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Lenders to face stress testing over future housing market crash

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  • 28/04/2014
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Lenders to face stress testing over future housing market crash
Banks and building societies are set to face new stress testing over the impact of a future house price crash when new rules are announced by the Bank of England tomorrow.

The Prudential Regulation Authority will unveil its plan to make banks stress test against a drop in house prices of as much as 35%, according to a report by Sky.

Mortgage lenders could be forced to retain even more capital than at present to show they could deal with a house price fall of that level.

Other measures will see providers tested on their ability to handle a sharp rise in interest rates above the 5% mark.

The tests have been devised by the Financial Policy Committee and the board of the PRA. They will tie in with similar rules to be implemented by the European Banking Authority.

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