Borrowing is now based on expected rental cover of 125 per cent of the monthly mortgage payments for all products, with the exception of its five-year fixed rates.
The required rental cover for deals of five years and over will reduce to 120 per cent of the monthly mortgage payment.
Andrew Moss, BTL product manager at Mortgage Express, said: “The BTL market has evolved considerably since its inception. Continuing product innovation has played a major part in making bricks and mortar the popular and accessible investment vehicle it is today.”
Moss added that the move would help MEX remain competitive in the market, and said customers would not be at any greater risk following the announcement. “At 125 per cent, monthly mortgage payments are covered for the equivalent of three months per annum. This compares to average rental void periods, where voids arise, of only 27 days per year.”
David Hollingworth, head of communications for London & Country, commented: “This is a good deal and follows the rest of the BTL market in gradually reducing restrictions. Rental cover coming down has happened a lot in the market over the last year, just as in the residential market where the income multiples are going up.”
MEX’s announcement follows news that the BTL market has continued to be favourable for landlords in 2006. According to a report from UCB Home Loans, rising rents, an increasing number of tenants and gradually rising house prices have all contributed to the BTL sector’s growing success.
Commenting on the findings, Keith Anstill, managing director at UCB Home Loans, said: “Mid-2004 to mid-2005 was the first year in which BTL purchases ever decreased, but there was a sudden leap of 40 per cent in the number of BTL mortgages in the second half of last year.”
