I'll be honest I've been caught out by the severity of the 'credit crunch' like many other landlords. What started as a short term tightening of the purse strings by the buy-to-let lenders is becoming an absolute squeeze on all aspects of buy-to-let finance. The way things are going soon, the only person that will be able to get credit will be the Queen and possibly one or two Russian billionaire oligarchs. Certainly not Gordon Brown - he's more broke than all of us. Didn't you notice he's been spending your money like it's going out of fashion!
Need BTL finance - don't panic - 5 mortgage brokers - 1 FORM
It's increasingly obvious by watching the news feeds on specialist mortgage broking websites like emoneyfacts that buy-to-let lenders are increasingly pulling fixed rate buy-to-let mortgages or significantly repricing them upwards. Why? One word. INFLATION. The only tangible benefit that the Labour government bought to the UK economy was giving control on base rates to the Bank of England Monetary Policy along with strict instructions to keep inflation under control. This they have done very successfully.
However, after a decade of relying on being able to import lowering prices, inflation is now being imported from around the world in the form of rising commodity and food prices - nothing to do with domestic factors. Now the MPC are in a straight jacket. They need to cut interest rates to mitigate the impact of rising mortgage costs caused by the credit crunch and avoid a housing crash but they simply can't.
The result is that banks get even more worried about lending against a depreciating asset i.e. houses and therefore jack up lending costs even more - depressing house prices further.
How do i find a fixed rate mortgage?
Look at this article in the Times which reported that Barclays the UK's 7th biggest mortgage lender is upping it's rate on buy-to-let mortgages by 0.5%. They are not alone. A cursory look at the emoneyfacts website shows a constant stream of lenders withdrawing products or upping interest rates.
The message for landlords is if you are going to remortgage do it sooner rather than later. Otherwise - just sit tight and hope that inflation doesn't get any worse prompting the MPC to raise the interest rate.
Do you need BTL insurance in 08?
So let's see if I get this right... The Bank Of England makes and additional £100bn to the banks at 5% then the banks slap on a nice 1.5%+ on top and, if we are lucky, lend it to us at basically zero risk and with a nice product fee on top. Mmmm... call me stupid but what about an 'Emergency Mortgage Line' direct from the BoE for people facing massive increases coming of their discount periods? That may give banks a little bit of an incentive...
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