Buy-To-Let Mortgages Riskier Than Before Crisis

Buy-to-let mortgages in Britain, especially those issued recently, are more risky than loan deals signed before the 2008 financial crisis, according to a Moody’s report. The ratings agency said one factor was that a new cohort of lenders, in their quest for market share, tend to issue loans with higher average loan-to-value ratios, laxer credit history constraints and longer maximum maturities than established lenders, degrading the quality of recent buy-to-let loans. Pre-crisis loans have also benefited from rising house prices in a way newer ones will not, it continued. Loan-to-value ratios have fallen more on legacy loans thanks to this than they have on newer ones. Read more on the Reuters website.

https://uk.reuters.com/article/uk-britain-mortgages-moody-s/uk-buy-to-let-mortgages-riskier-than-before-crisis-moodys-idUKKBN1HI294

Bank Of England Set For New Buy-To-Let Powers

The Bank of England seems set to be given greater powers over the buy-to-let market, after the Chancellor expressed concern about the housing "bubble". A consultation was launched late last year after the Financial Policy Committee, which is part of the Bank of England, recommended it should be granted the power to direct regulators to require lenders to restrict buy-to-let loans. The powers included allowing the FPC to cap the maximum loan-to-value ratio (the size of the loan relative to the value of the property), as well as the costs of debt servicing relative to rents. The FPC, whose role is to identify and head-off possible risks to the financial system, has had similar powers over residential mortgages since April last year. Read more on the Sky News website.