Members raised concerns over the ‘increasing share of interest-only mortgages in buy-to-let mortgage lending’ and agreed to monitor developments in this trend.
In February, the committee was granted powers to control loan-to-value (LTV) and debt-to-income (DTI) ratios for owner-occupied and buy-to-let residential mortgages.
Previously, the committee was only able to give its recommendations on policy.
The FPC’s powers of direction over mortgage lending for owner-occupied properties were passed by Parliament and came into force on 6 April. The committee’s recommendation for powers over buy-to-let lending will be consulted on by the Treasury later this year, to define the shape of those powers.
The FPC’s insistence over being granted powers of direction rather than powers of recommendation came under fire from the Council of Mortgage Lenders in November. The CML said a robust system of consultation must be implemented alongside the FPC’s powers so that it could communicate and gather the opinions of those who would be affected.
CML director-general Paul Smee also thought that the the owner-occupier regulations which were already in place where sufficient to safeguard consumers.
The CML is doing battle with more than one legislative force on behalf of the buy-to-let market. Earlier today it launched a statement of practice which has been adopted by 31 lenders in the sector representing 90% of the buy-to-let market. The aim of the statement is to demonstrate the industry’s commitment to responsible lending to stave off tighter regulatory control from Europe.
