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Non-portfolio BTL mortgages fall following PRA changes

  • 30/10/2017
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The latest rule changes have had an unwelcome impact on mortgage products, according to Moneyfacts, which has seen the number available to smaller landlords fall noticeably.

The beginning of this month marked another significant change in the buy-to-let mortgage market, with lenders are now required to apply stricter underwriting criteria to portfolio landlords.

Since introducing the portfolio lending rules Moneyfacts said it had seen the buy-to-let mortgage market shift away from landlords with three or fewer properties, with a 13% drop in the number of products available to this group since.

Moneyfacts also noted that since 1 October the average two-year fixed rate had increased by 0.05% and was on target to get back to the rate seen in September, before the latest set of regulatory changes came into effect.

So far 18 individual providers have upped their rates since the start of September. However, this mirrors rising rates seen across much of the mortgage market, as rumours of a Bank of England Base Rate hike intensify.


Process costs

Charlotte Nelson, finance expert at Moneyfacts, said: “This portfolio change may have had a more practical effect on rates as well, with lenders not just being a little more cautious; some lenders may have had to change their process behind the scenes to accommodate the new rules, and this extra cost may be impacting these providers’ pricing activity.

“With all the changes and now the rising buy-to-let rates, it is going to be more difficult for individual landlords to make a profit that is worth their efforts. Landlords will have to weigh up the costs to figure out what their best possible option may now be.”

Nelson added that it had been a turbulent time for the buy-to-let market. “While a 0.05% increase appears insignificant, it marks a turnaround in the buy-to-let sector, so landlords are now faced with not only more hoops to jump through but higher rates as well.”

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