Buy to let investors return at first time buyers expense

Landlord Expert
By Landlord Expert January 19, 2010 17:43

Brokers said that a number of lenders have started to focus on attracting landlords with more favourable interest rates, after a long period of freezing them out. Despite the credit-fuelled boom and subsequent collapse of the buy-to-let market, which left many city centre flats empty and landlords unable to complete purchases, the lenders that are now re-entering the market perceive their customers as less risky than first-time buyers. Whiteaway Laidlaw, a subsidiary of Manchester Building Society, which entered the buy-to-let market for the first time six months ago, and whose typical borrower is a GP with two or three buy-to-let properties, said that it was targeting high-earning landlords rather than first-time buyers because they were less likely to default. It has also introduced a mimimum age limit of 30 to reduce exposure to younger, inexperienced buy-to-let investors. David Cowie, chief executive of Manchester Building Society, said: “First-time buyers do not have a proven track record of meeting mortgage repayments. They might have a good credit history from paying off credit cards but a mortgage debt might be ten times what they are used to. We think that grade A buy-to-let is a much lower lending risk.” Mark Clare, chief executive of Barratt, one of the UK’s biggest housebuilders, said: “There is definitely more buy-to-let availability now than there was. Lenders are telling us that rather than increasing loan availability to first-time buyers, they are preferring to lend to buy-to-let investors.” Ray Boulger, director at John Charcol, the mortgage broker, said: “There has been a steady trend of lenders offering better deals to buy-to-let landlords over the last three months that has recently accelerated. “The market is benefiting from an increase in competition, with an increased range of products and/or lower rates announced over the last week from BM Solutions, Godiva, Whiteaway Laidlaw, Aldermore and The Mortgage Works.” Although buy-to-let investors have not outnumbered first-time buyers as a proportion of the mortgage market since mid-2008, their numbers are beginning to rise again. They make up just over 6 per cent of the mortgage market, according to the Financial Services Authority, down from about 12 per cent in the second quarter of 2008. Meanwhile, the proportion of first-time buyers has risen from 9 to 14 per cent over the same period, despite the rise in the size of deposit required, boosted by funds from parents and grandparents.

Landlord Expert
By Landlord Expert January 19, 2010 17:43

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