British families would struggle if interest rates rose to 2pc or more, as soaring mortgage debts have accumulated during years of rock-bottom borrowing costs, the Bank of England has warned. The vast majority of households can comfortably afford their loans at the current base rate of 0.5pc, the Bank's Financial Policy Committee said, with indications of financial strain substantially below those seen just before the financial crisis. Mark Carney and his colleagues increased the base rate from 0.25pc to 0.5pc in November and are expected to move to 0.75pc in May. But the FPC, which is chaired by Mr Carney, indicates that just a few more such moves could put significant numbers of households under strain.
The FCA has reintroduced the defined term of a ‘retirement interest-only mortgage’ which will now be treated as a standard mortgage instead of being regulated under equity release standards. In September last year, an FCA consultation paper set out plans to reintroduce retirement interest-only mortgages, which were redefined as lifetime mortgages after the implementation of MCD.
Buy to let investors are unaware of how changes to regulations will impact their ability to borrow or refinance their rental property portfolio. The new regulations, which were introduced in September 2017, make it tougher for landlords with four or more mortgaged properties to borrow money. They are designed to reduce irresponsible lending and make buy-to-let mortgage and lending requirements tighter, including the introduction of an interest rate dependent stress test on new mortgage applications.