Lord Lamont, chancellor during the last recession in the
1990s, has warned ministers to be wary of the sudden growth in the buy-to-let
property market which he fears could collapse, causing wider economic
catastrophe. The rapid boom in the
market should not be a cause of unqualified celebration he warns because of the
impact that an inevitable rise in interest rates will have on lenders and
buyers. Lending to landlords hit £5bn in
the past three months, even before the Bank of England's pledge to keep
interest rates low. More than one in 10 mortgages are being handed to
prospective landlords who are taking advantage of a low interest rate and the
pledge by the Bank's new governor that it will not rise until employment
reaches 7%, a threshold that is not expected to be reached until 2016. Read more on the Observer website.
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