View more on these topics

BoE director notes growing ‘risky’ mortgage lending


A Bank of England director has today urged caution over rising levels of risky mortgage lending.

This includes mortgage lenders loosening credit standards, according to Bank executive director for financial stability strategy and risk Alex Brazier.

Speaking at Imperial College today, Brazier said a slowing in buy-to-let and new buyers had “masked the effect of looser credit supply to owner occupiers”.

City AM reports that Brazier adds: “Mortgage rates have fallen materially relative to Bank rate, especially at the riskier end of the lending spectrum And lenders are now prepared to take a bit more risk.”

Brazier added: “There is no flashing warning light here telling us to pull over urgently. There is, perhaps, the light that reminds us the car is due for a service.”

The Bank executive says this ‘risky’ mortgage lending could hit lenders if the economy slows.

He says: “Developments in corporate credit, consumer credit and in the mortgage market could be signs of a more generalised pick-up in risk taking. And when risk taking increases, it must not be at the expense of the resilience of lenders to any future downturn in the economy.”

Brazier’s words echo the thoughts of the Bank’s Financial Policy Committee.

The March FPC minutes say there has “been a gradual loosening in credit conditions in the mortgage market in recent years” for owner-occupier loans.



BoE warns lenders end of TFS a ‘systemic risk’

The Bank of England has quietly warned mortgage lenders that the end of the Term Funding Scheme is a possible “systemic risk” to the country’s financial system. Bank of England staff are understood to have told lenders this at the end of last year, according to the Telegraph. Experts expect that lenders will raise rates […]


BoE crackdown on ‘risky lending’ could hit FTBs

Experts warn that Bank of England Financial Policy Committee threats to increase lenders’ reserves could decrease the supply of high-LTV mortgages First-time buyers and less well-off borrowers will be hit if the Bank of England carries out mooted plans to crack down on what it considers risky mortgage lending, experts warn. Last month, the Bank’s […]


BoE urges caution over ‘risky’ mortgage lending

The Bank of England has fired a warning shot over what it sees as potentially risky loosening of mortgage underwriting standards. The Bank could order lenders to raise their financial reserves over the issue, according to the board minutes of the latest Financial Policy Committee meeting. The March FPC minutes say there has “been a gradual […]


Will lower inflation delay BoE rate rise?

The headline rate of inflation fell to 2.7 per cent in February, according to the Office of National Statistics, reducing pressure on the Bank of England to raise interest rates. It has been widely expected that the BoE would rise interest rates again in May this year, following its decision in November to raise the […]


News and expert analysis straight to your inbox

Sign up