Bank of England to be given powers to rein in buy-to-let market
George Osborne is preparing to hand the Bank of England extra powers to rein in the rapidly growing buy-to-let market, in an attempt to prevent landlords exacerbating movements in house prices and threatening financial stability.
Responding to a request from Threadneedle Street, the chancellor signalled he was ready to let policymakers restrict the size of landlords’ mortgages relative to the value of a property and to rental payments. (AtW's comment: oi, how is that BoE independence thing going???)
The Bank has already intervened in the residential mortgage market, barring lenders from granting more than 15% of their mortgages to customers who need to borrow four-and-half times their income.
The latest move follows repeated warnings about buy to let from the Bank of England’s financial policy committee, which was set up after the banking crisis to monitor threats to financial stability. The sector has fuelled growth in the mortgage market since 2008 and is growing fast – in the first nine months of this year, buy-to-let lending rose by 10%, while lending to owner occupiers rose 0.4%.
In June there were 1.7m outstanding buy-to-let mortgages, worth £201bn. This is 16% of the residential mortgage market, up from 12% in 2008 and 4% in 2002.
As he launched a consultation on the Bank’s new powers, the chancellor said his aim was to ensure it had “the tools it needs to protect our economy”. The policymakers will have to carry out a cost benefit analysis the first time they use the new powers.
The Bank is already analysing the terms under which mortgages are granted because its analysis shows that buy-to-let landlords could be more vulnerable to rate rises than other borrowers.
Source: Bank of England to be given powers to rein in buy-to-let market | Money | The Guardian
First they came after BTLetters ...
George Osborne is preparing to hand the Bank of England extra powers to rein in the rapidly growing buy-to-let market, in an attempt to prevent landlords exacerbating movements in house prices and threatening financial stability.
Responding to a request from Threadneedle Street, the chancellor signalled he was ready to let policymakers restrict the size of landlords’ mortgages relative to the value of a property and to rental payments. (AtW's comment: oi, how is that BoE independence thing going???)
The Bank has already intervened in the residential mortgage market, barring lenders from granting more than 15% of their mortgages to customers who need to borrow four-and-half times their income.
The latest move follows repeated warnings about buy to let from the Bank of England’s financial policy committee, which was set up after the banking crisis to monitor threats to financial stability. The sector has fuelled growth in the mortgage market since 2008 and is growing fast – in the first nine months of this year, buy-to-let lending rose by 10%, while lending to owner occupiers rose 0.4%.
In June there were 1.7m outstanding buy-to-let mortgages, worth £201bn. This is 16% of the residential mortgage market, up from 12% in 2008 and 4% in 2002.
As he launched a consultation on the Bank’s new powers, the chancellor said his aim was to ensure it had “the tools it needs to protect our economy”. The policymakers will have to carry out a cost benefit analysis the first time they use the new powers.
The Bank is already analysing the terms under which mortgages are granted because its analysis shows that buy-to-let landlords could be more vulnerable to rate rises than other borrowers.
Source: Bank of England to be given powers to rein in buy-to-let market | Money | The Guardian
First they came after BTLetters ...
Comment