Up to 40% of buy-to-let borrowers face falling into negative equity by the middle of next year as the rapid decline in house prices continues, a new report has warned.
Buy-to-let mortgages are already seeing a proportionally higher level of repossessions than owner-occupier loans, but the market is likely to deteriorate further because it is 'more sensitive' to the difficult credit environment, warns credit rating agency Standard & Poor’s.
The UK saw a boom in buyto-let homes before the credit crisis as buyers sought to take advantage of booming property prices and sustained growth in rental values.
However, the credit crisis forced lenders to rein in their generous mortgage deals, many up to 100pc of loan-tovalue, leaving owners struggling to keep up with mortgage payments.
Daily Telegraph
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