Bank of England ready to restrict mortgage lending

Charles Bean, the deputy governor of the Bank of England, has this weekend suggested that Bank of England will step in to restrict mortgage lending in the UK in the future. There is a suggestion that buyers will need to put down between a 10% and 25% deposit on any future housing purchases and indeed the Bank of England may step in to set mortgage interest rates across the UK.

The idea behind this new initiative is to try and stabilise the UK property market and the UK economy in the future by controlling the amount of risk which UK banking corporations are allowed to take. While there's no doubt that there needs to be further guidance and further regulations with regards to mortgage lending in the UK it is a very dangerous to step to introduce restrictive practices and regulations into a "free market economy".

Even though there have been major problems in the UK mortgage market over the last for five years it is easy to forget that the free-market economy which we currently live in has bred a number of new and innovative financial tools. If this power was taken away from the financial arena this could impact upon future services and future investment products made available.