That's the concern I have here - rather than being proactive in producing a total solution they have concentrated on one part of the problem.
Granted rules are a good thing but personally I think 80% LTV is on the extreme side. Loan to earnings is probably the more relevant metric. This will deflate some property prices - but at the lower end of the market will it increase prices? IF that is all some higher earners can get approval for. Will it further push lower earners out of the housing market and into social housing because they won't be able to afford the increasing rents.
Also makes it very hard for people to move and trade up which will further constrict supply at the lower end.
I think maybe builders will now hold fire on any new developments which will
1. hurt the economy
2. Further constrict supply
In additional people may rush to buy houses now further pushing prices up this year - for some people it may be more beneficial to actually pay an extra 20k in house property now (subject to getting that finance) rather than wait another year when they may never get that mortgage and take another 5 years to save a bigger deposit.
The people I've heard agreeing with the rules seem to be just saying we need it to protect us from another bubble - and that is fine but what are the knock on consequences of that. There is a bigger picture. Overreacting is a bigger issue.
And from a personal point of view another fear is that with fewer mortgages there are fewer people contributing to banks profits which will push variable rates higher for people. We have seen in the other thread that there is no link with the ECB and the variable rates we pay here and this will make it harder to bridge that gap.