I spoke to Fred of Resident Broker. The website is down, but he is very much up and about. Resident Broker is a specialist BTL mortgage broker. They seem to know what they are doing and gave me a picture of the market. Essentially the banks are punishing new borrowers for the sins of their forebears. The *best* deals available now for BTL are from Birmingham Midshires, with 5.89% fixed for 3 years with an astonishing 2.5% initial fee. The best tracker rates are Bank of England base rate + 3.75%. Nobody will lend at more than 75% LTV, and *the only* no-fee deal is from Northern Rock is offered at 8.04% - practically a credit card rate.
Banks will not lend on HMOs any more, they are reluctant to lend to student lets. It seems practically impossible to get any finance for property investment. This sort of situation is going to result in some real bargains coming onto the market.
The situation is improved by the existence of people like PJT Finance who can structure deals to achieve much higher levels of gearing than banks officially are happy with as long as 'BMV' (below market value) prices are available. Having been deeply sceptical about the whole BMV concept in the past, I now can recognise that with new finance being impossibly expensive compared to existing finance there will be sellers who may be prepared to sell at any price to "de-leverage" (un-gear?). There are a number of sites offering 'BMV leads' - i.e. the contact numbers of desperate home owners facing repossession. This is maybe not the sort of bottom-fishing that everyone is comfortable with, but with the prospect of a house being sold at a no-reserve auction by a bailiff instructed by the mortgage lender (which, as we saw above, has no compunction about taking it's pound of flesh at the point of lending) I can see why some owners might choose this option. A couple of sites offer this service - Network Property Buyers and 24-7 Property dot Com. You can see a consolidation of leads at this forum at Singing Pig.
