Analysis by the Financial Services Authority suggests there will be a small fall of 0.2% in GDP as the reduction in mortgage lending leads to lower consumer expenditure, which will hit seven years after implementation.
However it added: “We estimate the long-term impact on GDP growth to be an annualised GDP increase of around £1/3bn.
“This is because part of banks’ response to reductions in domestic mortgage lending is increased corporate lending that increases business investment.”
