Regulators are expected to consult on the buy-to-let mortgage market this week, as they pave the way for the next salvo on the booming sector.
George Osborne has committed to launching a consultation before the end of the year on handing the Bank of England new powers to apply rigorous rules to the buy-to-let market. It has already been granted substantial control over owner-occupied lending.
Lenders must now ensure less than 15 per cent of their residential mortgages are to people borrowing more than 4.5 times their income. The Bank can also enforce caps on loan-to-value ratios.
The Bank flagged up the risks from the buy-to-let market in its financial stability report earlier this month. The Bank said it “remains alert to financial stability risks arising from rapid growth in buy-to-let mortgage lending and notes the difference in underwriting standards in the owner-occupier and buy-to-let mortgage markets.”
The Basel committee of banking regulators from the world’s biggest financial centres proposed on Friday that banks hold more capital against the buy-to-let loans.