Having explained previously the impact that excess debt could have on the economy, it’s no wonder the Bank of England feels it needs to keep a watchful eye over the buy-to-let market.
Over the past few months, it has seen continual increases in the volume of borrowing being approved to landlords on an interest-only repayment basis.
In excerpts from a meeting at the end of March, the Financial Policy Committee (FPC):
“[…] noted the increasing share of interest-only mortgages in buy-to-let mortgage lending and agreed to continue to monitor developments closely.”
It does appear that whilst the concerns have been noted, at the moment, buy-to let lending is consuming a bigger share of properties being purchased – with a 6% increase from December to January and a rise of over 10% when compared with the same timeframe in 2014.
Towards the end of last year, the FPC had requested the power to direct the banks on a more formal basis and apply lending ratios. The request to the Treasury also included the power to formally limit the buy-to-let ratio. The Treasury is currently gathering evidence on the risk posed to the economy by this particular side of the market.
As a mortgage professional working within the industry, part of your day-to-day role will be to ensure that you fully comply with the regulation set by the Financial Conduct Authority (FCA). The products and types of borrowing that you are able to advise on will depend on your employer.