No more deals for buy-to-let mortgage borrowers

Article source:

No more deals for buy-to-let mortgage borrowers

The recent down fall of one of the biggest mortgage lenders in the market, Bradford and Bingley has seen some major changes in the mortgage market. The problems in the financial markets have been compounded by the Bradford and Bingley’s move to scrape away all their buy-to-let mortgage products. This bold move by Bradford and Bingley has caused other mortgage lenders to re-think the deals they have on offer. Many who considered Bradford and Bingley a great competitor will, most likely, re-price their current deals or even follow the competitor all the way and withdraw their buy-to-let products as well. The outcome will be a much higher price for the available buy-to-let mortgage products or the complete doing away with these deals just like Bradford and Bingley.

New pretenders to the property investment thrown looking to secure a buy-to-let mortgage product will be scratching their heads as lenders doors will, in more cases than not, be closed to them. This is down to the fact that these types of borrowers will unlikely have any substantial assets on which the lender can secure the loan and will unlikely have a big enough deposit to tempt the mortgage lender.

Only some experienced borrowers from the buy-to-let sector that have something to still smile about lenders are still seeking out those who still have large cash deposits for their mortgage applications and an existing property portfolio on which to hedge the risk. Mortgage lenders are more than willing to strike deals with these established landlords as they are they are typically seen as a lower risk because of the higher deposit they would receive.

After the fall of the Bradford and Bingley and because of the current market situation, discounted rates are disappearing fast and interest rates are also rising just as fast. Buy-to-let mortgage borrowers therefore have to look for new mortgage lenders to strike deals with and as experts are advising: it is better to move quickly to secure permanent fixed-rate mortgage deals for security purposes even though these deals may come with higher monthly payments.

The mortgage situation is the same everywhere with mortgage lenders becoming stricter with their new mortgage lending criteria. It follows that finding a suitable, pocket friendly deal for a re-mortgage is getting close to impossible. Borrowers are however advised to follow the market situation closely to ensure that they secure themselves a good mortgage deal as soon as they come up because, despite the situation, new deals are still being introduced, tailor made to suit the market situation.

Since the move to nationalise the Bradford and Bingley, there has been a rapid fall of the buy-to-let mortgage deals, with a fall of about 25% being recorded over a period of just a week.

Whilst the added stability that the recent take over of the Bradford and Bingley’s savings and deposit business, and its branch network by the Spanish banking giant, Banco Santander, and the impending take over of Halifax Bank of Scotland (HBOS) by Lloyds TSB has yet to be quantified, further consolidation in the banking system is still to be expected. Whilst this will reduce the number of individual lenders and the number of products that are on offer, it may bring a form of long term stability that will bring security to the mortgage market and prevent a similar financial situation occurring again.