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By Andy Bruce
LONDON, June 12 (Reuters) - British business minister VinceCable on Thursday urged the Bank of England on clamp down onmortgages with high loan-to-income ratios to stop booming houseprices from harming the economy.
Speaking ahead of keynote annual addresses to London'sfinancial community by finance minister George Osborne and Bankof England Governor Mark Carney, Cable said he was "concerned"about rising house prices.
Cable said experience of previous housing booms showed thatmortgage loans of around 3-3.5 times people's incomes were seenas stable, and that he was "appalled" to see some banks lendingas much as five times income.
"This is the key area that Bank of England has got tooperate into and make sure that this boom in house prices,particularly in the south of England, doesn't destabilise thewhole economy," Cable told BBC Radio's Today programme.
Lloyds Banking Group and Royal Bank of Scotland both said recently that for loans over 500,000 pounds($839,500), they will no longer give mortgages of more than fourtimes a borrower's income.
Last week, the International Monetary Fund urged Britain totake steps to cool the housing market, and figures from theRoyal Institution of Chartered Surveyors on Thursday showedhouse prices rose faster than expected in May.
Data from mortgage lender Halifax last week showed houseprices rose at the fastest annual rate in more than six years inMay.
While tougher rules for London's currency trading hub willbe high on the agenda at Thursday's Mansion House speeches, BoEGovernor Carney may touch on measures to reduce risks to theeconomy from rising house prices.
The BoE meets next week to finalise a twice-yearly report onfinancial stability, and is expected to consider tighter curbson mortgage lending.
But views differ among policymakers on the importance ofrising house prices as a risk to Britain's financial stability.
BoE policymaker Ben Broadbent, who in July will becomedeputy governor, said on Wednesday the housing market upturnbears little resemblance to the debt-fuelled booms of the past,adding that it was more important to watch leverage rather thanprices.
($1 = 0.5956 British Pounds) (Additional Reporting by David Milliken and Ana Nicolaci daCosta; Editing by Toby Chopra)
