During 2008 the number of Buy-to-Let mortgages plummeted from over 3,000 to fewer than 200 as lenders ditched the private rented sector in droves.
Lenders who previously competed so furiously for landlord’s business stopped competing with each other and stopped lending. In many cases lenders actually paid landlords to take their mortgages elsewhere. Analysts confidently predicted that the whole UK Buy-to-Let sector faced meltdown leaving lenders with huge debts.
The fact was that the Buy-to-Let sector did not suffer anything like the level of bad debts predicted and now Buy-to-Let lending seems set for a comeback. Lenders are finally beginning to realise that landlords make excellent customers as demand for rented property begins to soar.
What started as a trickle is now gaining real momentum as lenders head back into the Buy-to-Let market. After a stream of positive headlines about the prospects for the private rented sector even lenders are beginning to realise that landlords could be one of the few beneficiaries of the recession. When they look at their debt ratios they also see that Buy-to-Let fared better than virtually ever other mortgage sector during the recession.
The reality of the residential mortgage market is that lenders are not lending in sufficient amounts, builders are not building in the quantities needed and as a result the housing market is stagnant. First time buyers who are the driving force of the property market cannot get onto the housing ladder. The knock-on effect has slowed house sales throughout the whole property market.
January’s mortgage lending figures confirm that there has been a serious reduction in general mortgage lending. Only 28,500 loans were granted in January according to the Council of Mortgage Lenders.
An increase in bank rates is likely to further stifle any potential housing market recovery that might happen this year, and it is almost certain that interest rates will rise during 2011.
All this means that lenders have very few market sectors that they can lend to with any confidence. But people still need somewhere to live and the private rented sector looks set to benefit from a significant increase in demand from people looking for a home. This increase in demand makes lenders more confident about lending to the private rented sector.
With more lenders offering an increasing number of Buy-to-Let loans now may be the right time for landlords to think about buying more property or re-mortgaging existing property. For the first time since 2008 85% loan to value mortgages are now available. Landlords who require a lower loan to value have even more choice.
Now is the time for landlords to start reviewing their existing loans and to start considering increasing their portfolios.
Whilst it is true that obtaining any loan is still difficult, it is no longer impossible. The landlords who act first are likely to be the biggest winners.
NetRent Mortgages are independent Buy-to-Let specialists with access to the whole market – plus many exclusive mortgages. We charge no broker fees on Buy-to-Let mortgages.
You can view the entire Buy-to-Let mortgage range on-line, simply click here NetRent Mortgages.
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