The Financial Policy Committee (FPC) has published its latest Financial Stability Report. The report sets out the FPC’s assessment of the outlook for financial stability in the UK. To do this, the FPC identifies the risks faced by the UK financial system and weighs them against the resilience of the system.
In the report, the PRA reveals it intends to review the underwriting standards of buy-to-let lenders. The Bank of England governor Mark Carney said the review of underwriting standards was to ensure there was not a shift from ‘responsible to reckless.’
The report notes that competition has increased among the sector. While the report stresses this greater competition is not leading to widespread deterioration in underwriting of UK banks – it says some smaller lenders have loosened their criteria, namely their maximum LTV thresholds.