What do mortgage market forecasts predict?
Gross BTL mortgage lending is forecast to be at £13bn for house purchase this year, and £30bn for remortgaging, according to UK Finance, marking a 27 per cent and 22 per cent decrease respectively year-on-year.
2022 Article continues after advert | 2023 | 2024 | |
|---|---|---|---|
Gross BTL mortgage lending for house purchase (£bn) | 18 | 13 | 11 |
Gross BTL mortgage lending for remortgaging (£bn) | 38 | 30 | 28 |
Source: UK Finance Mortgage Market Forecasts | |||
While rates are driven by the market, Jannels says he thinks lenders will look at criteria.
“[Lenders] have no real control over the rates at all. So I think it’s going to have to be criteria – so houses in multiple occupation, student lets, holiday lets. These are all high rental yield entities and attractive propositions.”
Although Charman says Sesame Bankhall Group has seen a small number of amateur landlords selling properties, she also says the group has seen “strong activity” from professional landlords buying property and diversifying their portfolios by looking at HMOs and multi-unit blocks.
Jannels makes a similar observation. “There are some landlords who are looking to exit the market. But they tend to be the landlords that maybe have been an accidental landlord; they might only have one or two properties.
“But we’re seeing lots of landlords at the moment, especially the portfolio landlords, who have got space and capital or equity in their properties; they’re actually raising money at the moment to buy more properties, because they’re seeing it as an opportunity, rather than a hindrance.
“What they are doing though, is they’re not buying a single BTL anymore. They’re buying HMOs or student lets, where they can rent out per room rather than the BTL as a whole.”
Jannels adds: “I think because they’re comfortable the rental incomes are going to fit.
“Whereas if you’ve got a normal two bedroom house, you’re probably going to find in the current climate that the rental income is probably going to be very tight [with regards to] getting the mortgage that [the landlord] wanted.
“Whereas a HMO is going to attract a bigger rental income, and therefore the rental income calculations would probably fit the loan required based on... renting out room-by-room.”
Cooper at Aldermore, who agrees that experienced landlords are looking for more value for money and moving into areas such as HMOs or refurb-to-let, says: “I expect to see that a portion of lenders will look to adapt to offering experienced landlords more diverse product sets, such as bridging or refurb solutions to HMO products.”
Although Kirby at The Mortgage Lender says there are some professional landlords with larger portfolios who may also be re-evaluating their portfolios, and making a move on some of the less profitable properties they have, he adds that these landlords are “ultimately not going anywhere”.
