Ray Boulger, of John Charcol, commented: “The fact that the BTL market has remained strong is hardly surprising, with continued strong rental demand. The plight of the first time buyer is clearly to the benefit of the BTL investor, and there is no real sign that this will change in the short term. In fact this month’s Base Rate rise, and fears of another later this year, is likely to deter some potential first time buyers from taking the plunge into the property market. With demand in the UK property market outstripping supply, any improvement in the fortunes of first time buyers depends on lenders or the government devising more innovative schemes such as shared equity mortgages.
“Although this month’s Base Rate increase, and indeed the potential for another, will impact on investors’ net yields, the astute ones will have factored in the possibility of one or two rises.
“One point worth noting is that, contrary to CML comments, underwriting criteria has changed in the last six months, with many lenders realising that lending to investors is not as risky as they once perceived it to be. Indeed, CML figures show that the percentage of BTL mortgages in arrears by over three months is lower than the percentage of residential mortgages, although both figures are under 1 per cent. Some lenders have increased their maximum loan-to-value (LTV) to 90 per cent and some have relaxed rental requirements to as low as 115 per cent of the monthly mortgage commitment, and in a few cases only 100 per cent. These changes allow the astute investor to remortgage to release equity to provide a deposit for a further purchase.”
