Investors are finding it hard to acquire mortgages on buy-to-let properties.
Telegraph.co.uk has reported statistics from Paragon Mortgages that showed 89 per cent of investors found it trickier to get money for mortgages during the three months to the end of August than in the previous quarter. Of the rest, 3 per cent said they had found it easy to gain a mortgage and 8 per cent said they didn?t see any difference in the difficulty of getting one, according to the specialist lender.
The recession has affected the buy-to-let mortgage market by making it harder for money to be raised from wholesale money markets. Only 195 different mortgages are available, which is almost a 95 per cent drop since August 2007, which is when the credit crunch began the fall into recession.
While there is hope that the conditions are improving in the wider mortgage market, the availability of buy-to-let mortgages has been continuing to fall, dropping to 218 in May.
John Heron, MD of Paragon Mortgages, said: ?Product availability in the general mortgage market has improved slightly in recent months, but has worsened for the buy-to-let market. Mainstream lenders are reducing their focus on this sector and specialist lenders are still unable to access the wholesale funding markets to enable them to offer new products. We know that there is demand from investors to purchase new property, particularly with returns from savings products being so low, but they are being frustrated by a lack of mortgage supply.?
Mr Heron also said there was a slump in buy-to-let lending levels and warned that it could be very likely the private rented sector could start to contract if so-called ?accidental landlords? decided to sell their homes due to the housing market picking up. He said: ?This would be disastrous for those sectors of the population that rely on the private rented sector for their housing needs.?
