We thought you may be interested in the following story. We are receiving copy correspondence sent to some of our buy to let mortgage customers from a particular mortgage lender ‘offering’ them:

i) No closing fees (e.g. redemption penalties, deeds release/sealing fees etc.)  on their existing buy to let mortgages

ii) A lump sum cash payment of upto £12,000 (yes, twelve thousand pounds)

 And the catch? They have to move their mortgage away from said lender by the 31st August 2008. Strange times indeed…Â

So where are we?

For professional landlords the issue of ‘bottom-fishing’ remains (anyone caught sniggering will be sent to the headmaster). If you think we are near the bottom of the cycle then  buying possibilities must surely abound in this stagnant market. There is a sense however that the overall sense of unease and nervousness in the market is leading to a reluctance to commit to new purchases. This is of course entirley understandable given the negative signals that are coming from the retail, building and property services sector. If we are not in recession, then my we respectfully suggest that the the economic measuring stick is not working (we were going to use the word ‘dipstick’ there but felt we would just end up going off on a ‘It’s a Knockout’ themed tangent).

On a more positive note, there seems to be a move toward more competitively priced buy to let mortgage products. I think some mortgage lenders have realised that there is an abundance of low risk remortgage potential out there presenting an opportunity to hoover up large chunks of this business in the current turmoil. The improved products have been introduced at very moderate loan to values (typically 65% or less)  so will mainly benefit the remortgage market unless you have some pretty chunky deposits to fund your purchases. Check out the latest buy to let mortgage best buys here - Best Buy Table

There can be little argument that the property market is experiencing a downturn. Are there opportunities for the professional buy to let investor in this market? The answer is a very qualified ‘maybe’. It could be argued that there are bargains to be had in the new build sector with a ‘name your price’ attitude evident amongst builders and developers as they are left with surplus stock particularly in the city centre flat market. Of course ‘bargain’ is a somewhat subjective concept here as in truth we do not know where we are in the housing cycle. Have we come through the worst of the housing ‘crisis’ or do we continue to stare into the abyss? In truth, no-one knows. In addition you will need some pretty serious cash to take advanatge of any new-build opportunities as lenders continue to restrict buy to let mortgages on such property to low loan-to-values.

Distress sales are seen as another opportunity for the professional investor with the seemingly inexorable rise of property available at below market value due to sellers trying to seek an immediate alternative to imminent reposession. Again, the concept of ‘below market value’ should be put into context of the general housing cycle. Let’s take the case of an investor who bagged a ‘bargain’ 6 months ago for buying a distressed seller’s home for 85 - 90% of its true value and then renting it back to them at standard market rent. Although the press have been critical of such activity, given the slide in house prices the distressed seller can now consider they made a pretty savvy financial move!

In summary, opportunities? It all depends on your view of where we are in the housing cycle and your ability to finance any opportunites with buy to let mortgages. For the moment…Cash Is King!

In the words of Michael Jackson…’You are not alone’. A quick glance at our Buy to Let Mortgage Best Buys Table just underlines the paucity of competitively priced products out there. The big question is, are things going to get worse or better? In six months time, are we going to be looking back thinking what good value these buy to let mortgage products represented? It is certainly not a problem with customer demand as the clamour for products is as strong as ever.

 As for our landlord investors, a number would seem to be sitting tight (or ‘hanging tough’ as our younger patrons may call it) until normality returns to the lending markets. Others however see a golden opportunity arising to obtain property at below market value as the credit crunch finds an ever increasing number of victims in the sub-prime mortgage sector.

 As to what the future holds, I am afraid it is a case of wait & see!