Buy-to-let mortgages will be difficult to re-finance Monday, September 29, 2008
The nationalisation of Bradford & Bingley will remove the largest provider of buy-to-let mortgages from the market, since it is highly likely that this will now be run as a closed book of business and run down over time.
In the current climate, it is improbable that many other institutions will be racing to fill the gap it is has left. As a consequence, existing buy-to-let mortgage holders who come to the end of early-years discount arrangements or similar, may find re-mortgaging a considerable struggle should they need to.
Whilst the rental market is proving very resilient, primarily because more people are choosing to rent than buy in a falling market, rental property owners are being hit with falling capital values which also depletes the collateral they can offer to banks for a mortgage. This may force such "investors" to sell their holdings, further depressing property prices.