Bank of England given wider powers over buy-to-let mortgages

The Treasury is to grant new powers to the Bank of England’s financial policy committee (FPC) designed to help it protect the financial system from future risks in the buy-to-let mortgage (BTL) market if interest rates rise

From early 2017, the FPC will be able to direct the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) to require regulated lenders to place limits on BTL mortgage lending in relation to both loan-to-value (LTV) ratios and interest coverage ratios (ICRs).

The Treasury announcement follows the FPC asking for extra powers over the residential mortgage market and the buy-to-let mortgage market in September 2014.

The government granted the FPC powers over the residential mortgage lending market in April 2015. There was then a consultation on the FPC’s recommended powers relating to the VTL market from December 2015 to March 2016.

Philip Hammond, Chancellor of the Exchequer, said: ‘It is crucial that Britain’s independent regulators have the tools they need to keep our financial system as safe as possible.

‘Expanding the number of tools at the FPC’s disposal will ensure that the BTL sector can continue to make an important contribution to our economy, while allowing the regulator to address any potential risks to financial stability.’

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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