Landlords falling into serious arrears
September 4, 2008
According to a recent report a rising number of landlords are falling into serious arrears with their buy to let mortgages, with the number of landlords now three months behind with their repayments rising to over ten thousand. Since the onset of the global credit crunch borrowing costs have gone up, availability of mortgage products has come down, and credit conditions have become far more difficult, and this has hit lenders, homeowners, buyers, and now landlords.
The data comes from Hargreaves Lansdown, which estimates that more than ten thousand landlords have fallen three months behind with their mortgage repayments. Industry officials have said that in some cases landlords may find that they have to sell their property early because they cannot keep up with the repayments on the property. Many landlords are also set to come off cheap low rate deals taken out several years ago, and this is set to further impact upon these figures, taking the number of landlords in serious arrears even higher.
One of the problems that faces many landlords that are due to come off cheap rate deals is that they will experience difficulties getting another low rate deal because of the current financial conditions in the mortgage market and the lack of mortgage products. Many will also find that they cannot get a similar loan to value offer as before. Some may even find themselves facing negative equity, with house prices now said to have suffered a 10% year on year fall.
An industry official stated: “Borrowing to invest can be a hazardous strategy, just as much with property as with any other form of investment, because you magnify losses as well as gains. This was as true 10 years ago as it is today, and will be in 10 years time when everyone has forgotten the current credit crisis. For the overwhelming majority of the population, buy-to-let should not be seen as an alternative to making regular savings into a pension.”
Recent Additions:
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- Rise in repossession orders
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- Even wealthier borrowers are now struggling to repay their loans
- Increased stability for mortgage product numbers on market Since last summer when the global credit crunch swept across the UK the number of mortgage products available on the market has plummeted, with many lenders having to take a wide range of products off
- Low fee mortgages from Abbey for those with sizeable deposits Over recent months a number of lenders in the UK have increased the mortgage arrangement fees on their mortgage products, and this has seriously affected the ability of many people to afford to take out
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- Many landlords deciding to sell up According to a recent report an increasing number of landlords in the UK are deciding to sell up, with a number of factors thought to be responsible for this increase. The Royal Institute of Chartered
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