Sir John Gieve has recently stepped down from his three year role as deputy governor of the Bank of England, and was recently speaking at a farewell speech, where he commented on a number of issues, including the financial crisis and how it had been handled by the government and the tripartite system put into place by Gordon Brown in 1997.

Another issue that Sir John spoke about was mortgage lending, and he suggested that authorities and lenders needed to consider putting a cap on mortgage lending.

Sir John said that there should be more direct control with regards to how much banks can lend to customers based on their income and also based on the amount that they want to borrow compared to the value of the property that they are looking to purchase. He has already showed that he is in support of a similar financial regulation system as the one that is set up in Spain.

He also said that the government should have taken greater control over interest rate cuts in the decade leading up to the financial crisis, adding: “the large and co-ordinated cut in interest rates at the start of this decade almost certainly contributed to the build-up of an ever larger bubble.”

Speaking about his thoughts on capping mortgage lending, Sir John said: “In theory, a ceiling on these ratios could have provided an effective brake on the excesses of the last boom. If problems are concentrated within the property market then caps on loan-to-income and loan-to-value ratios might be effective.”

Sir John spoke about a number of issues during his farewell speech, and also said that there was a high risk that the UK was heading towards a Japan style period of deflation.

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