Brokers have welcomed the absence of fresh controls on residential borrowing in latest Bank of England Financial Stability Report.
That is in contrast to last year, when the Bank introduced prudent interest rate stress tests.
Charles Haresnape, chairman of the Intermediary Mortgage Lenders Association (IMLA), said: “We are clearly operating in a new era of mortgage market regulation, where action will be taken long before an ‘imminent threat to stability’ emerges.
“The Financial Policy Committee’s (FPC’s) approach is geared towards avoiding another crisis, but it is vital that financial markets are not supressed too heavily by regulators’ bias towards action.”
Haresnape said that lenders were quick to respond to last year’s recommendations and many were already applying prudent interest rate stress tests. “The market now needs a period of calm to prepare for the upcoming Mortgage Credit Directive (MCD) before any further action is taken.”
But he was concerned by the prospect of consultation on buy-to-let lending controls.
“Lending growth has been in line with the expanding private rental sector, and lenders have taken a responsible approach by tightening their criteria rather than relaxing standards.”
Haresnape said that landlords’ behaviour during the recession also suggests a collective sell-up of property during a downswing is unlikely, with many preferring to retain an asset that generates attractive returns in the long-term.
“The need for buy-to-let controls is far from proven, and we welcome a full and open consultation to guard against overzealous regulation and the risk of unintended consequences.”