1. ITV Report

London homeowners could be hardest hit by powers to cool property market

First time buyers in London could be among the hardest hit by new powers being given to the Bank of England to try to cool the property market.

Credit: PA

Chancellor George Osborne is to allow the bank to cap the size of mortgage loans. Earlier, Business Secretary Vince Cable suggested loans should be no more than three and a half times a borrower's salary.

Credit: PA

There is a risk that some banks are lending too much in relation to people's income, that's something the governor and the Bank of England have got to take charge of.

Traditionally, most middle aged people will remember, the standard was for banks to lend three, at most three and half times your income. If you do much more than that it means that the borrower is then at serious risk if they have trouble with their job in future or if interest rates rise.

– Vince Cable, Business Secretary
Credit: PA

The average first time buyer in London is said to need a mortgage of £200,000 - more than five times their annual salary.

First time buyers will be looking on aghast if three and a half times were to come in, that would knock many of them out of the game entirely and they'd have to rethink completely.

– David Hollingworth, mortgage broker