Allow Landlords to evict tenants where there are 14 days rent arrears14:34 PM, 1st October 2020
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Landlords with Bank of Ireland buy to let loans can breathe a sigh of relief as mortgage interest rates are hiked by new owner the Nationwide.
The bank’s standard variable rates for residential mortgage borrowers are set to rise from 2.99%, to 3.99% in June and then to 4.49% in September, affecting around 100,000 customers.
However, buy to let loans are linked to a tracker rate and remain unaffected by the rise.
The mortgage books of the Bank of Ireland and subsidiary, the old building society Bristol & West, were taken over by the Nationwide as part of a rescue package when the Republic of Ireland’s banking system faced meltdown during the Eurozone debt crisis.
Instead of absorbing the new mortgage customers as part of the Nationwide, the building society decided to switch them to subsidiary The Mortgage Works (TMW), better known for self-cert loans (self-certification of income), buy to let and other home loans outside of the mainstream.
The mortgage rate hikes come from aligning the Bank of Ireland mortgage book interest rate with the TMW standard variable rate.
The Halifax has also announced a mortgage rate rise of 0.49% to 3.99% on 1 May for 850,000 customers.
Industry insiders do not expect to see banks and building societies putting up their mortgage rates across the board, as the Halifax move is more about bringing their pricing in line with competitors rather than moving ahead of the field.
The Bank of England is keeping rates on hold at 0.5% for another month and wholesale market borrowing costs for banks have dropped from 1.09% to 1.04% in recent months.
The problem for landlords on standard variable rate borrowing is they are unlikely to find a cheaper alternative deal as mortgage rules have tightened up while house prices have dropped.
The latest Halifax house price survey shows average homes values are 20% below the 2007 peak of £200,000 at £160,000.
Equity is an issue for many landlords who borrowed at 85% loan to value at the top of the market, as worked on average prices, many could have a mortgage of £175,000 on a home now worth £160,000.
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