The recovering buy-to-let mortgage market has been further boosted with the addition of another two new lenders to the sector.
With the backing of United States venture capitalists, Precise Mortgages will issue mortgages to investment landlords who have a deposit of at least 25%.
The group will initially distribute its loans through a panel of intermediaries, including L&G Mortgage Club, Mortgage Intelligence and Mortgage Next. The group, however, would not reveal the amount of money that it had available to lend.
Ian Lonergan, CEO at Precise Mortgages, said: “Over the last two years a fundamental mortgage shortfall has developed as lenders have exited the market, rebuilt their balance sheets, restricted their lending volume and focused on very low credit risks.
“There is therefore a significant need for new lenders to bring new funding to the UK mortgage market. Precise Mortgages has access to funding and we will bring extra liquidity to the market. Others will hopefully follow our lead and over time will help fill the funding gap that is damaging the overall economy.”
The group has launched with three different mortgage products to begin with. Rates start at 5.79% for a two year tracker loan of Libor plus 5.15%, for which the arrangement fee is 2.5%.
The news has come at the same time as other firms, such as the Bank of China and Aldermore Bank have also entered the sector. The latter, which is owned by venture capital company Anacap Financial, has also done so this week, and like Precise Mortgages will issue mortgages through its own panel of intermediaries, including L&G Mortgage Club, Mortgages for Business and Mortgage Intelligence.
In addition, it is now just a week since The Mortgage Works, the specialist lending arm of the Nationwide Building Society, increased the loan-to-value amount available on seven of its buy-to-let loans to 80%, which is another indication for many observers of the increasing health of the buy-to-let mortgage market. The financial crisis hit the buy-to-let mortgage market particularly adversely: there were only a total of 215 buy-to-let loans available at the turn of the year, and even on Monday there were only 301 different mortgages available, compared to a high of 3,662 in August 2007.
According to Moneyfacts.co.uk and as reported by the Press Association, there has also been an improvement on the rates being charged on buy-to-let mortgages. The average cost of a two year fixed rate loan was 5.96% as of September 2009, but has fallen to 5.65% now.