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Bank alert over steep rise in buy-to-let properties

By John-Paul Ford Rojas

The Bank of England is looking at ways to curb risks to financial stability that might be posed by the burgeoning buy-to-let market.

Minutes of the Bank's Financial Policy Committee (FPC) meeting last month showed officials' concerns about the sector that accounted for 15% of outstanding mortgages and 20% of new home loan lending in the first quarter of this year.

They noted that the number of buy-to-let products where loans were worth more than 80% of the value of properties had risen by half in 18 months.

The FPC set out new policies on home loans a year ago to insure against the risk of a steep rise in indebted households and has been given powers to limit residential mortgage lending at high loan-to-value or high debt-to-income ratios.

But these applied only to owner-occupier loans.

The FPC's latest minutes said that given this fact "it was possible for risks to financial stability to be transferred to the buy-to-let segment".

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