Criteria changes hitting BTL intermediaries

David French

March 29, 2008

According to Mortgages for Business, some lenders were asking investors to put down larger deposits by lowering maximum loan-to-values (LTV), while The Mortgage Works’ (TMW) and UCB Home Loans’ decision not to lend to new landlords has also hit the sector hard.

Jonathan Moore, head of marketing at Mortgages for Business, commented: “It is essential not to judge the whole BTL investment proposition on the performance of new builds. The fact that renovated flats and houses in the last 12 months are classed as a new build may be of surprise to many investors.

“In the last five years BTL lenders have lent at 85 per cent LTV, with many lending up to 90 per cent LTV last year. However, some lenders are now introducing a maximum LTV of 75 per cent or 80 per cent. The move is not widespread across the marketplace as of yet but some lenders are making definitive moves to increase deposit requirements.

“The changes cannot solely be attributed to lender worries about the credit crunch and the need to ensure loans are as prime as possible.”

A spokesperson for Nationwide Building Society, said: “Lenders are starting to increase the level of equity and these statements about TMW and UCB are true as we have needed to raise the maximum LTV. We can now write as much as we want to at margins that are adequate as we have infinite opportunities to lend.

“The difference now between 70-90 per cent LTV makes a huge difference and while the performance of BTL is still very good, we are now in an environment where lending is reduced.”

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