Mortgages (Hansard, 15 July 2003)

§ Mr. Syms
To ask the Chancellor of the Exchequer what assessment he has made of the effectiveness of monetary policy in economies with housing markets characterised by high levels of fixed rate mortgages. [125047]

§ Mr. Boateng
The Chancellor has asked David Miles, Professor of Finance at Imperial College, to undertake a review of the UK's fixed rate mortgage market.
This will involve an examination of whether there has been any market failure that has held back the market for fixed and long-term fixed rate mortgages and a consideration of associated opportunities, risks and potential costs.
Professor Miles will deliver an interim report by autumn and a comprehensive report and recommendations to the Chancellor by Budget 2004.
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§ Mr. Syms
To ask the Chancellor of the Exchequer what discussions he has had with members of the Bank of England Monetary Policy Committee concerning(a) the effectiveness of monetary policy if the ratio of fixed to variable rate mortgages were to rise and (b) the likely level of interest rates corresponding to an annual inflation target of 2 per cent. on the Harmonised Index of Consumer Prices. [125048]

§ Mr. Boateng
The Chancellor regularly meets with the Governor of the Bank of England to discuss a wide range of issues. The Treasury representative to the MFC and other Treasury officials also regularly discuss economic issues with counterparts in the Bank of England.
The Chancellor has asked David Miles, Professor of Finance at Imperial College, to undertake a review of the UK's fixed rate mortgage market. This will involve an examination of whether there has been any market failure that has held back the market for fixed and long-term fixed rate mortgages and a consideration of associated opportunities, risks and potential costs. Professor Miles will deliver an interim report by autumn and a comprehensive report and recommendations to the Chancellor by Budget 2004.
The inflation target is 2.5 per cent. for RPIX inflation. In his statement on EMU on 9 June, which he reaffirmed on Thursday, 10 July, the Chancellor said that, subject to confirmation at the time of the pre-Budget Report, he intended to change the inflation target to one set on the consumer prices definition at that time.