Buy-to-let feels the effects of credit crunch says National Homebuyers

A worrying trend is emerging in the buy-to-let mortgage sector.

[UKPRwire, Wed Oct 03 2007] Figures from Moneyfacts.co.uk show that lending criteria is tightening in response to the recent credit crunch.

The firm points out that until now the biggest effects had been felt in the sub-prime mortgage sector but it appears that the turmoil is spreading.

According to Moneyfacts, the biggest change has been with minimum rental cover requirements.

This is the percentage of the monthly mortgage payment that must be charged as rent.

Some lenders have increased the minimum requirement from 100 per cent to 110 per cent, meaning that a landlord who must pay £2,000 per month for their mortgage needs to charge at least £2,200 rent.

"The trend over recent years has been a falling rental income cover requirement, so with lenders reversing this trend, it's a definite sign that some are taking a more cautious outlook," said Julia Harris from Moneyfacts.

Further to this, some lenders have withdrawn all of their buy-to-let mortgage deals, while others have removed their tracker-rate mortgages.

Julian King of National Homebuyers adds, "The effect on the homeowner will be felt for many months to come".

Mr King is a director of National Homebuyers, the UK's leading fast property purchase firm, guaranteeing to make an offer to purchase any property from vendors who need a quick property sale.

"The increased costs from the lenders means it will be an augmenting 'bad deal' for thousands of amateur landlords".

Arrangement fees have also been increased by a number of firms as the buy-to-let mortgage sector seemingly descends into panic following the credit crisis.

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