FINANCE: The Bank of England is canvassing views on the creation of a UK loans database, as recommended by the A Vision for Real Estate Finance in the UK report.
In a new discussion paper the bank asks for feedback on its assessment of the UK CRE lending market “to help inform the Bank’s consideration of the case for improving the availability of credit data”.
The paper published on Friday calls specifically for responses to its views on the key information required for CRE lending (see box) and the availability and importance of information in the UK CRE lending market.
It acknowledges that aggregate data – such as the biannual De Montfort University survey – is available to the public, “but importantly, timely data on changes in underwriting standards, in terms of the average and the distribution, are not available”.
On improving the availability of data, the Bank says: “The financial crisis exposed the lack of data on CRE lending and led to calls for the establishment of a loan-level database for CRE loans to address the issue.”
The Bank references Vision’s recommendation for a database to ensure lenders and regulators have access to timely information in order to understand the risks that are being taken and to stress-test CRE portfolios appropriately.
The Bank goes on to highlight potential benefits of a database including an improved understanding of market risk and allowing lenders to price risk better. It also identifies possible risks (see box).
The paper is the first signal that the Bank is considering the recommendations included in the recent cross-industry Vision report including its call for a database. It was published as the Bank’s executive director for financial stability Andy Haldane swapped jobs with the Bank’s chief economist, Spencer Dale.
bridget.o’connell@estatesgazette.com
