Surely I am not the only landlord worried about new EPC requirements?9:44 AM, 17th February 2021
About 2 weeks ago 126
The Financial Policy Committee (FPC) has just published its latest Financial Stability Report. In a speech given by Mark Carney, the Governor of the Bank of England, it was confirmed there is evidence that the forecast risks to the economy were beginning to crystallise and the current outlook for UK financial stability is challenging.
To ensure there is no lack of supply of credit in the economy that could hamper growth, the Bank of England has made available £150Billion in loans to households and businesses by easing up capital requirements for banks (only for the domestic market). This proves the strength of the reserves the banks have built up considering the total Net lending figure for the UK last year was only £60Billion.
However, the markets have handled the volatility well, and instead of adding to the problem, the strength of the banking system has helped cushion the economy from uncertainty.
It was made clear that households would be vulnerable to an economic downturn and at risk from income or interest rate shocks. It was confirmed that the average household debt to income ratio had increased recently to 132%, but the Bank of England could not confirm in numbers how many households it thinks could be at risk.
The Bank is watching closely, but not concerned that the Buy to Let market presents a particular risk to the economy. This is because of previous policies by the PRA to help restrict Loan to Value ratios and to ensure that there is no slippage in Buy to Let underwriting standards.
The Banking system has also recently been stress tested against a drop in domestic house prices of 35% and commercial prices of 30%. The Banking system passed this stress testing and the very worst predictions for the housing and property markets post Brexit are only half this figure.
The FPC said it is taking proactive action now to decrease any fragility in the financial markets and was ready to move further if necessary. The report said that maintaining foreign investment, necessary to support the UK’s historically high current account deficit, could become harder following the decision to leave the European Union because of a prolonged period of uncertainty.
Mark Carney confirmed the bank of England is doing everything it can to stabalise the economy, but there are limits to what it can achieve to avoid a recession and it needs Government to make the necessary economic policy decisions to secure future growth.
Mark Carney’s full opening statement remarks can be read by Clicking Here
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