mortgage
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Latest property news
‘Deal rush’ reported as buyers try to complete before loans expire
OTM says 'time to sell' is shortening as buyers scramble to buy homes via mortgage rates agreed prior to Kwarten'g disastrous budget.
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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 news
Interest rates to remain unchanged
The Bank of England Governor Mark Carney has indicated that interest rates are going to stay lower for longer than expected, with a rate rise now forecast for 2017 at the earliest. With the recent stock market turmoil and the oil price rout showing no sign of abating, Carney has said that “now is not yet the time” to raise rates from their historic low of 0.5 per cent, adding that any such move would “depend on economic prospects, not the calendar.” Some economists have even mooted the idea of a possible rate cut should economic conditions worsen markedly, particularly after Japan recently reduced its borrowing rate. Philip Shaw, Economist at Investec, said, “It would also be interesting to know what weight, if any, the MPC places on a prospect on a reduction in the Bank rate.” Meanwhile, the former City regulator Adair Turner has warned that without radical policies, the UK economy could be stuck with low interest rates “almost indefinitely.” He forecast that “interest rates in the UK may not go up beyond two per cent by 2020.”
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