and building societies lending conduct. The committee is proposed to be compiled of members of The Bank of England workforce and the Financial Services Agency.
The proposal is to act as a controlling mechanism on mortgage lenders so that when credit is starting to become too freely available they will be able to restrict the lenders facility to lend. On the other hand when lending is hindered they can take steps to open up credit more freely. This will give the Bank of England greater control over money supply (which is dictated by bank lending) and so more ability to sway economic activity.
Had these powers been in place over recent months then it is thought that the housing market overheating, which reached it’s peak in 2007, may well have been avoided. Property prices were driven to unsustainable levels by the very free accessibility of mortgage lending, including considerable sub-prime lending. Buyers could borrow at levels which drove prices too high.
Likewise, throughout the present lending famine the Bank of England will be able to persuade lending in order to support the economic sitation.
Such aid will be most important for the mortgage market. Although property prices would seem to have stabilised there are nevertheless far less property sale transactions going through. The current figures, at around 45,000 per month, is about half of the long term standard and much of the problem appears to lie with lower mortgage availability. Anyone looking to Sell Property Fast is presently facing a demand for homes at about half previous levels. So the only way to hurry up that Quick Property Sale has been to drastically reduce asking prices and this is the cause of the collapse in property values.
This broadcast therefore should be good news for the housing market. Much detail of the new powers remains to be discussed but it is to be hoped that there is extensive focus on the mortgage market. This seems expected as an improvement in the availability of mortgages is not just good news for those demanding their estate agents to “Sell my House fast”, it is also very good news for the building trade. With unemployment likely to continue to rise for another year or so a stimulation in house building would be of use to the wider economy as well.
Finally, it is hoped that any mortgage lending expansion gives due attention to the first time buyer. Those looking for their first home have been particularly affected by the mortgage deficiency, but they remain crucial to the housing market revival. It is hoped that the coming weeks see the expansion of new first time buyer deals which will galvanize the property market recovery.
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