The Bank of England announced on Monday that it intends to remove a requirement that mortgage borrowers be able to afford a three-point increase in interest rates, which could benefit home buyers.

The Bank of England's Financial Policy Committee (FPC) stated that its Financial Policy Committee (FPC) believed that a requirement for most mortgages to be limited to 4.5 times a borrower's income, combined with separate affordability rules from the UK's Financial Conduct Authority, would be sufficient.

"The FPC, therefore, intends to maintain the LTI (loan-to-income) flow limit Recommendation, but consult, in the first half of 2022, on withdrawing its affordability test," the BoE said alongside the publication of its half-yearly Financial Stability Report.

Bank of England clamps down on Brexit-driven EU relocations | Financial  Times

The Bank of England also stated that it would raise the counter-cyclical capital buffer (CCyB) that banks must maintain to 1% of risk-weighted assets from zero currently, with effect from the end of next year, and possibly to 2% in the future.

The Bank of England has kept the CCyB, a buffer built up in good times for release during downturns, at zero to assist banks in continuing lending to households and businesses during last year's historic recession caused by the COVID-19 pandemic.

The British central bank recognized the risks to the economy's recovery posed by the Omicron variant of the coronavirus pandemic. "There are near-term pressures on supply and inflation, and there could be a greater impact from COVID on activity, especially given uncertainties about whether new variants of the virus reduce vaccine efficacy," the BoE said.

On Thursday, the Bank of England's separate Monetary Policy Committee is expected to announce its most recent interest rate decision. Because of the uncertainty posed by Omicron, investors have reduced their bets on a rate hike this month.