HSBC targets buy-to-let borrowers

19 May 2004
HSBC has unveiled two new fixed rate buy-to-let mortgages over three and five years and a new buy-to-let equity release loan to let owners unlock equity in their buy-to-let property.

The bank's new deals are aimed at landlords who let their properties on a shorthold tenancy basis, where monthly rents are set over an agreed period. The new mortgages allow buy-to-let borrowers fix their monthly repayments should interest rates rise any further.

HSBC's buy-to-let equity release loan is available from £10,000 over a minimum term of five years on a capital repayment basis.

HSBC's three year mortgage rate will be 6.0 per cent, whilst the five year rate will be 6.15 per cent, fixed until 31 July 2007 and 31 July 2009 respectively. Both mortgages are available at up to 75 per cent loan to value and HSBC specifies that the rental income from the property must be equal to or exceed 130 per cent of the annual mortgage interest charge.

"If the base rate rises to five per cent by the end of the year, it could add some £62 a month to the average £100,000 buy-to-let loan," Sian Lehrter, HSBC head of mortgages, said. "We don't think there's any danger of landlords exiting the market en masse, but what we could see is higher interest rates putting a squeeze on income from property, which some people would prefer to protect."

The number of buy-to-let loans has increased by more than 50 per cent each year since 1998. There are now an estimated 400,000 buy-to-let mortgages in the UK, worth around £39 billion, or four per cent of the mortgage market.