Bank Capital Push Could Hamper Help to Buy

The Government’s flagship Help to Buy scheme risks being derailed by recommendations from regulators for banks to hold more capital against home loans.  Senior banking analysts and industry executives have warned that the Bank of England’s push to get lenders to increase the risk weightings on their mortgage books could dent the impact of George Osborne’s scheme to stimulate the housing market. The fears follow the Bank of England’s Financial Policy Committee (FPC) announcement that the authorities had for the first time applied a “risk weight floor” on UK mortgages. A minimum risk weight on mortgages would likely mean banks being forced to hold more capital against their home loan portfolios at the very time the Help to Buy scheme is attempting to make mortgage borrowing more attractive to lenders. “This could effectively kill the scheme before it has even been launched — Osborne must be furious,” said one senior banks analyst. Read more on the Daily Telegraph website.