A recent announcement by George Osborne revealed that banks will be given new powers that may make it much harder for investors to obtain buy-to-let mortgages.
In a bid to regulate mortgages for landlords, the chancellor has given the financial policy committee of the Bank of England the power to govern buy-to-let products. According to the Bank of England, the housing market is at risk of overheating due to the unregulated buy-to-let mortgages.
In 2014, regulations were introduced to control the housing market, but only applied to the residential property and didn’t include buy-to-let properties. Under the regulations, borrowers who were taking on a mortgage that was greater than 4.5 times their annual income had to be restricted to just 15 per cent of the total number of residential mortgages. Borrowers also faced affordability tests to make sure they can afford to repay the loan. However, until now, buy-to-let mortgages fell outside the regulations.
The chancellor, speaking to the Treasury select committee, said that the Bank of England had been “granted those powers” so the organisation can prevent a credit bubble from developing. Osborne told MPs that he had taken the view of the Bank of England governor, https://www.beaconfinancialtraining.co.uk/wp-content/uploads/2020/06/cemap-online-and-classroom-training-uk.jpg Carney, seriously and the required tools have been handed over so that the buy-to-let market will be regulated.
The changes have made obtaining a mortgage much more complex for some people, which is why demand for a CeMAP trained mortgage adviser has increased recently, as borrowers try to find a suitable mortgage product.