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|Fleet Mortgages comments on today's PRA final buy-to-let underwriting standards|
|Friday, 30 September 2016|
Bob Young, Chief Executive Officer of Fleet Mortgages, said: “While CP11/16 did cause some consternation in the industry, we at Fleet Mortgages are wholly supportive of these measures; indeed, to my mind, it is a positive to see all lenders having to raise standards and to be operating at levels which we believe we’ve been working at since launch. Anyone who has read CP11/16 will have understood this was less a consultation paper, more a statement of intent, and therefore we should not be surprised to see these results. This appears to be one of those rare occasions when we are acting now, rather than waiting until it’s too late – a case of the stable door being shut before the horse has bolted.
“Lenders have already been moving in a number of areas since its initial publication and we can expect those who do not meet these standards to have to move further, and relatively quickly, in the case of interest cover ratio and stress test changes which need to be implemented by the start of next year – the market norm is likely to be circa-5.5% at 145%. The PRA have allowed five-year fixes to remain outside these standards but I suspect if there’s a spike in five-year activity, they’ll move to include it.
“Fleet Mortgages will continue to do what we do; I’ve heard us described as a ‘hybrid’ model which I believe means a combination of individual underwriting on each loan, coupled with the benefits of an automated approach. This appears to be exactly what the PRA and FCA are looking for from buy-to-let lenders – upfront underwriting of cases by experienced professionals which leave brokers and their clients with absolute certainty on the acceptance (or otherwise) of their case within a very short space of time. We are about to launch a revamped product range very shortly which will be very much in keeping with both market and regulatory demands, and will help satisfy growing demand, particularly in the limited company space.”
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