There’s growing concern across the lettings sector about the buy to let mortgage market seeing lenders pull product ranges, tighten lending criteria and widen margins.
For example, Barclays has announced that it’s withdrawing all portfolio buy to let products and is no longer accepting new applications; it’s also closed two underwriting sites, therefore limiting the number of applications it is currently accepting. And the Halifax has withdrawn the majority of its mortgages due to a “lack of processing resource."
Now Property Master, an online mortgage brokerage, says the range of products across the board is tightening sharply.
“Landlords are finding that their borrowing options are being drastically reduced as lenders respond to this new record low base rate environment and fears of falling house prices by withdrawing entire product ranges. We have had clients mid-way through a mortgage application only to find the process is halted and the product withdrawn before they can reach completion and the release of funds” explains Property Master chief executive Angus Stewart.
“We can well imagine the difficulties lenders are facing when it comes to valuing properties and properly pricing risk” he adds.
The brokerage says these are the key trends it has seen in the market:
Some lenders have chosen to exit the buy-to-let mortgage market altogether for the foreseeable future: Saffron Building Society, which offered a range of mortgages including for portfolio and limited company landlords, currently has no products available saying only that its product range is under review. The Melton Mowbray Building Society and Vida have followed suit. Together Money has suspended lending in both the buy-to-let and residential market. Barclays has withdrawn all its products for portfolio landlords.
Tracker buy-to-let mortgages, where the rate charged tracks usually the Bank of England rate plus a set percentage, are being taken off the market: In recent days The Mortgage Works and HSBC have both withdrawn their tracker mortgages for the foreseeable future.
Lending criteria are being tightened: In recent times some lenders have been prepared to lend up to 85 per cent of the value of a buy-to-let property. Now Property Master says it has observed fewer being prepared to do so as fears grow of falling property prices. Kensington Mortgages, for example, has reduced maximum loan to value lending criteria down from 85 per cent to 75 per cent.
Widening margins: The brokerage says that whilst landlords might expect a lower Bank of England base rate will lead to lower mortgage rates this is not always proving to be the case. “Lenders concerned about the increased risk of tenants defaulting on rents and falling property prices may well choose to widen their margins and increase the cost of borrowing. Some lenders have increased rates despite the 0.65 per cent fall in base rate where margins as a result have increased by about 1 per cent.”