Bank of England governor Mark Carney has again spoken out about possible “threats” to the economy posed by the increase in buy to let lending.
Answering questions from MPs sitting on the Treasury Select Committee, Carney said the sector required "heightened scrutiny" as a result of the sharp increase in BTL lending in recent years, and as a result of speculation that the Chancellor’s April 1 stamp duty surcharge deadline was producing a surge in purchasing before the end of March.
Conservative MP Chris Philip asked Carney to comment on the fact that buy to let mortgage holders are twice as likely to default as owner-occupier mortgage holders.
Carney reminded the committee that the Bank of England's Prudential Regulation Authority is undertaking a review of the under-writing of buy to let mortgages, and has already issued warnings that such underwriting should not be relaxed.
On the proposed fiscal changes to reduce landlords’ mortgage tax relief to 20 per cent, irrespective of the rate of tax they pay as individuals, Carney promised MPs that he and the Bank of England would keep a close watching brief.
The committee was also addressed by Martin Taylor, a member of the Bank of England’s Financial Policy Committee, who repeated the sentiment that there was “mild concern” over buy to let. "We are looking at it carefully" he said.
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