Analysts at investment bank Morgan Stanley have warned that plans being mooted by the Treasury and regulators to increase the amount of capital that banks must set aside to cover their mortgage lending risks could deal another blow to the ailing housing market.
The Financial Policy Committee at the Bank of England has voiced gentle worries on mortgage risks and the Treasury said the FPC should have the power to force banks to increase their buffers.
Morgan Stanley said banks could be forced to raise and set aside up to an extra £22 billion. This would hit share prices and possibly mortgage availability.
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