Affordability for BTL investors bounces back

The loan sizes being offered to buy to let investors have bounced back after last autumn’s market contraction, data reveals.

According to Mortgage Broker Tools (MBT), an analysis of real cases processed through its research software shows that BTL affordability fell to its lowest level on record last November 2022.

That’s when nearly a fifth (19%) of enquiries failing to find one lender was able to provide the loan size requested.

‘Tough time for buy to let investors’

Tanya Toumadj, the CEO at MTB, said: “The last quarter of 2022 was a tough time for buy to let investors as rate rises significantly impacted stress tests and the loan sizes available contracted considerably.

“However, buy to let has bounced back and the situation has improved quickly.

“Competition has returned to the market, lenders are now starting to cut rates, and many are offering more achievable stress testing.”

She added: “We have also seen record demand for buy to let mortgage enquiries at MBT in January, and so the outlook for brokers is much brighter than it was just a few months ago.”

Lenders are cutting rates

MTB’s data shows that competition has returned to the market and lenders are cutting rates and offering more achievable stress testing.

The data reveals that last month, only 10% of BTL enquiries were deemed to be unaffordable.

Also, MBT received a record number of BTL mortgage enquiries in January with high demand from first time landlords and investors looking for variable rate products.

The top lender for affordability was The Mortgage Works, MTB says, which was the top affordability option on 11% of all enquiries.