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Landlords see market tighten
12 August, 2008
The number of mortgage products available for buy-to-let borrowers dwindled from 4,384 to 307 during the past year.
On top of the scarcity of products, buy-to-letters face steeper interest rates on those still available, according to figures from price comparison site moneysupermarket.com.
The average rate for 75% loan-to-value BTL products has increased by 0.35% to 7.33% in the past year, and by 0.63% to 7.46% for 85% LTV products.
The increase in interest rates means landlords will have to increase rents or find the shortfall themselves. On a £100,000 interest-only mortgage, for example, the rent needed to cover the interest on the mortgage has increased from £569 to £622.
This hike is compounded by the fact, on average, lenders now insist the rental income is 19% greater than the monthly mortgage repayments, up from 13% a year ago. It means, in effect, landlords will need to increase rent by 15% to keep up with these two changes.