Mortgage cap could ruin the UK property market

It is believed that the UK government is on the verge of passing significant power to the Bank of England in relation to the UK mortgage market which could see potentially four out of every 10 mortgage applications rejected. Central to this issue is a proposed mortgage cap which could see the introduction of a requirement to put down a minimum 25% deposit on any house purchase.

It has yet to be confirmed whether the Bank of England will introduce the mortgage cap and at what level the cut-off point will be but there are genuine fears within the marketplace. This comes at a time when the UK property market it still struggling to pull away from the economic turmoil and indeed comes at a time when first-time buyers, the lifeblood of the property market, have all but disappeared. Further restrictions in the mortgage arena would have a disastrous impact upon not only short-term sentiment in the property market but the number of buyers and competition for properties.

It will be interesting to see whether the UK government confers with those working in the industry to see whether a mortgage cap would work and if so what level it should be introduced at.