Boris Johnson set to unlock cheaper mortgages for millions in major rule change

The Bank of England has pledged to to adopt a more “British style” of rule-making

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Boris Johnson is poised to unlock cheaper mortgages for millions in a major legislation change as the Bank of England pledges to adopt a more “British style” of rule-making.

Threadneedle Street will take advantage of post Brexit freedoms to overhaul burdensome rules that prevent smaller banks from offering cheaper loans.

They hope by abandoning Brussels' top-down approach, and developing a “simpler regime” they will give companies more power to set their own agenda.

Sam Woods, head of the Prudential Regulation Authority (PRA), a financial services regulatory body, said the proposals "will enable us to adopt a more British style of rule-making, with less fine detail in legislation and more ability for us to maintain and develop a coherent and dynamic rulebook".

Prime Minister Boris Johnson
Prime Minister Boris Johnson
The Bank of England, in the City of London
The Bank of England, in the City of London

He told the Telegraph: “We are already developing a simpler regime for smaller banks, which will be good both for safety and soundness and for competition – we call this ‘Strong and Simple’ because we have no interest in a weak regime."

House sales were down by more than a third in March compared with a year earlier, according to HM Revenue and Customs (HMRC) figures.

An estimated 114,650 property transactions took place last month, which was 35.7 percent lower than March 2021 and a 2.6 percent increase compared with February 2022.

Ian Gordon, an analyst at Investec, said: “Put simply, it is uneconomic for a challenger bank to operate in the standard vanilla mortgage market.

"The only markets where challenger banks or specialist banks can potentially make a sensible living is in higher-margin products, whether that be professional buy to let, or high loan to value, or lending to non-standard or self-employed [customers]. The current regime forces banks into niche or higher risk [products]."

Insurers could also reap the benefits from the move as it could help them make more secure, long-term investments.

Anne Boden, founder and chief executive of Starling Bank, said: “The PRA is taking the right steps to improve competition by simplifying the regime for small banks. However, Starling is no longer a very small bank and is unlikely to be able to take advantage of any of the concessions being offered.”