Buy-to-let landlords are experiencing a repayment shock more severe than the one faced by other borrowers, as lenders raise rates in response to growing evidence of arrears in the sector.
Thousands will be fighting to keep their investments, experts said, after a disastrous week in which Bradford & Bingley, Britain’s largest buy-to-let lender, warned profits would fall 50%, fuelled by a sharp rise in bad debts. The number of borrowers missing three or more payments jumped by 36% between the end of December and April.
Although the Bank of England left rates at 5% last week, Mortgage Express, the lending arm of B&B, announced on Friday that it was increasing buy-to-let mortgage rates by up to 0.55 percentage points on three and five-year fixed-rate loans.
BM Solutions, which issued the most buy-to-let mortgages last year, has cut its product range from 20 to seven since February.