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Another buy to let mortgage lender clamps down on borrowers

Ahead of expected restrictions on buy to let lending to be introduced next year by the Bank of England, some individual lenders are changing their criteria to make it tougher for investment buyers.

The consumer media are reporting that the Coventry Building Society’s buy to let product arm, Godiva, will from the end of this week require any borrower with a deposit of less than 35 per cent of the purchase price of a BTL property to have a rental income of 125 per cent or more of the monthly mortgage interest calculated at 5.5 per cent - until now, it has been 125 per cent of interest calculated at only 5.0 per cent. 

Only those who take out a five-year fixed-rate deal will avoid the change.


Last week Barclays made a change, also aimed at making it tougher for many borrowers.

Until recently it required landlords to have a rental income of 125 per cent of the monthly interest calculated at a mortgage rate of 5.79 per cent. Now it requires income of 135 per cent.

Last week we reported that the Bank of England’s latest Financial Stability Report spoke out against any relaxation of lending criteria by mortgage companies.

"The [Financial Policy] committee remains alert to the rapid growth of the UK buy to let market, and potential developments in underwriting standards as the sector could pose a risk to broader financial stability," the BoE said.

Lending to landlords has been a key factor in the mortgage market in the past two years and some reports suggest it is now close to its pre-crisis peak. In the first nine months of 2015, buy to let lending rose by 10 per cent - for owner occupiers it rose by less than half a per cent. 

  • Adam Hosker

    To be clear the new 5.5% rate applies if you want over 65% LTV, below that it remains 5%.
    In addition above 65% if you get a Five Year Fix then you can still get the 5%.

  • Commercial Trust

    We might see underwriting standards tighten like this for a lot of high street lenders. With the number of specialist lenders that have entered the market over the past few years, however, there will still be options for landlords to obtain finance for properties with lower rental income. https://www.commercialtrust.co.uk/btl/declined/rental-income/


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