GBP/USD - Cable briefly rose to intra-day high of 1.7030 after the BoE Financial Stability Report were released.
Statement from BoE Financial Stability Report, quote:
1. " to set from october loan to income ratio at 4.5 for 85 pct of new mortgages".
2. "new cap would apply to lenders who grant more than 100 mln stg of home loans a year".
3. "home loans granted from today but completed from october will count towards total volume for setting planned cap".
4. "toughens affordability tests for new home loans from thursday by taking into account potentially higher interest rates".
5. "most lenders already operate within the lti cap".
6. "does not believe that household indebtedness poses an immediate threat to stability, measures aimed to insure against this risk".
7. "eight top uk lenders must maintain core equity ratio of 7 pct, leverage
ratio of 3 pct".
8. "sets first formal countercyclical capital buffer for banks at 0 pct".
Earlier, BoE's Carney begins his news conference n says, quote:
'the biggest risk to the UK economy relate to the housing mkt;
it is not the FPCI's role to control house prices;
the FPC is concerned that a marked loosening in underwriting standards n increase in household debt cud pose major risk;
today's measures shud not constrain current housing activity, actions will bite if sustained momentum in housing mkt;
these measures will prevent slide into riskier lending, higher indebtedness; monetary policy does not need to be diverted to address a sector-specific risk in the housing mkt;
today's actions don't affect the central outlook for the economy;
today's actions are less likely to have implications for monetary policy path, which anticipates limited n gradual rate rises;
we expect the momentum in the housking mkt to continue for the next year or so;
this is the limit of our tolerance on the housing mkt, if we need to recalibrate, we will.'
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