Rachel Reeves backs plans for looser limits on mortgage lending.

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Chancellor Rachel Reeves has backed plans by the UK financial regulator to investigate ways banks can allow more mortgage risk to help more people own their own homes.

The chancellor told the Financial Times that she was “entirely open to looking at proposals that boost home ownership and help working families get on the housing ladder” to lift mortgage restrictions from the Financial Conduct Authority.

Reeves is heading to Davos this week to pitch the UK as an investment destination at the World Economic Forum as the Labor government tries to boost growth after the economy collapsed in the second half of last year.

The chancellor has come under intense political pressure since the start of the year, following her decision to increase employers’ National Insurance contributions in the October budget for her own fiscal rules under pressure and business sentiment.

The Treasury has been at the center of efforts to pressure government regulators to take growth-enhancing measures. Reeves met several UK buyers last week to hear their views.

“My biggest concern is that we are at risk while ignoring growth,” Reeves said. “We need to make sure regulators take into account the impact of their policies on growth – that’s what we’ve decided to do as a reforming government.”

FCA said. The letter Published on Friday for the Prime Minister, it begins to “simplify responsible lending and advice rules for mortgages, support home ownership and open a dialogue on the balance between credit access and default rates”.

UK mortgage lending is regulated by rules from the FCA and the Bank of England, most of which were introduced after the 2008 financial crisis when many banks were bailed out by the government.

The rules limit how much banks can lend to multiples of a person’s income or property value and require a affordability test to see if borrowers can withstand future interest rate increases.

“Home ownership fell under the last government and we are committed to changing that,” Reeves said, adding that the Treasury would “look at the FCA’s proposals in this area”.

According to the Office for National Statistics, the proportion of households owning their own home has fallen from 64.3 per cent in 2011 to 62.5 per cent in 2021.

Richard Donnell, managing director at property portal Zopla, said the “biggest barrier” stopping more people from taking out loans was the FCA’s ability to affordability test, which meant borrowers had to pay the costs of borrowing. Banks should test whether they can increase.

Reeves She has come under fire in recent weeks after she left herself with a small margin of error of £9.9bn in 2029/30 by challenging budget rules that would see the government’s day-to-day spending out of tax receipts. That margin is at risk of being erased by any renewed bond yields.

She said the budget has struck a chord with her administration, and in March, the Office of Budget Responsibility’s forecast was based on several factors, not just bond yields.

Global markets had experienced “headwinds” but fiscal conditions remained “non-negotiable”, Reeves added. This means she would not make any changes to the laws published during the budget, she added.

When asked if she could avoid a tax increase in March to ensure compliance with those laws, Reeves reiterated, “We don’t have a budget in March . . . My commitment to one budget preparation per year remains.

Reeves admitted he had to take “difficult decisions” in a budget that has been heavily criticized by business leaders for increasing employer NPI and wage costs. But she insists they are the right ones to put the economy back on a solid footing.

She said she had yet to hear of a serious alternative to the measures.

“Imagine the alternative, if I had not been able to make those difficult decisions on a firmer footing of the public finances, what that would have done to market confidence in Britain,” she said. “I had to deal with my legacy. That means making tough decisions, but the right decisions to get our economy back on a solid footing.

Speaking before Donald Trump’s inauguration as US president, Reeves said she hoped there was “scope” to negotiate a trade deal with the new administration because Reeves was “clearly a negotiator”.

Any trade deal with Washington “must be right for the UK”, the chancellor said, adding that Labor would not take the position of banning US imports of chlorinated chicken or hormone-treated beef.