In a report from Property Master, the buy-to-let mortgage online specialist, hundreds of products for buy-to-let mortgages have been removed from the market. This has been in response to the global outbreak of coronavirus.
In the research, Property Master warns that landlords in the buy-to-let market will struggle now to secure mortgages as the effect of the crisis sees lenders widen their margins, tighten lending criteria and pull ranges of products from the market altogether.
The chief executive at the online mortgage firm, Angus Stewart, has stated that the attractive and competitive market for buy-to-let mortgages appears to be moving in reverse as the true impact of the emergency begins to bite.
Across the country, landlords are discovering that borrowing options are drastically limited as lenders fear a fall in house prices and respond to the new record lows in base rates by removing entire product ranges from the market.
Mr Stewart states that Property Master has seen their clients who are in the middle of a mortgage application find that the product is withdrawn and the process halted before the funds are released and they are able to reach completion.
He urges mortgage lenders to continue their support for buy-to-let landlords, and in particular those who are successfully moving through the application process for a mortgage and would otherwise be expecting to be in receipt of the loan shortly. However, Angus Stewart also acknowledges that the majority of mortgage providers are also experiencing serious difficulties when adequately pricing risk and valuing properties.
Similarly, Property Master are also urging banks to honour the commitments made by the UK government to offer payment holidays to landlords who are struggling in the current climate due to the impact of the coronavirus. It is thought that the coronavirus will affect the ability of renters to make their rent payments.
However, in recent weeks, many mortgage lenders have decided to exit the buy-to-let market altogether in the short term.
Saffron Building Society, a lender which offered a wide range of mortgages for limited company and portfolio landlords, has no products currently available, explaining that its previous product range is now under review.
Vida and the Melton Mowbray Building Society have also followed suit, with Together Money going a step further in suspending lending to both the residential and buy-to-let market. Barclays have also withdrawn all mortgage products for landlords.
Mortgages which track the rate set by the Bank of England in addition to a set percentage, known as tracker buy-to-let mortgages, are being removed from the market. In the past few days, both HSBC and The Mortgage Works have removed their tracker mortgage products from the market.
Lending criteria for mortgages are also being tightened. In the past few years, lenders have agreed to lend around 85 per cent of a buy-to-let property’s value. Far fewer lenders are now prepared to do this, as fears grow that property prices will fall. For example, Kensington Mortgages have reduced the maximum loan to value down to 75 per cent from 85 per cent.
While landlords may be expecting a lower base rate from the Bank of England will lead to low mortgage rates, it is not proving to always be the case. Property management software in the UK can help landlords reduce their costs by streamlining processes and ensuring maximum productivity. However, lenders are now concerned about the increased risk that tenants may default on their rent, while falling house prices may mean landlords will increase borrowing costs and widen margins.