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Surge in home equity won’t trigger credit easing

The home equity share has surged to a 31-year high, which in the past may have persuaded mortgage lenders to ease credit conditions. But Ability to Repay regulations brought in after the financial crisis have broken the link between home equity and lending standards, and banks are not planning to ease standards in the third quarter. That supports our call for a significant slowdown in house price growth over the second half of the year.

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