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31st January 2012

Landlords benefitting from rise in 80% LTV buy-to-let mortgages

The news follows a survey by buy-to-let mortgage provider Paragon which found that more than half of mortgage intermediaries (53 per cent) expect to do more buy-to-let business in 2012 than they did last year.

Property management agents could be seeing a rise in demand if an increase in high loan-to-value (LTV) buy-to-let lending helps stimulate UK property investment.

There are now six UK lenders offering buy-to-let mortgages at an LTV of 80 per cent or higher, according to data from Mortgage Flow, a mortgage sourcing tool from Mortgages for Business.

This represents a significant turnaround in comparison to the years following the 2008 financial crisis, which saw many lenders significantly scale back their buy-to-let products.

Between December 2008 and May 2010 not a single lender offered an LTV of above 75 per cent, until the Mortgage Works launched a limited range of 80 per cent LTV products on 9th May 2010.

It has now been joined by Kent Reliance Banking Services, Saffron Building Society, Leeds Building Society, Aldermore Mortgages and Clydesdale Bank, who between them offer more than 20 buy-to-let products at 80 per cent LTV or higher.

An increase in the availability of high LTV lending could help make it easier for landlords to invest in buy-to-let at a time when demand for rental property is at an all-time high.

"This is great news for landlords and investors and demonstrates the growing confidence of lenders in this sector who see buy-to-let as more profitable than homeowner lending," said David Whittaker, managing director at Mortgages for Business.

"Between them, there is a good range of products on offer from two-year discounted trackers to five-year fixed rates. Some even come with flat arrangement fees which really start to make sense for investors looking to borrow larger sums."