A casualty of the pandemic, 80% loan to value buy to let mortgages are yet to return to pre-COVID levels. However, as one lender has launched a competitive range of products specifically for greener properties, could they be making a come-back?
While the vast majority of the buy to let mortgage market has returned to pre-COVID normality in terms of interest rates and criteria, the 80% loan to value (LTV) market has remained restricted and expensive.
The reason for lender hesitancy is down to uncertainty around what house prices will do in the latter half of 2021 and into 2022. The concern is that having increased by almost 10% year to date, house values will decrease after the stamp duty holiday fully ends and the Government retract the furlough scheme. While most experts don’t foresee a crash, it’s likely prices will soften slightly. Consequently, while arguably over-cautious, lenders are worried that high LTV borrowers could fall into negative equity.
In a positive turn of events, one lender has recently launched a new 80% LTV buy to let range which has grabbed our attention. With rates starting from 2.49% for a two-year fix, they’re incredibly competitive for the current market. “What’s the catch?” – I hear you ask. Well, the whole 80% LTV range is only applicable for properties with an EPC rating A-C, making them a ‘green’ buy to let mortgage. They are also only available to landlords with ten or fewer mortgaged buy to let properties, with a maximum loan of £350,000; so relatively risk-averse.
While there are currently only two lenders offering ‘green’ 80% LTV buy to let mortgages, less than half of buy to let lenders offer any 80% LTV products at all. Still, I see this latest green offering as an indicator of growing confidence. While this lender is clearly rewarding landlords purchasing or remortgaging more environmentally friendly properties, I think it’s an early indicator that lenders have more trust in the housing market’s future. Furthermore, what a great incentive to help landlords purchase greener properties by only requiring a 20% deposit!
For more information on green buy to let mortgages, you can see our blog on the topic, here. Alternatively, do give our team a call on 0345 345 6788 or email email@example.com and one of our expert buy to let brokers will be able to help.