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Co-Operative Bank buy to let mortgage customers can breathe a sigh of relief as the wholesale scrapping of interest only loans does not include buy to let borrowers.
The bank’s specialist property investment subsidiary Platform will continue to offer interest only deals to landlords.
However, the bank is scrapping new interest only mortgages for residential customers through the Co-Op, Platform and the Britannia.
The bank explained interest only will remain a payment option for buy to let as the property is considered the repayment vehicle for loan and the monthly payments are underwritten by rent payments from tenants.
Meanwhile, in a policy move that could affect buy to let landlords, Lloyds Banking Group is cutting mortgage lending by 3%.
Lloyds is one of the largest landlord lenders through BM Solutions.
The bank is cutting lending because the cost of raising funds on money markets are too high. At the same time, the bank will increase retail bank deposits by 3%.
The aim is to cover lending with deposits from savers rather than raising expensive cash on the markets.
Another specialist buy to let brand, The Mortgage Works (TMW), which is a subsidiary of The Nationwide, has added some new deals for landlords.
TMW’s range will expand to include new two-year fixed rates for mortgages and remortgages:
Interest rates on current two-year landlords mortgages are cut by up to 0.25% on loans up to 75% LTV.
Tracie Pearce, head of group mortgages at Nationwide, said: “These improved rates are great news for landlords looking for a new purchase or remortgage deal. Our new two-year fixed rates start from just 3.39%, helping to maximise landlords’ monthly income.
“We regularly review our mortgages to ensure their relevance and competitiveness in the market and these changes are a further example of that.”
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