BoE

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    Products & Services

    The lending lottery

    It’s been a volatile six months for mortgage rates. Richard Reed asked a team of experts to indicate where they think rates might be heading.

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  • Latest property news
    Latest property news

    Buy-to-let mortgage stress test shock

    As mortgage approvals continue to fall – down to 60,058 in August from 60,925 in July – buy-to-let lending is also likely to decrease with the latest news from the BoE’s Prudential Regulation Authority (PRA) which has confirmed that a series of investors’ affordability checks and interest rate “stress tests” will be introduced from January 2017. Buy-to-let lenders will be required to verify that landlords can afford to pay the mortgage under potential future interest rates of 5.5 per cent, as the PRA recommended that the interest coverage ratio, a commonly used measure of the ratio of rental income to mortgage payments, does not fall below 125 per cent. Affordability assessments will need to take into account borrower’s costs, personal income and possible future interest rate increases, with lending to portfolio landlords to be assessed using a specialist underwriting process. “The PRA’s actions are intended to bring all lenders up to prevailing market standards and guard against any slipping of underwriting standards during a period in which firms’ growth plans could be challenged by the changing economic landscape and the impact of forthcoming tax changes,” it said. Peter Williams, Executive Director of Intermediary Mortgage Lenders Association (IMLA) said, “IMLA welcomes…

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  • Latest property newsBank of England image
    Housing Market

    BoE: “Very volatile boom and bust conditions”

    The Bank of England has announced plans to introduce more stringent checks on buy-to-let lenders amid concerns that the property investment market is moving into bubble territory.

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  • Latest property newsBank of England image
    Latest property news

    BoE may curb credit growth

    The Bank of England may consider introducing measures to improve financial stability if household debt grows faster than the rest of the economy, says the bank policymaker in charge of financial stability. British household debt, measured as a share of income, has fallen substantially from its peak during the financial crisis and has now stabilised around levels last seen in 2004. Deputy Governor Jon Cunliffe said he did not want a return to the situation prefinancial crisis, when credit grew twice as fast as the economy as a whole. “If credit began to grow faster than GDP, I would want to think very seriously about taking action to manage that sooner rather than later,” said Cunliffe.

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  • Latest property news
    Regulation & Law

    Buy-to-let mortgages to be overseen by BoE

    Growth in the buy-to-let sector could soon come to a very abrupt end if the Chancellor George Osborne presses ahead with plans to regulate those mortgages available to landlords. The Chancellor announced late last week during a Treasury Committee hearing that he intended to give the Bank of England (BoE) additional powers to regulate the buy-to-let mortgage market. While the stock of owner-occupier mortgage lending has risen by just 2 per cent since 2008, buy-to-let mortgage lending has increased by more than 40 per cent over the same period. But growth could come to an end after the Bank, which already has the power to regulate the wider the residential mortgage market, was also given the authority to regulate the buy-to-let sector too, should it wish to do so. BoE warned last month that Britain’s buy-to-let market poses an increasing threat to financial stability because rising property prices expose vulnerabilities that could magnify a housing market crash. The Financial Policy Committee, led by Governor Mark Carney, said landlords were more sensitive to booms and busts, often buying property when prices increase but also selling homes swiftly during a downturn. Peter Williams (left), Executive Director of the Intermediary Mortgage Lenders Association…

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