Buy-to-Let mortgages diminish

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Buy-to-Let mortgages diminish

The unexpected emergency bail out of the UK’s leading mortgage lender, the Bradford & Bingley has consequentially caused severe depreciation on the availability of buy-to-let mortgages.

Following a tough decision made by the mortgage lender, the Bradford & Bingley, to take back all of its existing buy-to-let products through its subsidiary Mortgage Express, the group’s smaller competitors have all together been greatly motivated to re-price or take back some of their mortgage products.

Although mortgages for landlords seeking to refinance and new entrants on to the property investment ladder are quickly evaporating, landlords with an established reputations and large cash deposits are still being welcomed.

According to, a financial comparison website, there are currently around 25 percent less buy-to-let mortgage products available in the market than there were about one or two weeks ago; this time reference refers to the period before the Bradford and Bingley fell into the red and ended up in the Government hands.

Owing to the credit crunch and the problems that many mortgage lenders are facing, securing buy to let mortgage products has become much more difficult; investors now have to deal with tighter lending criteria, lower maximum loan-to-values deals and higher demands on their rental income.

Compared with the boom, over a year ago, a landlord is now required to prove that their rental income surpasses their mortgage payments by up to a staggering 125 percent in order to quality for the majority of buy-to-let mortgage products available in the market.

Recent product withdrawals from The Mortgage Works (a subsidiary of Nationwide Building Society) and UCB Home Loans, which together form Nationwide Building Society’s chief lending divisions, have led to the unprecedented thinning of the market for buy-to-let mortgages for the last twelve months by a whooping 85 percent, this is according to Moneyfacts.

UK mortgage lenders such as Halifax (of the HBOS Group), Bank of Scotland Mortgages, Bristol & West Mortgages (wholly owned and a subsidiary of the Bank of Ireland), Intelligent Finance (a division of the Bank of Scotland) and Newcastle Building Society have reduced their assortment of buy-to-let mortgage products.

Onlookers have cautioned that if more lenders continue to withdraw their mortgage products, this will have a huge knock on affect on the few remaining mortgage lenders.

A market analyst from Moneyfacts (one of the leading autonomous financial information sources in the UK), Michelle Slade, so far warned that, “As the pressure on these lenders increases, service is likely to suffer. As a result we may see further lenders being forced temporarily to withdraw their range.”

Michelle also worriedly affirmed that coupled with the current liquidity problem in the mortgage markets, it is quite possible for us to experience further increases with this observable fact in other aspects of lending, for example secured and unsecured loans and current account overdraft rates amongst others.

Established property investors with portfolios in prime locations will see their rental income increase; this will be pushed upwards by an increase in demand for rental properties; this is according to a report by the National Landlords Association.

In absolute disparity to young property investors, their more established counterparts are being allured by some mortgage lenders who have substantially cut down their rates for customers who are well able to lay down huge deposit against their property purchase.