Bank of England increase base rate
Brian Murphy, Head of Lending at Mortgage Advice Bureau (MAB), comments:
“As the decision to raise the Bank of England base rate today demonstrates, it would seem that current economic indicators have provided members of the Monetary Policy Committee sufficient evidence to reduce monetary easing to the UK economy.
The increase in the bank base rate seen this afternoon will have little impact on many new borrowers who’ve probably opted for a fixed rate product, which has been the case for the majority of those taking out new mortgages for quite some time. However existing borrowers whose mortgages are directly linked to the bank base rate will see a minor increase in monthly repayments.
Read more: Bank of England increase base rate
New rules on borrowing for portfolio buy-to-let investors
From the 30th September this year, landlords with four or more buy-to-let properties will have to satisfy different criteria to secure mortgage borrowing, as they will be considered ‘portfolio investors’ under new rules being introduced by the Prudential Regulation Authority.
In order to comply with the new portfolio landlord underwriting standards, lenders will now be looking at the total income versus borrowing across all a landlord’s properties, to ensure that any new borrowing doesn’t adversely affect affordability for other properties within the portfolio.
This means more work for lenders, who will have to investigate each mortgaged property held by the landlord in more detail, then apply an Interest Coverage Ratio (ICR) across the portfolio. This ICR will vary, depending on the individual lender and the number of properties owned with a mortgage
In addition, in some cases, the lender will also take into account the landlord’s individual earned income/salary.
Read more: New rules on borrowing for portfolio buy-to-let investors