Lenders pull BTR mortgages as Bank of England threatens more rate rises

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Landlords have increasingly fewer BTL mortgages to choose from as lenders withdraw products amid a rise in average fixed rates.

Moneyfacts reports that since the beginning of last week, the number available has dropped from 2,748 deals to 2,343 while the average rate on two- and five-year fixed BTL mortgages has surged to 5.61% and 5.52%, respectively.

Finance expert Rachel Springall (pictured) says average rates are expected to keep climbing because of the ongoing concerns over future interest rate hikes.

“We have seen a few lenders withdraw selected fixed mortgages from the market, at least temporarily. This volatility is down to the concerns surrounding future interest rate hikes, and lenders are reassessing their propositions,” she adds.

Lee Grandin (pictured, below) at Landlord Mortgages believes it’s a temporary situation and that lenders are repricing fixed rates, not withdrawing them for good.

“They may reissue products, but it might not fit many landlords because rates are so much higher – they can’t make it stack on a variable rate and now it’s hard on a five-year fixed rate,” he tells LandlordZONE.

“Maybe funding will have to shrink short term until lenders catch up.”

He adds: “You might find more products coming onto the market from lenders that aren’t PRA-regulated who might stretch the rules.”

Impact

Grandin admits that the current situation could have an impact on investors’ ability to finance their BTL properties. “A landlord doesn’t have much room to increase rent until the annual review, so they’ll have to survive this tight cycle.”

The news follows reports that the UK’s housing market is showing signs of stress. Figures from Nationwide reveal that house prices fell in May at an annual rate of 3.4%, representing the sharpest fall since July 2009 when the British economy was dealing with the fallout from the financial crisis.

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