09:51

Newsflash: The Bank of England has warned high street banks are starting to take increasing risks selling mortgages.



The BoE is suggesting it could force them to boost their financial buffers to protect against losses.

Threadneedle Street said almost a fifth of new mortgage lending was just below the limits set by its financial policy committee for banks to sell consumers a loan of no-more than 4.5 times their income.

[that’s the limit which Berkeley cited as a reason not to build more homes this morning]

Putting lenders on notice over the increasing risks, the Bank of England said no action was required at this stage but that it would reconsider whether to force banks to hold more capital in June.



The Bank has also revealed that its annual stress test for the major British banks would be almost identical to last year, when it concluded they would all be able to withstand a disorderly Brexit.

Barclays, HSBC, RBS, Santander UK, Standard Chartered and Nationwide will be put through their third annual healthcheck this year, designed to spot warning signs in the banking industry to prevent a rerun of the financial crisis.

The Bank said the 2018 test would include the same catastrophic economic scenario as was set in 2017, which was much tougher than the conditions seen in the financial crisis. The test includes a 4.7% fall in GDP, house prices crashing by as much as a third and interest rates rising to 4% (from 0.5% today).