Professor Philip Lane:

The latter. This is very important. We insist on people paying downpayments because downpayments provide protection in case house prices fall. If it is just a question of a slowdown in house prices we would be much more relaxed about looking for deposits or loan-to-value ratios, where we look for them. This is to guard against house prices falling. I say consistently that we should recognise this as a genuine risk and this is why it is important that we insist that our mortgage rules provide protection against actual downturns.