Buy-to-let landlords are not benefiting from rate cuts

Despite aggressive cutting of the Bank of England base rate many landlords have not seen the benefits being passed on in the form of lower buy-t0-let mortgage rates.

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Michelle Slade, analyst at Moneyfacts.co.uk, said: “Falling house prices have caused the equity in many landlords’ portfolios to reduce, but with no deals available for less than a 20 per cent deposit, many have no option but to move onto the lender’s standard variable rate (SVR) at the end of their existing deal.


Buy-to-let lenders not passing on rate cuts

“For some this may be no great hardship, but some lenders have not passed on cuts to their buy-to-let SVRs, as they have to their residential version.

“Despite a four per cent drop in bank base rate since last year, landlords have seen little impact with the average fixed rate dropping just 0.03 per cent. Tracker mortgages have come down but the average margin above base has increased to an astonishing 3.18 per cent.

“Buy-to-let lenders have also tightened criteria, restricting the size of portfolios that landlords can have, both in number of properties and maximum total advance.

“The Mortgage Works has become the first lender to introduce a collar to its pay rate calculation, meaning borrowers will have to earn bigger rental incomes; not an easy feat in these difficult times.”

Landlords have had a rough ride in the last year and it looks like 2009 won’t be any easier.