Online buy-to-let mortgage broker, Property Master, has warned that landlords will struggle to get mortgages as lenders pull product ranges, tighten lending criteria and widen margins, due to the impact of the coronavirus.
Some lenders have chosen to exit the buy-to-let mortgage market altogether for the foreseeable future.
These include Saffron Building Society, which offered a range of mortgages including for portfolio and limited company landlords, The Melton Mowbray Building Society and Barclays has withdrawn all products for portfolio landlords.
Together Money and Vida Homeloans have suspended lending in both the buy-to-let and residential products.
Tracker buy-to-let mortgages 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 In recent days The Mortgage Works and HSBC have both withdrawn their tracker mortgages for the foreseeable future.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% of the value of a buy-to-let property. Fewer are prepared to do so now as fears grow of falling property prices.
Kensington Mortgages, for example, is one of those lenders that has reduced maximum loan-to-value lending criteria down from 85% to 75%.
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% fall in base rate where margins as a result have increased by about 1%.
Angus Stewart, Property Master’s chief executive, said: “The competitive and attractive buy-to-let mortgage market appears to be going into reverse as the impact of the coronavirus begins to bite.
“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“We have had clients mid-way through a mortgage application only to find the process is halted and the product withdrawn before they can reach completion and the release of funds.”
“We can well imagine the difficulties lenders are facing when it comes to valuing properties and properly pricing risk. But we would urge them to continue to support landlord customers, especially those who were moving successfully through the mortgage application process and would otherwise have expected to be shortly in receipt of a loan.
“Similarly, we would urge banks to stand by the commitment made by the Government to provide payment holidays to landlord customers struggling as the current crisis impacts on the ability of tenants to pay their rent.”
By Joanne Atkin
Source: Mortgage Finance Gazette