The Prudential Regulation Authority has agreed to suspend guidance levels on fixed rate lending for building societies on a temporary basis.
The idea originally proposed by the Building Societies Association. The PRA’s response, a letter penned by director Mel Beaman, sets the dates for this withdrawal of the guidance from 1 August this year to 31 January 2021.
Beaman says that doing so will enable lenders to, “react more quickly in the current environment.”
“The only proviso we set is to limit any self-administered extension to 10 per cent above the lower of the sourcebook benchmark or the society’s current limit, and still expect boards to undertake the appropriate risk assessment before undertaking any such change,” she says.
The letter also asks building societies to keep the PRA informed of any changes that are made as a result of this relaxed guidance and to supply the relevant board minutes.