The Buy to let mortgage market continues to grow

Landlord Expert
By Landlord Expert May 17, 2010 10:04

The Mortgage Works is offering seven fixed-rate and tracker mortgages for people borrowing up to 80% of their home’s value; the first time it has offered a loan-to-value (LTV) ratio of this size since early 2000.

It joins only two other lenders offering mortgages to landlords with just 20% to put down.

The buy-to-let mortgage market has been hit particularly hard by the credit crunch, with the number of products available diving from 3,662 in August 2007 to just 299 now. The level of advances also contracted for seven consecutive quarters to June 2009, as many lenders withdrew from the market, while others struggled to raise the funding they needed.

The market showed signs of recovering in the second half of last year, with total advances rising for the first time since 2007, although at £4.5billion lending was well down on the £23.7billion advanced in the second half of 2007. says there has also been a gradual improvement in the rates being charged on buy-to-let mortgages, with the average cost of a two-year fixed-rate loan dropping to 5.63% now, from 5.96% last September.

The availability of buy-to-let loans has also risen from 215 at the start of 2010 to 299 now, as new lenders, including the Bank of China, have entered the market.

Moneyfacts spokesman Darren Cook said buy-to-let lenders were becoming more comfortable with the risks they faced, and this was leading to a reduction in rates, as had been seen in the wider mortgage market.

News of The Mortgage Works’ new loans was welcomed by mortgage brokers.

David Whittaker, managing director of Mortgages for Business, said: “Finally we’re seeing a lender move the pieces on the chess board in a positive way. Many portfolio landlords have been unable to expand over the past 18 months as they have reached their maximum with the mainstream lenders.

“They will welcome the news that alternative options at higher LTVs are becoming available.” He added that other lenders were now likely to follow suit.

In the wider mortgage market, Nationwide said it was cutting rates on 56 of its 69 mortgages, reducing them by up to 0.6% and by an average of 0.3%. It is also increasing the proportion of a property’s value that new customers who are remortgaging can borrow to 85%.

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Landlord Expert
By Landlord Expert May 17, 2010 10:04

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