IMF backs LTV cap to prevent housing bubbles - Telegraph

IMF backs LTV cap to prevent housing bubbles - Telegraph

In a study of housing booms and busts and the damage they inflict on growth, the IMF argued for limits on LTV ratios and debt service-to-income ratios as "useful prudential tools to dampen credit and hence house price growth".

Britain is considering such measures as part of the so-called "macro-prudential toolkit" the regulator will wield to deflate a housing bubble before it bursts. The move would prevent lenders offering 125pc loans, as Northern Rock infamously did before its collapse.

"Higher LTV ratios are associated with higher house price and credit growth over time," the report said.