The trade body published an analysis showing that house purchase approvals were only around 200,000 per quarter instead of 270,000 per quarter as the BoE predicted in 2014.
It suggests that one of the key reasons for this difference could be the 3% affordability calculation.
Speaking at the CML annual lunch, CML president Peter Hill said the body wanted to encourage the bank’s Financial Policy Committee (FPC) to continue to behave “in a bold and confident manner towards the use of macro-prudential tools”.
He acknowledged that the change to the operation of the loan to income (LTI) mechanism in the light of evidence from the CML had been welcome.
“On behalf of the industry we would now like to urge the FPC to take a look at the 3% affordability test,” said Hill, who is also chief executive of Leeds Building Society.
“It is the CML’s view that the Bank’s policies risk having a net adverse effect on the housing market and rather than hardwire the current requirements as was mooted in the last financial stability report, it should be looking to soften the impact.
“A failure to do so may unnecessarily cramp the ability of homeowners to move house and undermine the smooth functioning of our housing market,” he added.
Is it working?
The report published alongside Hill’s comments recognised the importance of effective macro-prudential regulation of the industry, but asked if it was working as it should be?
“Data we publish today suggests the FPC may be limiting credit risk at the expense of shrinking activity. We believe that macro-prudential policy could be re-calibrated to deliver a modestly stronger and broader mix of activity – without undermining financial stability,” it said.
Hill also used his speech to highlight the impact of Brexit and thank the BoE for its swift action to help prevent a post-referendum shock.
“If Brexit has relatively few direct impacts on the mortgage industry, the implications for the UK economy are profound,” he said.
“I would like to applaud the BoE for its immediate action in the aftermath of the referendum which I believe played a key role in averting a crisis.”