Bank of England to Channelize Help to Purchase a Scheme
Recent updates from the Bank of England (BOE) highlights that it has been given a good amount of control by the UK government to purchase new Help to Buy Scheme.
This scheme has increased house prices and also raised issues regarding house price bubble.
The bank's Financial Policy Committee would rule out 95% loan-to-value products. This would allow it to levy severe fees on high debt loans. This would happen next September when the changes in Treasury's Help to Buy Scheme would happen.
The Help to Buy Scheme was launched by the Government to support a package for first-time buyers. This covers an interest-free equity loan to touch a turf of 20% of a property's value.
This allows the buyers to climb the property ladder. But now it appears that the central bank would call for a specific increase in the fees banks.
In the annual review in September, the central bank would come up with a plan. According to this, the banks would be charged three different fees. This would depend upon loan-to-value ratio. In that case, one would be for the 80-85% loan, the other one for a 85-90% loan and another for a 90-95% loan.
So, the charges for the highest debt mortgages would be really high after ruling them out of the market.
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