A property industry commentator wants buy to let mortgage rules to be relaxed so that frustrated sellers can let out their homes while awaiting a buyer.
Jonathan Rolande from the National Association of Property Buyers says the latest hike in mortgage rates will make the sales market tougher for vendors.
“Buyers will be able to afford less and will have to reduce their expectations. There will now be further pressure on prices which will fall more sharply because of it” he says, saying the situation deteriorated yesterday when the rate on a two-year fixed mortgage surpassed the peak in the aftermath of the mini-budget.
The average rate on such a deal is now 6.66 per cent - a level not seen since August 2008 and the financial crisis.
As a result Rolande wants to making letting a property easier for frustrated sellers.
He asks: “Could minsters loosen the rules around Buy to Let so that borrowers could rent their home as an alternative to selling, boosting the supply of rentals on the market.?
“Currently Buy to Let mortgages are more expensive than homeowner loans. In certain cases, for example where the borrower wishes to travel or move in with a partner or family, the easy ability to let would avoid having to sell and possibly realise a loss on the home.
“There are also substantial fees when applying for a mortgage. These usually get added to the loan and are therefore not always scrutinised by borrowers. What is the justification for them and what is the process around deciding what is fair?"
Reflecting a growing sense of gloom within the industry, Rolande says: “Wages have grown at record rates thanks to employee shortages and many asking for rises to help cover additional living costs caused by inflation.
“The irony is that this will in turn further fuel inflation, making further interest rate rises more and more likely. The beginning of the so-called ‘doom-loop’ where inflation triggers pay increases that trigger inflation, that trigger pay increases.
“It is normal in such times to see unemployment on a large scale which, as callous as it sounds, does effectively relieve pressure on wages and inflation. We are not yet seeing this and so we are in choppy waters for a considerable time to come.”