07/05/2009 - New landlords hit by credit crunch
The credit crunch has hit amateur landlords hard with the buy-to-let market plunging 95% in the past two years, according to new figures.
The number of mortgages available for rental properties has dropped to 213 from 4,384 in April 2007, while lenders are also demanding larger deposits from landlords, according to financial website moneysupermarket.com.
Investors are being asked for a deposit of at least 25% on mortgages and there are no deals available for those looking to borrow 85% of the value of their homes.
Lenders' demands coupled with diving house prices mean that many new landlords will be unable to remortgage when their current deal expires and they will have to stay on their lender's standard variable rate.
The fall in interest rates for buy-to-let mortgage loans - following the drop in Bank of England rates from 5% to a record low of 0.5% - has also failed to keep pace with that in the residential mortgage market.
Rates for mainstream mortgages have dropped 2.6% since June last year against 1.51% for buy-to-let.
Copyright © Press Association 2009
Related links
|
