A respected think tank has recently offered its opinion on UK home mortgages.  In order to prevent future housing crashes within the UK, a home mortgage should max out at three and a half times income of that household.  Additionally, these mortgages should be limited to being 90% loan to value, or requiring a minimum of 10% deposit.

These new standards have been devised by the Institute for Public Policy (IPPR) and come on the heels of a recent prediction about the Scotland housing market not recovering fully for another twenty four months.

Due to home prices skyrocketing over a ten-year period and credit being given out in copious amounts, the housing bubble was sure to be unsustainable.  Fill a balloon with air day after day and see how long it maintains its shape without failing.  At one point banks provided mortgages to households at up to six times that resident’s income.

The primary banking regulator, the Financial Services Authority (FSA), is looking at ways to build stability within the market.

The director of the think tank, Nick Pearce, commented on controlling home prices through policy, saying: "A central plank of economic policy should be to target moderate increases in house prices, rather than allowing runaway house price inflation which is always damaging in the long run.

"We need tougher mortgage market regulation from the FSA, especially caps on ‘loan-to-value' and ‘loan-to-income' ratios."

The estate agent, Savills, has recently made the prediction regarding Scotland’s housing market not making a viable recovery for at least twenty-four months.