According to Paragon's Trends research, a panel-based survey of UK landlords, over half of professional landlords (54%) have attempted to obtain a buy-to-let mortgage in the three months to the end of August for either remortgage or new purchase purposes.
Of those landlords, nearly nine out of 10 stated that it was more difficult to secure a buy-to-let mortgage than in the previous three months.
Nearly one in ten (8.4%) said that they had noticed no change in buy-to-let mortgage availability over the period, with 2.8% stating that they had found it slightly easier to secure a mortgage.
Buy-to-let product availability has continued to fall in recent months, in contrast to the residential market where availability has improved. There were 196 live buy-to-let products available at the end of August (a 94.4% reduction on August 2007), compared to 218 in May. This compares to 1,329 prime residential mortgage products available in August (an 86.1% reduction on August 2007 numbers), against 1,266 in May.
John Heron, Paragon Mortgages' managing director, 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. Buy-to-let lending has slumped and there is a real danger that the private rented sector could start to contract, particularly if the ‘accidental landlord' begins to sell property. This would be disastrous for those sectors of the population that rely on the private rented sector for their housing needs.
“The Government has already taken steps to increase liquidity in the lending markets but these have had limited success. It is imperative that more steps are taken to improve confidence in and access to the wholesale funding markets.”
