The Bank of England (BoE) should prevent house prices from rising by imposing mortgage restrictions on buyers in the UK, according to a new report from think tank The Institute for Public Policy Research (IPPR).
The IPPR said that the BoE should be given new powers to achieve zero house price inflation, similar to its inflationary target of two per cent, amid continued rising property prices in many parts of the UK. The recommendations come as part of a broader call from the IPPR to rebalance the economy away from financial services with a greater focus on science and manufacturing.
The report, which is titled On Borrowed Time, argues that the BoE’s financial policy committee, supported by the Treasury, should insist on higher initial deposits and stricter ceilings on loan-to-income ratios, and steps to increase house building.
Author of the IPPR report Grace Blakely said: “Since the 1980s, the UK’s business model has rested on attracting capital from the rest of the world, which it has channelled into deb for UK consumers.
“The 2008 crisis proved that this is unsustainable. We need to move towards a more sustainable growth model, one built on production and investment rather than debt and speculation.”
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