View more on these topics

PRA boss warns housing crash would hit retirement savings


PRA chief executive and incoming FCA boss Andrew Bailey has warned savers investing in property to fund their retirement could be at risk if house prices slump.

Yesterday, the PRA proposed new minimum underwriting standards for the buy-to-let sector, arguing that the market is defined by short-term interest-only mortgages that leave consumers vulnerable to hikes in base rate.

And speaking to the Telegraph, Bailey says while the growth in buy-to-let lending is likely to continue in the face of low interest rates and low annuity rates, a crash in house prices would pose risks for pensioners and savers.

He says: “Looking across the whole landscape I do think this whole question about long-term savings and retirement provision and the role of the housing market is important.

“I’m not surprised at the growth of buy-to-let lending and the rental market. It’s obviously an issue of how long-term saving behaviour translates into asset holding and asset values. The point we are emphasising today is that nobody benefits if one of the outcomes is unsustainable lending practises.”

Bailey adds: “People might form expectations about what the necessary long-term saving to support their retirement will be, which can then [if house prices fall] be transformed quite suddenly in ways that frankly are unwelcome.”



‘Tough B2L underwriting rules needed to keep lenders in check’

Buy-to-let experts agree with the Prudential Regulation Authority that a minimum set of underwriting standards are needed to keep lenders in check. The proposals are laid out in a consultation paper on buy-to-let, published this morning. The paper includes suggestions for a minimum level of stress testing and new definitions and rules for portfolio landlords, […]


PRA proposes minimum B2L underwriting standards

The PRA wants to strengthen buy-to-let underwriting standards by insisting on a minimum level of stress testing to ensure loans remain affordable when rates rise. A consultation paper on the future of buy-to-let underwriting says that the market is defined by short-term interest-only mortgages that leave consumers vulnerable to hikes in base rate. The paper […]


Editor’s note: Little-known boost for B2L but still no housing plan

Those expecting a rabbit out of a hat-type announcement in last week’s Budget would have been bitterly disappointed. All in all, the whole affair was pretty beige – despite some well-timed one-liners – and rhetoric over substance was the order of the day. There were, however, some interesting announcements, the Lifetime Isa being one of […]


CML urges caution against further B2L intervention

The Council of Mortgage Lenders is calling for more considered buy-to-let regulation after several examples of Government meddling in the market. A CML response to a Treasury consultation on giving the Financial Policy Committee more power over buy-to-let urges caution over making changes until it is clear what effect the cut to tax relief and […]


White paper — Dubai International Insights

Jelf Employee Benefits discusses the legislative changes in Dubai, available medical facilities and policy considerations for employers with expatriate workforces in the country. This edition will be of particular interest to global human resource directors, compensation and benefits specialists and mobility managers who have employee populations in Dubai, or are considering operating there in the near future.


News and expert analysis straight to your inbox

Sign up
  • Post a comment
  • Chris Hulme 30th March 2016 at 12:19 pm

    Somewhat funny isn’t it that the PRA and FCA warn of the issues of a house price crash yet both seem to be doing everything in their power to make it a self fulfilling prophecy….