CML comments on PRA's underwriting standards for buy-to-let mortgages
Published: 29 September 2016
The CML is pleased that the PRA has confirmed that buy-to-let mortgages with terms less than five years, or rates fixed for five years or more, are not subject to the affordability stress test. The CML also welcomes the PRA's decision to adopt the CML proposal that firms be given three months to implement the IRC and interest rate affordability stress test but have a year to meet all other regulatory requirements.
CML director general Paul Smee commented:
The new underwriting requirements broadly reflect existing practice, as the PRA says. While the regulator will need to keep the impact of the new requirements under review, we expect the effect to be modest under current market conditions, and we do not anticipate the measures resulting in any shock to the market.
Notes to editors
1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 97% of all residential mortgage lending in the UK. There are 11.1 million mortgages in the UK, with loans worth over £1.3 trillion.