The Bank of England are taking a sniff at the BTL mortgage market as they begin to consider placing similar lending restrictions to those placed on the homeowner market.
The Bank are wanting to insure against a property crash, so are evaluating what might be done to restrict risk.
Though BTL is still perceived as less vulnerable to a rate rise, if an individual landlord was to fall foul of the inevitable interest rate hikes, or collapse in values, their property portfolio would place an amplified burden on the market.
With the Financial Policy Committee (FPC) telling banks that homeowners need to cope with repayments if interest rates rise by three percentage points, this same equation might well be applied to BTL lending.
The FPC has reported , “The FPC considered the need to monitor mortgage lending activity beyond the scope of the recommendation to ensure that financial stability risks did not shift to other lending institutions or forms of lending,”
“This included close monitoring of the buy-to-let market, which would not be directly affected by this recommendation but where there was scope for financial stability risks to arise from increases in borrower indebtedness.”
“This included close monitoring of the buy-to-let market, which would not be directly affected by this recommendation but where there was scope for financial stability risks to arise from increases in borrower indebtedness.”
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