NEWS: Bank of England confirms stricter rules for buy to let lending
The Bank of England has confirmed new guidelines tightening up how mortgage companies lend to individuals wanting to purchase a buy to let property.
The new rules – heavily leaked in the press for many months, and which many finance companies already operate – mean lenders will ask for more evidence of borrowers’ personal taxation, their routine financial commitments and other existing investments.
In addition there will be a ‘stress test’ of how borrowers will be able to cope if mortgage interest rates rise to a notional 5.5 per cent – far above the current historically-low levels.
A substantial majority of mortgage lenders already abide by these guidelines anyway, but the Bank of England believes buy to let lending will reduce by about a fifth over the next three years as a result of the stricter approach.