PRA tightens standards for buy-to-let market
“Interest coverage ratio” and affordability stress tests to be implemented by January 2017
The Prudential Regulation Authority (PRA) published underwriting standards for the buy-to-let market today (September 29), outlining its expectation of how firms should prepare mortgage contracts.
Under the new standards, affordability assessments must take into account not only of the borrower's costs, including tax liabilities, but also verified personal income and a "stress test" of a borrower's ability to cope with interest rate increases.
"When setting the expectations for future interest
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