Take advantage of high LTV rates before a likely ‘winter of discontent’, warns mortgage broker

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Landlords now have the chance to snap up an 85% loan-to-value (LTV) mortgage – but probably not for long, according to a leading broker.

Private Finance reports that one lender, Vida Home Loans, is making a cautious return to the higher loan-to-value space with some 85% LTV products for standard buy-to-let mortgage products, HMOs and multi-unit blocks – up from the 80% seen recently.

Mortgage consultant Chris Sykes says the higher LTV segment of the market is in a state of flux and that rates are correspondingly high, reflecting the uncertainty in the market and the potential for significant falls in property prices.

He says: “As with the 90% residential lending market, we expect lenders will offer products for a short time and be inundated with applications and then withdraw them relatively quickly.” 

Winter of discontent

The broker believes that landlords face a winter of discontent with increased supply further depressing rental prices, especially in London.

As well as having to now go through an even lengthier eviction process, finding new tenants could see landlords very much out of pocket, it believes. And with the furlough scheme ending at the end of October there could be large-scale redundancies, possibly leading to a higher rental void and further evictions.

“The upcoming eviction of tenants en masse in the midst of a global pandemic will see a great deal of negative publicity – ultimately we believe this will put off new entrants to the market, even with the potential savings from the Stamp Duty Holiday,” says Sykes (pictured). 

“Mortgage rates are rising and we expect this will be the same for buy-to-let mortgages, again potentially discouraging entrants to the market. We may also see landlords sell their investment properties to avoid the potential difficulties moving forward – we believe we will see a decrease in demand for BTL products in the coming months.”

Read more about buy to let loans.

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