The chancellor has been warned not to relax mortgage rules. (Image: Getty)
has been warned against relaxing mortgage rules as it could see thousands of families losing their homes each year.
The Chancellor and boost economic growth, but easing restrictions on lending could actually double the number of home repossessions, a finance chief has warned.
Nikhil Rathi, CEO of the Financial Conduct Authority (FCA), cautioned against the potential change as it would go against the charter that helps borrowers and reduces repossessions.
He told a select committee: “If the numbers went up from 1,000 to 2,000 … would that be an acceptable or would you say to us: ‘Why on earth have you let it go up by 100%?’
“When the charter came in last year, pretty much every major party said keep repossessions down, and we did. That is not consistent with relaxing the lending standards.
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Thousands of families could lose their homes every year, according to the FCA chief executive. (Image: Getty)
“The benefit on the other side is you could potentially into the market who are paying very high rents right now. So there are positive benefits for the economy which we should articulate.
“But ultimately that risk calculus is something we do need a bit of political guidance on, a bit of a political discussion on.”
The FCA’s plans to ease restrictions, which Ms Reeves backed, were first put forward in 2008 after the financial crisis.
Now, the authority restricts banks wanting to lend mortgages that are over 4.5 times the borrower’s income, and dictates they must carry out affordability tests to ensure
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Sir asked regulators to propose new ideas on how to stimulate economic growth, to which the FCA replied with plans to ease their old restrictions.
However, Mr Rathi appeared to deviate from his watchdog, warning that its own calls for changes to rules could put borrowers at a higher risk of
Between July and September last year, lenders reposessed 990 homes – a 39% increase on the same period in 2023.