Ray Boulger: The financial crash had some benefits for buy-to-let investors

Ryan Bembridge

August 29, 2018

The global financial crisis benefitted buy-to-let investors by driving mortgage rates down to similar levels as residential mortgages, John Charcol senior technical manager Ray Boulger argued.

Boulger (pictured) asserted that the market’s recovery from the global financial crash, which was triggered around a decade ago, proved that buy-to-let can handle economic downturns.

He said: “Buy-to-let investors have benefitted from the downturn because they are able to borrow at cheaper rates than before the crash.

“In 2007 the spread between residential and buy-to-let rates was about 2%; if you wanted a 5-year fix it was 2% more for buy-to-let than resi.

“The spread is now tiny.”

He went on to say that in 2007 investors were cautious about buy-to-let because it had never been through a complete market cycle, while a disproportionate amount of lending was funded by the mortgage-backed securities market.

But Boulger added: “Because it became so difficult to get a mortgage after the crisis more people had to rent – so buy-to-let recovered more quickly than residential.”

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