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Saturday, April 02, 2016

Bank to restrict buy-to-let lending

Landlords still looking to buy or remortgage their buy-to-lets may be advised to get on with it.

The Bank of England has already expressed it's concern that an over heating Buy-To-Let (BTL) lending market represents a threat to the economic stability of the UK and are examining ways of tightening lending criteria for the banks to ensure that BTL lending does not race out of control.

PRA to restrict lending

The Prudential Regulation Authority (PRA) states that mortgage firms expect to grow their lending books to landlords considerably over the next few years. The PRA have called for action to "ensure underwriting standards did not slip".  They claim that without further constraints lenders expect a gross increase of 20% in BTL borrowing over the next 2 to 3 years.

Lending restrictions for landlords

The PRA are looking for banks from later this year to take into account how much cash landlords have to cover their interest payments in a worse case scenario that interest rate rise to 5.5% for a full 5 years.  They think that such action will reduce lending to landlord by 10 -20% by 2019.  If approved by the Bank of England in June these measures will impact on landlords looking for loans from the Summer onwards.  Simplistically, the motto of this story is if you want a loan...grab it while you can.

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