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The Bank of England may be granted mortgage powers it doesn't want or need.
Imagine a world where the fate of first-time homebuyer policy is decided by bankers and not politicians — though the issue, to be clear, is becoming very political.
The House of Commons Treasury Committee in the United Kingdom is pushing for the Bank of England to have the ability to stop mortgage lending in a time of economic boom.
The feeling here is that the BofE can cut off any potential housing bubble before it bursts, and help keep the U.K., which is sliding toward recession as it gets set to host the summer Olympics, on solid monetary footing. Nonetheless, it is to the credit of the House of Commons that it is taking a proactive, forward-looking approach to the next economic boom, whenever that may be.
However, one of the biggest opponents to the added powers, according to the Financial Times UK, is the BofE.
And it makes sense. Empowering central bankers to implementing a blanket ban on mortgage lending is a power they don't want and don't need.
For one, the runaway lending here in the United States in the mid-2000s is likely gone for good. If similar products return, it will not be in force. Freddie Mac numbers recently show a distinct lack of demand for adjustable-rate mortgages.
The expanded powers concept, however, maintains a powerful support base. Both the Queen of England and Chief of the International Monetary Fund Christine Lagarde say improved regulatory authority will lead to improved fiscal activity.
But these notions are based on issues held against the financial construct of the city of London and Canary Wharf. To a larger extent, housing policy should remain limited to macroeconomic impact and how it helps a country pay off debt.
The IMF adds, that before mortgages are banned: "Fiscal space for further growth-enhancing measures could be generated by property tax reform, restraint of public employee compensation growth, and better targeting of social spending to those in need."
The average Brit who can prove the ability to make the mortgage, as well as the mortgage lender, should not be subject to the whims of a central bank in enforcing housing policy.
But even if the BofE is granted these powers, will it ever be necessary?
It is simply not plausible that the hugely deflated mortgage lending space in the UK will once again grow out of control.