Supply And Demand Gap In Buy-to-Let Mortgage Market
Research from price comparison site moneysupermarket.com shows that there's a widening gap between supply and demand for buy-to-let mortgages.
Here are the key findings:
 | - Enquiries for buy-to-let (BTL) mortgages increased by nearly 50 per cent since August 2008, but the number of available products has diminished by over 70 per cent over the same period.
- Moneysupermarket's research also revealed that BTL mortgage rates have not fallen by as much as mainstream mortgage rates following the decreases in the Bank of England Base Rate.
- Since August last year the average rate for mainstream mortgages has reduced by 1.95 per cent, whilst buy-to-let rates have only fallen by 1.13 per cent.
- According to moneysupermarket.com, the average BTL rate is currently 5.88 per cent, compared to 7.01 per cent a year ago.
- The average mortgage rate – based on 2-year fixed-rate, 3-year fixed-rate & 2-year tracker – is now 3.91 per cent, compared to 5.86 per cent last year.
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"Buy-to-Let Time Bomb"
Hannah-Mercedes Skenfield, mortgage channel manager at moneysupermarket.com, said: "Our figures show nearly ten per cent 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.
"Because banks are targeting safer borrowers for their limited mortgage funds, they have either abandoned or severely restricted their involvement in the buy-to-let market.
"Even 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.
"BTL Demand Likely to Increase"
"It is still increasingly difficult for first time buyers to get on the ladder as a 25 per cent deposit is the normal requirement. As more people look to rent a property instead of buying, the demand for buy-to-let housing is likely to increase.
"We have already seen rent prices rise, and with a lack of buy-to-let mortgages for new properties, existing landlords will take advantage and continue to hike prices."
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