View more on these topics

FPC ‘increasingly likely’ to get BTL powers

The Financial Policy Committee is “increasingly likely” to receive additional powers over the buy-to-let market after official figures show the sector is continuing to grow, according to Capital Economics.

Figures published last week by the Bank of England and FCA show buy-to-let lending grew by 18.5 per cent year-on-year from £7bn in the second quarter of 2014 to £8.3bn in Q2 2015.

As a result of its rapid growth, the buy-to-let sector has come under policymakers’ spotlight.

In July, the BoE warned that the buy-to-let market could put the financial stability of the UK at risk due to the relative ease with which borrowers could access credit.

The Treasury will consult later this year on whether to give the FPC the power to contain buy-to-let lending. The committee already has the power to cap LTIs and LTVs in the residential sector.

Capital Economics chief property economist Ed Stansfield says, since the MMR, lenders have shifted their activity from regulated owner-occupied lending to unregulated buy-to-let.

He adds that while buy-to-let’s share of total lending has fallen recently, this was largely “driven by strengthening regulated mortgage lending, not lenders pulling back from buy-to-let loans”.

He adds: “The FPC expressed concerns in July about the buy-to-let sector and its possible effects on financial stability. 

“With the size of the sector growing further, it looks increas-ingly likely that the FPC will receive additional powers over the sector when the Treasury consults on the issue later this year.”

Buy-to-let lending peaked at £45.7bn in 2007, although lending fell to just £8.6bn two years later. Since then, buy-to-let has made a strong recovery, growing by 218 per cent to £27.4bn in the five years to 2014. 

The sector is expected to reach £30bn this year.

Recommended

Rob-Clifford-MM-Grey-250x255.jpg

Analysis: Speculation leads to accumulation

The latest figures from the Council of Mortgage Lenders prove the strength of the summer recovery. Gross lending of £22bn in July – up 14 per cent year-on-year – shows a continued and growing demand for mortgage finance particularly as we move closer to the anticipated base rate rise. Part of this increase is due […]

Berry-Jason-700.jpg

Analysis: Beat comparison sites at their own game

On noting the return of the famously irritating opera singer featured in the advertising campaign of a well-known comparison website, I wondered why such sites go to the trouble of advertising when often they seem to get a helping hand from the consumer press.  Indeed, in recent weeks both Which? and a prominent current affairs […]

Jamie

Mortgage Mole: From Jamie With Love

From Jamie With Love Who will be the next James Bond? The mortgage industry may not be the first port of call when searching for a candidate but one person is clearly preparing for a phonecall from the producer. A Twitter picture from last week (right) shows Precise Mortgages national sales manager Jamie Pritchard doing […]

Newsletter

News and expert analysis straight to your inbox

Sign up