Buy To Let Time Bomb On Its Way?

» Click here for the original article

A buy-to-let time bomb could be on its way as the gap between supply and demand for buy-to-let mortgages increases.

Moneysupermarket.com has found that its enquiries for buy-to-let mortgages has increased by nearly 50% since August 2008, whilst available products have diminished by over 70% over the same period.

Furthermore, it has found that buy-to-let mortgage rates have not fallen by as much as mainstream mortgage rates -since August last year the average rate for mainstream mortgages has reduced by 1.95%, whilst buy-to-let rates have only fallen by 1.13%.

Hannah-Mercedes Skenfield, mortgage channel manager at moneysupermarket.com says: “New and existing buy-to-let landlords face a difficult task in finding a suitable mortgage. Our figures show nearly 10% of those looking for a mortgage are looking for a buy-to-let mortgage, but the number of products has fallen by over two-thirds compared to this time last year.

"With significantly less products left on the market and high interest rates attached to those available we could potentially have a ticking buy-to-let time bomb on our hands – the need for rental housing is increasing, but there may not be enough landlords available to cater for this demand."

The website says that if you are lucky enough to meet the tighter eligibility criteria and have found a suitable buy-to-let mortgage product, you must watch out for the fees levied on arranging the deal, as these can be extortionate.

But as more people look to rent instead of buying, the demand for buy-to-let housing is likely to increase, so there is still hope for those borrowers who are looking to get into buy-to-let investment. They key to avoiding buy-to-let mortgage problems is to seek out professional advice. There are less products on the market, and they can be costly, but a buy-to-let mortgage expert can find you the best, affordable deal that is out there.

SOURCE: Moneysupermarket.com, 02/09/09

To keep up with the latest News and comment on the UK buy to let market visit the Buy to Let Mortgage Blog