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Leading Surrey & Berkshire estate agent Aston Mead has welcomed the “common sense” response taken by the Bank of England last week to control the housing market, as well as its willingness to tolerate a 20% rise in house prices over the next three years.

The Bank’s Financial Policy Committee, which is in charge of financial stability, unveiled a package of measures – including a restriction that no more than 15% of new mortgages can be greater than 4.5 times a borrower’s income, and specifying that all borrowers will have to demonstrate that they can afford to pay their loan, even if interest rates rise by 3 percentage points. The Governor of the Bank of England, Mark Carney, also said a house price rise of 20% would be “the limit of our tolerance”. 

Responding to the move, Adam Hesse said: “To be honest, the market had been quite nervous about this announcement. In fact, in the run up to last week, we were expecting the Bank’s response to be little short of draconian. However, what emerged was much more lenient than we were anticipating. We feared a stranglehold, but instead got a helping hand to guide things on their way. It’s a common sense approach, and we welcome it.”

Adam Hesse was keen to point out that a system of checks and balances on the lending process has already been put into effect by the recent introduction of the Mortgage Market Review (MMR).

He explained: “The impact of the MMR cannot be underestimated. Whilst it’s had the unfortunate effect of increasing the time it takes to buy and sell houses, it has also ensured that those taking out a new loan can genuinely afford it. This in itself has acted to prevent the market from overheating. So the announcement of severe restrictions last week would have been a step too far.

“It’s important to remember that as a responsible estate agent, we want to see a long, slow, sustainable housing recovery – not an artificial boom fuelled by irresponsible lending, which could all too easily lead us back into recession.

“What borrowers should be aware of, though, is that this latest announcement does mean interest rates are more likely to rise sooner rather than later.”


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