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Most lenders ‘have cut down the sorts of landlords that they will lend to’

While some lenders, such as HSBC, have stopped all buy-to-let activity during the Covid-19 outbreak due to limitations on physical valuations, the vast majority of mortgage providers are still lending to landlords, new research shows.

There are currently 42 lenders in the buy-to-let market, which represents 86% of the volume operating in the sector before the Covid-19 epidemic when there were 49 lenders in the BTL marketplace. There are just seven lenders no longer taking remortgage applications from landlords. 

Steve Olejnik, managing director of Mortgages for Business said: “While HSBC has recently announced it is no longer able to accept applications for buy-to-let mortgages, other lenders are out there.  

“We’ve seen lenders like Together Money and Vida Homeloans temporarily pull out of the market – but more than 85 per cent of the lenders that landlords rely on are still trying to do their bit – as are we.  

“Four of the lenders that initially withdrew their BTL mortgages – Santander, Clydesdale, Precise Mortgages, and Kent Reliance – are now lending again. There is no need for landlords to panic!  Yes, landlords looking to remortgage have fewer options. But they still have plenty.”

Saffron Building Society withdrew from the market before the outbreak in March – for non-Covid-19 reasons – and have indicated their intention to return to market ‘later in the year’.

Lenders that stopped lending to landlords since the outbreak – and remain withdrawn from the BTL market – include: HSBC; Foundation Home Loans; Together Money; Vida Home Loans; Platform Home Loans; State Bank of India; and Furness Building Society.

Olejnik continued: “Lots of lenders have cut down the sorts of landlords that they will lend to. They’re pulling product ranges, tighten lending criteria, and increasing margins. But different lenders are derisking against different kinds of landlord borrowers. 

“So, while some lenders are no longer lending to first time landlords, there are still lenders who are. A huge number of 80% LTV five-year fixed rate BTL products have been pulled from the market – about 90% of them.  But not all. 

“A good broker will be able to find you a competitive deal because those deals are still out there, for now.  

“My advice to landlords looking to remortgage is act sooner, rather than later. You may have to answer a few more questions when you’re applying for a remortgage that you would have had to last month – but a broker will still be able to find you a deal.  That’s how to get through this.”

Type of BTL Remortgage

March 2020

April 2020

Change

First-time landlords

47

35

-26%

Portfolio landlords

40

33

-18%

Ltd company landlords

30

24

-20%

Student lettings

30

21

-30%

HMOs

27

15

-44%

BTL tracker loans

28

16

-43%

85% LTV BTL loans

3

0

-100%

Active BTL lenders

49

42

-14%

With valuers banned from visiting homes, landlords are finding remortgaging harder than it was. But there are lenders offering mortgages using automated valuations, rather than physical valuations, and a lot of landlord clients are taking advantage of this, according to Olejnik. 

He added: The landlord community is benefitting from Shawbrook and Paragon, in particular, who are using virtual valuations for loans against standard properties up to 75% of loan to value. They’re being very helpful.

“Even lenders who require a physical valuation at a higher LTV are generally processing landlords’ remortgage applications as normal – but moving the valuation part of the application to the very end. A significant percentage of our landlord clients are happy to do this. They’re content to sit back and wait out the lockdown and get a physical valuation done.”

While the number of lenders operating in the market has fallen only marginally, there has been a significant fall in buy-to-let mortgage deals since the start of March 2020 and the of the spring’s Boris Bounce – with the number of BTL products dropping by almost 50%. 

Olejnik concluded: “The number of products has dropped but the only section of the market that’s genuinely gummed up is 85% LTV lending – and that’s pretty niche. There were only three lenders doing business at that end of the market when the Boris Bounce was in full swing.”

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