Banks hit first time buyers but boost buy to let

Having devastated their balance sheets through over-optimism back in the noughties, the banks have swung to the polar opposite this time around, factoring a worst case scenario into their lending policies.

The first big lender out of the blocks was Nationwide, who overnight tripled deposits required to 15%. following a slew of smaller lenders including Accord, Virgin Money and Clydesdale Bank. Others have followed suit, citing the risk of lower house prices.

Buyers who can raise the new higher deposits also find themselves facing another hurdle - higher repayments. Santander, for example, have increased their interest rates on mortgages above 80% loan to value.

If the banks were trying to drive property prices down, reducing the number of buyers in the market would be a good place to start. The words "self fulfilling prophesy" spring to mind.

And the buy to let market?

Perhaps comforted by the lower loan to value mortgages offered to investors, lenders have been improving their offerings, first by re-introducing products suspended earlier in the year, then launching new ones and cutting interest rates, albeit marginally.

Investors' reaction? We've yet to see the numbers, but anecdotal evidence suggests investors have reacted well. Ipswich Building Society - a player in this niche - had to withdraw two of their most popular products because they were unable to process the volume of new applications.

UPDATE 8/7/2020
Ipswich Building Society have continued to receive more applications for buy to let mortgages than they can handle, so they have pulled them all. Buy to let is alive and well.