There has been another high-level prediction that mortgage lending for buy to let investors is likely to be restricted further in the near future.
Richard Sharp, an external member of the Bank of England’s financial policy committee, has told the Treasury select committee of MPs that lending for the sector would “cool significantly” later this year.
“I suspect the banks will want to see what regime we’re in, in terms of house prices before they go back to aggressive lending,” he is quoted as saying.
Recommendations from the Bank of England’s Prudential Regulation Authority have told individual lenders to increase ‘stress tests’ on borrowers who would have to prove they could cover interest payments in a worst case scenario of interest rates rising to 5.5 per cent for a full five years.
Although the Bank has not formally ratified such restrictions, many lenders are getting their retaliation in first by making similar changes voluntarily: Barclays, TSB and Nationwide have already implemented a proposal for rental income to provide 140 or 145 per cent mortgage cover.