buy-to-let mortgage

Buy-to-let mortgage options fall but lenders keen to return ‘imminently’

Landlords with a buy-to-let mortgage may be holding their breath this week as the fallout from the mini-budget continues, so it’s more imperative than ever to seek advice.

Lenders across the UK have been pulling their mortgage products this week in response to the falling value of the pound and the looming threat of further interest rate rises from the Bank of England.

This is largely down to the after-effects of Chancellor Kwasi Kwarteng’s ‘mini-budget‘ last week, which announced a series of major tax cuts and overhauls and has led to a fall in confidence in the country’s economy. As a result, around 1,000 mortgage deals are estimated to have been withdrawn from the market.

In the buy-to-let mortgage space, new data from Moneyfacts shows that, as of yesterday (28th September), 507 deals were removed by lenders, bringing the total number of products available to landlords to 1,221. It marked the highest overnight product fall ever recorded by Moneyfacts.

Property values ‘unlikely to crash’

Landlords looking at mortgages right now may find it more difficult to borrow, albeit temporarily. Buy-to-let mortgage prices have also been creeping up in line with the Bank of England base rate rise, which now sits at 2.25% since the latest hike.

It is important to note that, in recent years, lenders have been especially competitive, with mortgage rates remaining at historic lows for an extended period of time. The buy-to-let mortgage space is also competitive, with a wide range of products available for various landlord buyer types and deposit levels.

According to Jeni Browne, director of Mortgages for Business, the current turmoil in the markets is temporary, and lenders are keen to bring their products back once the volatility subsides.

She commented: “Lenders are taking stock while the current turbulence in the market settles. Lenders who have withdrawn their products will return with new pricing – some are citing by the end of the week, others are less committal about time frames.

“But all remain committed to returning to fixed-rate lending imminently. While two and five SWAP rates continue to rise, I expect mortgage rates to continue to rise as well. With this volatility in play, it is never more important to seek the advice of a broker and come prepared with all your documents to secure the best rate.

“Projections for house prices and yields remain strong due to the ongoing demand for properties from both renters and buyers. The pound will stabilize, energy prices will drop, and landlords are unlikely to see the value of their property crash.”

Get advice on your buy-to-let mortgage

Many are calling on the Prime Minister to reverse the changes made in the mini-budget to try and bring some stability back to the market. However, PM Liz Truss has defended the measures as “necessary decisive” action, indicating that the moves will not be reversed.

She has also said that she is prepared to make “controversial and difficult decisions” to get the economy moving, while acknowledging that growth “won’t come through overnight”.

A spokesman for the NRLA also believes the government should do more to help landlords, who may come under more strain due to conditions in the buy-to-let mortgage space right now.

They said: “The withdrawal of buy-to-let deals over the last 24 hours is uncomfortably reminiscent of the credit crunch more than a decade ago when the overwhelming majority of products vanished overnight.

“Now, as then, landlords will be guided by their particular circumstances. Many will remember the marketplace before 2009 when interest rates were typically much higher than they have been in recent years.

“Unfortunately, however, because of the Government’s decision to withdraw finance costs relief from private landlords, the impact of rate hikes will be felt far more directly than they once were by landlords and renters alike.”

If you’re a property investor or hold a buy-to-let mortgage and you would like independent advice from one of our partners, get in touch today.

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