7 May

Buy-to-let mortgage lenders limit exposure

Buy-to-let mortgage lenders limit exposure

Buy-to-let mortgage lenders Bank of Scotland, BM Solutions, and The Mortgage Business all revealed yesterday that they are to reduce their exposure to risk.

They will do so by cutting maximum loan amounts on new-build properties and withdrawing a number of competitive rates, the Financial Times reported.

Maximum loan-to-value ratios on new-build flats offered by the lenders have now been reduced from 85 per cent to 75 per cent.

Other banks and building societies have already taken similar decisions, including Nationwide and Chelsea Build Society, who have stopped lending in the sector altogether.

Speaking to the newspaper, David Hollingworth from London & Country Mortgages said: "Everyone has been showing a much reduced appetite in this area due to issues around the transparency of builders' incentives, the real value of the properties and major fraud."

Moneysupermarket.com reported yesterday that there has been a 40 per cent drop in the number of buy-to-let mortgage products available in the last month alone.

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