Renters may struggle to find homes as rates hit buy-to-let loans

Renters and buy-to-let investors could be badly hit by soaring mortgage rates, with the availability of homes to let reducing, MPs have been told.

The Treasury committee heard about the impact holders and renters.

Chris Rhodes, CFO at Nationwide, said the buyto-let sector had been badly hit, meaning that: “It’s marginally profitable for new buy-to-let investors if not lossmaking to take on board a new property.”

Ray Boulger, senior mortgage technical manager at broker John Charcol added: “I think the buy-to-let market is where we’re likely to see a lot more stress than the residential market.”

Joanna Elson, chief executive of the Money Advice Trust, said: “And of course, the impact of that is on renters.”

Mr Boulger said: “What we’re seeing now is criteria changes and we’re finding situations where clients are not able to proceed with the amount they originally planned to borrow.

“It’s not all about rate, it’s rate and criteria, particularly stress test rates, they’ve been changed as a result of rates going up.”

Stress tests look at how affordable payments may be if rates rise.

Mr Boulger continued: “When you factor in the other impact of energy price increases and costof-living increases that can have a significant impact on what people can borrow.”

The stress rate is “particularly a problem with buy-to-let”.

Referring to landlords, he said: “If you need a mortgage and you need a loan-to-value anything above 50% or 60%, with the current stress rates it’s going to be very difficult.”

Renters may soon struggle to find homes.

Banks are making life harder for buy-to-let landlords.