More cautionary messages concerning the risk involved with lending in the buy to let sector have been made public from the Bank of England. Currently, the number of buy to let loans which are turning out bad outnumber owner occupier loans two to one. That spells bad news for anyone looking to invest in property for solid income. The Central Bank is now referring to landlords as a high risk group with surely new lending rules coming to govern the group.

The news is breaking the surface as the sector is booming currently with the increases in house prices which have taken place over the last several months. Buy to let borrowers continue to increase the amount of lending since it is easier for the group compared with home loans to owner occupiers. Bank standards are tighter for those attempting to gain access to the first rung on the property ladder.

The data confirms the strength of buy to let mortgage lending nationwide. An increase in the sector of more than 40% has occurred since the year 2008.

The minutes of the Financial Policy Committee laid out the specifics of what has occurred in the last five years, saying: “Since 2010, rates of credit loss on buy-to-let loans in the United Kingdom have been around twice those incurred on lending to owner-occupiers.

“Assessed against relevant affordability metrics, buy-to-let borrowers appeared more vulnerable to an unexpected rise in interest rates or a fall in income.”

As new lending rules are being installed into the system for the buy to let sector, another sector continues to flourish. Remortgage activity remains high and is expected to continue on the path until more clarity comes to the time of an increase in interest rates.