publication date: Oct 12, 2010
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books
Good news and bad news for the Buy to Let Mortgage Market
The last few weeks has seen good and bad news for the buy to let mortgage market. On the one hand, Lloyds Group is restricting any buy to let investors to three buy to let mortgages (down from 10) while on the other hand, the successful Paragon Group of Companies has returned to the lending market – but for serious investors only!
Paragon has secured around £200 million pounds to lend from Macquarie Bank, and will be allowing new lending for the buy to let market for the first time since February 2008. Despite the media’s views that when prices fall, buy to let lending is fool hardy, Paragon suggests that this is rubbish with less than 1% of their mortgage book in arrears for three or more months.
Part of the reason for Paragon’s success is that unlike many other lenders that ‘jumped on the band wagon’ just as the market started to falter way back in 2006. Paragon in contrast never lent via the property investment industry, nor did it lend to people who hadn’t a valid buy to let business plan.
Commenting on the announcement, Nigel Terrington, Paragon Group’s Chief Executive says:-
“Competition in the mortgage market has been sorely lacking, particularly as specialist lenders have largely been unable to secure funding or Government support to enable them to compete against high street lenders. Nowhere is this more evident than in the private rented sector where tenant demand is strong and expected to grow. This is an increasingly important part of the UK housing market and competition is vital for a healthy and vibrant buy-to-let market and we aim to provide that competition.”
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