Bank of England weighs higher threshold for riskier mortgages

The Bank of England is exploring an easing of the limit on riskier mortgage lending, according to the Financial Times, as the government and financial industry push for measures that could help more people buy homes. The proposal concerns the threshold governing higher-risk mortgages, but no revised level or implementation date has been specified.

The current constraint is part of the framework intended to prevent lenders from allowing too many borrowers to take on mortgages with high loan-to-income ratios. Raising the threshold would permit a larger share of such lending, changing the balance between expanding access to credit and preserving safeguards against household and banking-system stress.

The immediate parties are the Bank of England, mortgage lenders and prospective homebuyers. Lenders would gain more room to originate higher-risk loans, while the government would have a policy lever aimed at home ownership; the mechanism for borrowers is increased access to mortgages that may otherwise fall outside the permitted mix.

The reporting describes an exploration rather than a settled policy decision. The eventual threshold, the eligibility rules and the timing of any change are still open, and the proposal faces the broader trade-off between credit availability and financial stability.

The next points to watch are any formal consultation or announcement from the Bank of England, along with the level of the revised threshold and evidence on how lenders change their mortgage mix after implementation.