Mortgage News Buy To Let Mortgage Products Fall 93 Per Cent
11 August 2008 / by Rebecca Sargent
Available buy-to-let mortgage products have fallen from 4,384 to 307, (a decline of 93 per cent) in just one year according to research from moneysupermarket.com.
And, according to the figures, interest rates on buy to let mortgages are some of the highest on the market. The study showed that the average rate for 75 per cent loan-to-value (LTV) buy-to-let products has increased by 0.35 per cent to 7.33 per cent in the past year, and by 0.63 per cent to 7.46 per cent for 85 per cent LTV products.
The news comes amid announcements from several leading lenders that they are reducing the rates on many of their mortgage products. But, since the controversy surrounding buy-to-let mortgage specialist Bradford & Bingley, buy-to-let has not been such a stable market.
The hiked interest rates and lack of available buy-to-let products spells bad news for landlords and tenants in an already unforgiving climate. Landlords will be forced to put the rent up or shoulder the shortfall themselves. According to the research, on a £100,000 interest-only mortgage, the rent needed to cover the interest will have risen from £569 to £622.
The hikes emphasise the fact that, on average, lenders claim that rental income is 19 per cent greater than the monthly mortgage repayments, an increase of 13 per cent on last year.
Head of mortgages at moneysupermarket.com, Louise Cuming, said: “These are worrying times for tenants, landlords and developers. With the cost of living spiraling out of control, tenants are unlikely to be willing to wear increased rental demands.
“Those landlords wishing to remortgage buy to let properties will find it difficult, with lenders demanding sizeable deposits or charging higher rates.
“This could force landlords to re-evaluate whether it is worthwhile staying in the sector in the current climate. With property prices falling though, there may well be many landlords having to sell their investment at a loss.”
© Fair Investment Company Ltd