17:28 PM, 13th March 2012, About 10 years ago
Buy to let lenders are squeezing the availability of loans as funding problems ripple out through the industry.
Landlords are finding loans more difficult to locate as lenders topple like dominoes due to exceptionally high demand for limited cash.
The problem is many larger banks and building society lenders have pulled their mortgage deals because of difficulties raising money on the wholesale markets and new regulations forcing them to bolster the amount they hold in reserve.
As a result, borrowers then went looking for other lenders – and next in line were Accord and the Skipton Building Society as they were offering attractive interest rates at high loan to values.
The Skipton suffered from bad-timing, cutting rates just before other lenders closed their books.
As a result, an influx of applications flooded their underwriters, so managers decided to close for business while they dealt with the backlog.
Borrowers then simply turned their sights on other, smaller lenders.
The latest to succumb is the Hinckley and Rugby Building Society, which has withdrawn all but one residential mortgage and some buy-to-let mortgages, while Nottingham, Coventry and Principality have all hiked rates to try to control the number of applications.
Hinckley chief executive Chris White indicated the society would come back to the market by the end of March.
“I can’t recall anything like this happening. The big lenders have pulled back which has had a ripple effect, first on lenders like Skipton and now us,” he told trade mag Mortgage Strategy.
“We hope to be back shortly and with competitive products but it depends on what happens in the rest of the market. As a small lender we don’t set the pace – if the bigger lenders price upwards we have little choice but to follow suit.”
Although average two-year fixed rates for residential mortgage interest rates of 4.27% are the highest for six months, buy to let loan rates are slipping back – currently at an average 4.79%, which is 0.51% less than 12 months ago.
Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.
Previous ArticleAre ‘rate your landlord’ websites worth the effort?