Buy to let mortgage products plummet thanks to Coronavirus
By Graham Norwood
There has been an overall fall of 1,304 buy to let products in the market in just six weeks.
Product choice for borrowers at 80 per cent Loan To Value has plummeted on both two- and five-year fixed deals by 122 and 134 products respectively, so there are fewer than 40 deals combined today in these sectors and average interest rates have subsequently risen as well.
Average interest rates on fixed BTL mortgages have risen for borrowers who have a 40 per cent deposit, rates on both two- and five-year fixed rate buy-to-let products at 60 per cent LTV rose by 0.35 per cent and 0.31 per cent respectively since last month.
“It’s clear as day to see how the virus pandemic and isolation rules have led to a huge shake-up in the choice and cost of buy to let mortgages. This couldn’t come at a worse time, as from this new tax year, mortgage interest tax relief has been completely phased out for buy to let landlords” explains Rachel Springall, Finance Expert at Moneyfacts.
“The fall in choice and rise in interest rates will be a blow to landlords who are considering investing, however the market has moved in this way to protect providers’ existing books. Even if some believe the property market to be ripe to invest in, prospective borrowers who don’t have a decent deposit could well be discouraged” Springall continues.
“Existing customers could well be looking to cut down their monthly loan payments or indeed are concerned about rental payments. Thankfully, lenders will allow borrowers to defer their mortgage repayments for three months as of last month, but landlords must act now and check online to see how tenants falling onto universal credit or local housing allowance could impact their rental cover ratio. As interest rates rise, landlords would be wise to move quickly to remortgage.”