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Catching a Falling Financial Knife

Buy-to-let Mortage Market Sector Begins Fight Back From Credit Crisis

Housing-Market / Mortgages May 19, 2010 - 07:58 AM GMT

By: MoneyFacts

Housing-Market

The buy-to-let (BTL) sector was one of the biggest casualties of the credit crisis. At its lowest point (September 2009) 95% of all deals available at the peak of the market (August 2007) were withdrawn.

However, the BTL market has now started its fight back.


The number of BTL mortgages available has grown 70% since September 2009, increasing from 179 to 304, and encouragingly a number of these deals are at higher LTV levels.

Lenders are reappearing back in the sector and average rates are continuing to fall. 

                                          

Date                                                              Number of BTL Products available

August 2007 (Peak)

3,662

September 2009 (Low)

179

May 2010

304

Source: Moneyfacts.co.uk 19.05.10

 

Max LTV

% of total deals September 2009

% of total deals May 2010

80%

1.40%

4.24%

75%

24.20%

29.07%

70%

21.40%

25.82%

65%

15.30%

14.40%

60%

30.60%

26.47%

 50%

7.10%

0.00%

Source: Moneyfacts.co.uk 19.05.10

 

Deal

Sep-09

May-10

Average 2 year fixed

5.96%

5.66%

Average 2 year tracker

4.59%

4.49%

Tracker margin above base rate

4.09%

3.99%

Source: Moneyfacts.co.uk 19.05.10

 

Darren Cook, spokesman for Moneyfacts.co.uk commented:

“This is encouraging news for investors, especially those who were locked out of the market as the maximum available LTV’s fell.

“Competition has returned to the market, as lenders make cuts to their new borrowing rates.

“Saffron and Melton Mowbray Building Societies have returned to the market during the past month, while new lender Bank of China continues to successfully find its niche. Both are signs that this market is starting to become a more viable and safer option for lenders.

“Predicted changes to capital gain tax (CGT) could put the recovery of the BTL sector off track.

“Government sources predict that CGT on non-business assets, including buy-to-let properties, could rise from 18% to a figure that could be as high as 40%.

“In a separate blow the annual exemption limit for CGT, currently £10,100, may come down to as low as £2,500. This will bring hundreds of thousands more people into the tax net.
“One possible consequence could be an increase in the preferred investor properties on to the market as people scramble to take any current gains.
“The changes could spark a downward price spiral, but could create opportunities for both homebuyers and potential landlords.”

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.


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Catching a Falling Financial Knife