Thursday, May 14, 2009
Boffin: "Interest rates are no longer the issue, but capital is"
Telegraph: Buy-to-let: 'Robbie Fowler-type property tycoons to squeeze out amateur landlords'
"The squeeze on access to capital is now the major problem facing buy-to-let mortgage holders. A lot of these BTL mortgages are interest only mortgages, so they're not actually repaying the principal, and many of them are on rates that need to be rolled over, and it's not so much that they can't afford these rates if they have to be rolled over, but do they have sufficient capital? These mortgages were originally worth around 75-85pc of the value of the property – loans to value (LTV). There were concerns that some valuers were exaggerating the prices of properties at the time, which in effect gave people 100pc mortgages. When these mortgages have to be rolled over, it's a very different proposition, because some lenders have reduced their LTVs to 50pc for some types of property."
2 Comments
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1. Bobby9983 said...
This is pure BS, when a rate rolls over all that happens is that the borrower pays the standard rate.
2. mark wadsworth said...
Excellent.