The mortgage broker firm says seven lenders (14%) have temporarily exited the buy-to-let market following the Covid-19 outbreak.
Steve Olejnik, managing director of Mortgages for Business, said: “While HSBC has recently announced it is no longer able to accept applications for buy-to-let (BTL) mortgages, other lenders are out there.
“We’ve seen lenders like Together Money and Vida Homeloans temporarily pull out of the market – but more than 85% of the lenders that landlords rely on are still trying to do their bit – as are we.
“Four of the lenders that initially withdrew their BTL mortgages – Santander, Clydesdale, Precise Mortgages, and Kent Reliance – are now lending again. There is no need for landlords to panic! Yes, landlords looking to remortgage have fewer options. But they still have plenty.”
Saffron Building Society withdrew from the market before the outbreak in March – for non covid-19 reasons – and has indicated its intention to return ‘later in the year’.
Lenders that stopped lending to landlords since the outbreak – and remain withdrawn from the BTL market – include: HSBC; Foundation Home Loans; Together Money; Vida Home Loans; Platform Home Loans; State Bank of India; and Furness Building Society
Olejnik commented: “Lots of lenders have cut down the sorts of landlords that they will lend to. They’re pulling product ranges, tightening lending criteria, and increasing margins.
“But different lenders are derisking against different kinds of landlord borrowers. So, while some lenders are no longer lending to first time landlords, there are still lenders who are.
“A huge number of 80% LTV (loan-to-value) five-year fixed rate BTL products have been pulled from the market – about 90% of them. But not all. A good broker will be able to find you a competitive deal because those deals are still out there, for now.
“My advice to landlords looking to remortgage is act sooner, rather than later. You may have to answer a few more questions when you’re applying for a remortgage that you would have had to last month – but a broker will still be able to find you a deal. That’s how to get through this.”
Number of remortgage buy-to-let lenders by type of loan
| Type of BTL Remortgage | March 2020 | April 2020 | Change |
| First-time landlords | 47 | 35 | -26% |
| Portfolio landlords | 40 | 33 | -18% |
| Ltd company landlords | 30 | 24 | -20% |
| Student lettings | 30 | 21 | -30% |
| HMOs (Houses in Multiple Occupation) | 27 | 15 | -44% |
| BTL tracker loans | 28 | 16 | -43% |
| 85% LTV BTL loans | 3 | 0 | -100% |
| Active BTL lenders | 49 | 42 | -14% |
Valuations
Olejnik added: “With valuers banned from visiting homes, landlords are finding remortgaging harder than it was. But there are lenders offering mortgages using automated valuations, rather than physical valuations, and a lot of our landlord clients are taking advantage of this.
“The landlord community is benefitting from Shawbrook and Paragon, in particular, who are using virtual valuations for loans against standard properties up to 75% of loan to value. They’re being very helpful.
“Even lenders who require a physical valuation at a higher LTV are generally processing landlords’ remortgage applications as normal – but moving the valuation part of the application to the very end. A significant percentage of our landlord clients are happy to do this. They’re content to sit back and wait out the lockdown and get a physical valuation done.”
While the number of lenders operating in the market has fallen only marginally, there has been a significant fall in buy-to-let mortgage deals since the start of March 2020 – with the number of BTL products dropping by almost 50%.
The latest statistics from Moneyfacts show that buy-to-let mortgage product numbers in mid-April had fallen by 1,304 compared to the start of March 2020, with 1,593 available compared to 2,897.
Olejnik concluded: “The number of products has dropped but the only section of the market that’s genuinely gummed up is 85% LTV lending – and that’s pretty niche. There were only three lenders doing business at that end of the market when the Boris Bounce was in full swing.”
