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| CURRENT SECTION :: Money News | |
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The availability of buy-to-let mortgages has shrunk dramatically following the emergency bail out of the leading specialist in the market, Bradford & Bingley. The group’s decision to withdraw all of its buy-to-let products through its Mortgage Express arm has inspired its smaller rivals to re-price or recall their offerings. Although established landlords with cash deposits are still sought after, deals for landlords looking to refinance, and novices looking to enter the market, are drying up. According to moneysupermarket.com, there are now nearly a quarter fewer buy-to-let mortgage products on offer than there were a week ago, before B&B’s nationalisation. Criteria to secure them have tightened since the lender’s troubles, with investors facing lower maximum loans-to-values and higher rental income demands as a result. Unlike this time last year, a borrower now needs to ensure their rental income exceeds their mortgage payments by around a 125 per cent to be eligible for almost all deals. Since twelve months ago, the market for buy-to-let mortgages has contracted by 85 per cent, according to Moneyfacts, with recent withdrawals by The Mortgage Works and UCB. Meanwhile Halifax, Bank of Scotland Mortgages, Bristol & West Mortgages, Intelligent Finance and Newcastle BS have restricted their ranges of buy-to-let products. Observers warn that if more lenders decide to take the same stance and withdraw their range on a temporary basis, it is likely to cause a bottleneck for the remaining lenders. “As the pressure on these lenders increases, service is likely to suffer,” warned Moneyfacts analyst Michelle Slade. “As a result we may see further lenders being forced temporarily to withdraw their range. “Coupled with the liquidity problems in the markets, it may be that we see further increases with this phenomenon in other aspects of lending, such as loans and overdraft rates.” Tempering the gloom, the National Landlords Association has reportedly said mature investors with properties in prime locations will see their rents rise, pressured upwards by increasing demand. In contrast to market newcomers, these seasoned investors are being enticed by some lenders which have lowered their rates for customers able to put down high deposits. Oct 6, 2008 Email this article Printer friendly page Previous Page
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