So far, 37 lenders have pulled their fixed rate products this week for buy-to-let borrowers, with more expected to be pulled in the coming days.
Property Master chief executive, Angus Stewart said the situation is “extremely worrying” and warned landlords will be left waiting for new products, as they are unlikely to appear until the financial markets stabilise.
“We are seeing buy-to-let mortgage products removed from the market at an unparalleled level,” Stewart said.
“We have also seen some newer entrants to the buy-to-let mortgage market withdraw their products as they have been unable to source their usual funds from institutional lenders.”
Stewart advised landlords to secure fixed rate mortgages as soon as they become available again given that the market expects further base rates in the coming months.
“With base rate predicted to rise to 6 per cent within the next year or so, it is in landlords’ interest to act sooner rather than later,” Stewart said.
Lenders who have withdrawn their BTL rates:
| Accord | Mpowered |
| Aldermore | Newcastle |
| Bank of Ireland | Nottingham |
| Bath BS | Post Office |
| BM Solutions | Precise |
| Capitol Homeloans | Santander |
| CBS | Scottish BS |
| Cumberland | Skipton BS |
| Family BS | Suffolk |
| Fleet | The Mortgage Lender |
| Halifax | TMW |
| Interbay | Together |
| Kensington | TSB |
| Kent Reliance | Vida Homeloans |
| Keystone | Virgin |
| Landbay | West One Loans |
| Leeds BS | YBS |
| Lloyds | Zephyr Homeloans |
| Melton |
“The squeeze on private rental sector landlords continues from all angles, higher borrowing costs and recent increased regulation has created an unprecedented level of uncertainty,” Stewart said.
“Even the latest tax cuts from the chancellor Kwasi Kwarteng’s mini-Budget, could now be reversed.
“The fear now is that we will see many landlords choosing to exit the market resulting in a reduced supply of private rented property which will add further to the pressure on rents.”
Others in the buy-to-let space also expressed concerned, while the National Residential Landlords Association warned that many landlords simply do not have the means to continue to absorb rising costs.
NRLA policy director, Chris Norris said: “Landlords typically hold interest only mortgages, meaning rising rates and fewer products on the market will cause a considerable squeeze on many of their finances.
“Our data shows that 31 per cent of those landlords with a buy-to-let product plan to re-mortgage over the next 12 months. It also shows that interest rates rising to four per cent would mean around 30 per cent of those with a buy-to-let mortgage would need to divest all or part of their rental portfolio.
“This would exacerbate an already serious supply crisis in the rental market.”
Norris urged the government to step in and provide relief for both renters and landlords by unfreezing housing benefit rates.
“Failure to act now will leave an already depleted private rented sector in an even more precarious position,” he said.
Fleet Mortgages is one lender that has had to pull some products from its buy-to-let range.
Steve Cox, its chief commercial officer, said its intention is to bring back a full product range “as soon as possible”.
“To do that we have to take into account what is happening in the money markets, but also the action taken by our lender peer group,” Cox said.
“It is clearly not an ideal situation as we need a far greater degree of certainty about the path ahead in order to be able to appropriately price products, specifically fixed-rate mortgages. However, we’ve not seen landlord borrowers pulling out of deals in any significant number.”
Mortgage broker Lewis Shaw said: "For existing landlords they’re going to have their margins squeezed and that could easily see a glut of properties coming to the market as they look to offload unprofitable units.
"New landlords to the market are going to find it uncompetitive for a while and we’ll see a drastic switch to limited company buy-to-let structures for taxation benefits."
Shaw added: "We’ve already started to see landlords selling up and this will accelerate their exit. If we see it in sufficient quantities, expect house prices to be suppressed for a while or maybe contributing to the gradual decline in house prices that are predicted by large institutional investors and banks."
Elsewhere in the mortgage market, lenders have pulled over 900 products since Wednesday as many struggle to re-price interest rates amidst short-term market uncertainty.
jane.matthews@ft.com
