Bank of England concerned on BTL
The latest Financial Stability Report from the Bank said the fact that landlords were able to access mortgage finance more easily than homeowners could fuel house price rises and a widespread rise in household debt.
The Bank warned that should interest rates rise and economic growth slow, landlords could be forced to sell, flooding the market with property and exaggerating property price drops.
The report said: “Buy-to-let borrowers are potentially more vulnerable to rising interest rates because loans are more likely to be interest-only and extended on floating-rate terms, and affordability tends to be tested at lower stressed interest rates than owner-occupied lending.”
HM Treasury is due to consult on tools the Financial Policy Committee could use to keep buy-to-let lending in check later in 2015 with” a view to building an in-depth evidence base on how the operation of the UK buy-to-let housing market may carry risks to financial stability”.
The Financial Policy Committee said it will continue to monitor this sector closely.