Lenders pull plug on best buy-to-let mortgage deals

Tuesday 27th September 2011

Buy-to-let mortgage lenders have pulled the plug on a number of deals – just as the National Landlords Association was happily reporting a relaxation in the deposit requirements for BTL mortgages together with a growth in the number of products.
 
But the NLA’s announcement looked untimely, as at least 50 cheaper BTL deals suddenly disappeared.

Last week, the Post Office scrapped its entire BTL range, whilst Skipton pulled its cheap tracker deals, Kensington withdrew its deals requiring only 15% deposits, and Aldermore pulled the plug on its fixed rate.

Meanwhile, lenders such as Skipton put up tracker rates, in Skipton’s case from 3.24% to 3.59%, making BTL borrowing more expensive.

According to Aaron Strutt, mortgage adviser with Trinity Financial, it is a simple case of BTL lenders running out of money: “Many banks have simply reached the maximum amount they can lend on their cheapest, most popular mortgage deals.”

And David Hollingworth, head of communications at broker London & Country, said: “With such a strong demand for buy-to-let mortgages, banks will need to manage how much they can lend.”

The survey by the National Landlords Association NLA Mortgages brand showed that landlords were certainly making hay as the financial sun shone.

It found that the number of BTL schemes provided during the second quarter of 2011 grew by 25% when compared to the first three months of the year.

Average loan sizes also increased by £2,166 to £138,525, representing growth of 6.4% since January.  

This growth is mainly due to the greater number of lenders offering higher loan-to-value mortgages and the availability of finance for Houses in Multiple Occupation (HMOs), which tend to be higher value properties.
 
Over 50% of buy-to-let offers processed by NLA Mortgages were for loans over 70% LTV – resulting in an average LTV of 67%.
 
Low interest rates and future predictions were reflected by the increased popularity of variable mortgage products, comprising 59% of all mortgage applications.
 
Paul Rockett, managing director of NLA Mortgages, said: “Wider choice and better products for landlords mean that the overall buy-to-let market is improving.

“Although demand for finance still outstrips supply, the level of buy-to-let lending is gradually increasing giving property investors a reason to be optimistic.”