The mortgage industry is facing a potentially seismic shift, as NatWest, a leading lender, announced changes to its product ranges that could have severe implications for buy-to-let investments. The warning from industry experts came in response to the bank’s statement, issued yesterday, which read, “Effective 13th June we’re making changes to our end dates and rate changes to our new and existing customer product ranges.”
Amongst these changes were notable increases in buy-to-let rates, rising by up to 157bps. This sudden shift led to concerns among experts about the future viability of buy-to-let investments, particularly with NatWest.
Riverside Mortgages owner and broker, Lewis Shaw, expressed his disquiet about the changes. “I’m no longer sure what level of reality I’m meant to be operating on. This could sound the death knell for buy-to-let, at least with NatWest,” he commented. “Something has clearly spooked the money markets around 2pm [yesterday] and the two-year gilt yield has shot above its peak following the mini-Budget in September. This is extremely worrying and I don’t know where it ends.”
This concern was echoed by other industry figures. Riz Malik, director of R3 Mortgages, stated, “The considerable rise in mortgage rates on buy-to-let properties underlines the flux in the market at present and introduces yet more hardship and pain for numerous landlords. With each passing day, the financial calculations seem to make less sense. This a significant blow for the entire UK buy-to-let market.”
Justin May, Managing Director of EHF Mortgages, was similarly alarmed. He said, “NatWest is increasing the rates on their schemes, such as the Buy-to-Let deals, Green Mortgages and Help to Buy. Some increases are as much as 1.38 per cent on specific deals, with a more palatable (but unwelcome) 0.2 per cent increase across their standard products for remortgages and purchases. When will it end?”
Luke Thompson of PAB Wealth Management suggested that these changes could be a strategic decision by the bank. He said, “Given these latest rates, it seems pretty obvious that NatWest don’t want to be in the buy-to-let mortgage arena at this point in time. My assumption is that they want to see where swap rates will go in the coming weeks and once they have a bit more of an idea on that front they may start to price buy-to-let products more competitively again.”