Mortgage lenders in the UK are rejecting first-time home buyers and other conventional applicants but are instead approving mortgage applications for landlords, which could ignite fears of a fresh buy-to-let bubble.
According to statistics released by Moneyfacts, the amount of buy-to-let mortgages available for landlords rose 100 percent in the last 12 months and new launches are currently increasing. It also showed that there are 434 various buy-to-let mortgage offers currently available on the market, compared to 215 at the start of last year and 330 in March 2010.
One of the top UK lenders, Nationwide, noted that it prefers to grant loans to landlords rather than first-time buyers, as it would rather provide a 75 percent loan-to-value (LTV) for a buy-to-let loan to a seasoned buy-to-let investor rather than a 95 percent LTV for a first-time buyer.
Fuelling the resurgent interest in buy-to-let mortgages is the increasing number of rents for first-time buyers who are unable to raise funds to acquire properties. UK’s largest group of letting agents, LSL Property Services, said rental cost was “powering ahead” throughout the UK, especially in London.