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Saturday, July 19, 2014

Lenders rule out mortgage income cap

I've spoken before about RBS move to cap lending on their buy-to-let mortgages to a maximum income multiple of 4.99 being a political rather than a business decision.

I also proffered the view that I thought it unlikely that other lenders would follow RBS' lead.

Reports in the FTAdviser indicate that this is the case.

The worry remains however, that the Bank of England could act to limit lending if they perceive that the housing market runs out of control.  In the past monetary policy through the use of interest rates would be the go to mechanism.  The current Governor Mark Carney seems reluctant to raise interest rates for fear of choking of economic recovery in the rest of the economy.

Landlord should keep a careful eye on the mortgage market for signs that policy makers may be prepared to act.

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