Would a mortgage cap kill the property market?
There is strong talk in the city of a mortgage cap being introduced by the Bank of England with a suggestion that a minimum deposit figure could be as high as 25%. While there is no doubt that introducing a cushion between the value of any property and the funds forwarded from mortgage providers would reduce the chances of a property crash in the future it could also kill the property sector stone dead.
There is no doubt that first-time buyers are the lifeblood of the UK property sector and without them we are unlikely to see a full-blown recovery in the short to medium term. However, trying to find a balance between protecting the property sector and allowing for fluid investment is something which the UK government is attempting to tackle. The truth is that property buyers of the future are certain to pay for misdemeanours and irregularities in some mortgage applications of the past where customers overstretched themselves.
The UK property sector is central to the UK economy and is an area which needs to be nurtured and protected while also allowing for innovation and a certain degree of risk.
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