Yesterday the Bank of England released their financial stability report and announced tougher new rules on mortgage availability to avoid the housing market destabilising the UK economy .
The Bank of England announced new affordability test on banks, they must now calculate the impact on borrower’s ability to repay their mortgages if interest rates rise by three percentage points.The have also announced a lending cap of no more than 15% of any lender’s total number of new residential mortgages should be at or greater than 4.5 times the borrower’s income.
Mark Carney explained that the Bank of England is acting now, to avoid the housing market spiralling out of control and threatening financial stability.The governor says that the UK economy is broadening and strengthening, but the housing market is the main risk to financial stability.
Carney explained that it is not the Financial Policy Committee's job to control house prices but it is worried about the state of household indebtedness in the UK.Carney explained that household debt isn't an immediate threat but it is a worry for the future.
In the US yesterday new applications for unemployment benefits fell slightly last week, a sign of an improving labour market.Initial claims for unemployment benefits fell by 2,000 to a 312,000 in the week ended June 21.
However yesterday’s report also showed the number of workers continuing to draw unemployment benefits rose by 12,000 to a seasonally adjusted 2.57 million in the week ended June 14. Continuing claims are down by about 400,000 from a year earlier so this is good sign that conditions are improving in the US
09:30 – GBP – UK Gross Domestic Product (YoY) – expected to come in at 3.1% from 2.7%
09:30 – GBP – UK Gross Domestic Product (QoQ) – expected to come in at 0.8% from 0.7%
13:00 – EUR – German Consumer price Index – expected to come in a 1% from 0.9%
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