Mortgage Brokers and Specialist Buy to Let Lenders Play a Key Role in Market Recovery

Monday, June 26th, 2023

Following the infamous mini-Budget in September 2022 which created chaos in the UK financial markets and sent mortgage rates soaring, it is no surprise that the buy to let market is still finding its feet.

Panic Subsides, Although Uncertainty Remains

Even though the panic that immediately followed the mini-Budget may have calmed, uncertainty in the buy to let arena has not gone away with both landlords and those looking to dip their toe into buy to let property investment often feeling frustrated by the challenges they now face.

Many Buy to Let Mortgage Lenders Are Still Cautious

That said, a Moneyfacts report in March 2023 cited that there were still around 2,400 different buy to let mortgage deals on offer to landlords who were either buying a new property or remortgaging. **

This figure represents the widest mortgage product choice landlords have had since July 2022 and whilst it is most certainly a positive sign, it has not yet resulted in a higher number of mortgage approvals. In fact, buy to let lenders have reported that around a third of buy to let mortgage applications are now being declined. This could be due to one or several factors and changes that have been put in place as lenders exercise an increasing amount of caution following last September’s events.

Buy to Let Lending – a Common Sense Approach

Whilst mainstream buy to let lending criteria and affordability stress-testing remain strict, some specialist lenders are nevertheless working hard to find solutions to assist and support landlords, and the wider buy to let market. Part of this ‘can-do’ attitude involves a common-sense approach when assessing applications, especially those with complex or unusual circumstances which may have been beyond the landlord’s control.

A professional mortgage adviser must work hard to ensure that they understand all that these specialist buy to let lenders require and then collaborate closely with their clients to navigate these difficult times.

Buy to Let Mortgage Products Are Evolving

Alongside a common-sense approach, the development of buy to let mortgage products is a key to success moving forward. To assist landlords looking to maximise their capital raising some lenders have introduced products with lower rates and higher fees. This may seem counterproductive, however, the cost for the borrower is likely to be remarkably similar from a payment perspective but the cheaper interest rate allows the scope for greater capital raising.

Although flexibility and innovation are important, lenders need to make sure that affordability is not affected. Changes to stress testing rates have been seen by many lenders as they attempt to dampen the impact that these and any future changes (such as those experienced after the mini budget) will have on the ability of landlords to be able to maintain their buy to let mortgage payments.

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** Source – Financial Reporter: 03-05-23

The information contained above was correct at the time of publication but is subject to change.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR PROPERTY. YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE SOME TYPES OF BUY TO LET AND INVESTMENT MORTGAGES.

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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT. CONSOLIDATING DEBTS MAY INCREASE THE TERM AND TOTAL AMOUNT PAYABLE.

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Caboodle Financial Services Ltd, registered in England and Wales at Mere Green House, 46-48 Mere Green Road, Sutton Coldfield, West Midlands B75 5BT (number 08044670).
Caboodle Financial Services Ltd is an appointed representative of PRIMIS Mortgage Network (PRIMIS), a trading name of Advance Mortgage Funding Ltd which is authorised and regulated by the Financial Conduct Authority. PRIMIS is only responsible for the service and quality of advice provided to you in relation to mortgages, protection insurance and general insurance products. Any other product or service offered by Caboodle Financial Services Ltd may not be the responsibility of PRIMIS and may also not be subject to regulation by the Financial Conduct Authority. The Financial Conduct Authority does not regulate some forms of Buy to Let.

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