In a significant market shift, new data from UK Finance has revealed a substantial decline in buy-to-let (BTL) mortgage borrowing among older landlords, with the trend being described as having “fallen off a cliff.” The data points to higher interest rates as a key factor influencing this change.
During the final quarter of the previous year, only 7,980 “later life” BTL loans, encompassing both house purchases and re-mortgaging, were issued. This marks a stark contrast to the 16,930 loans advanced to individuals over the age of 55 for the same purposes during the corresponding period in 2022.
The latest figures indicate that later life BTL loans in Q4 2023 constituted approximately 22% of all BTL mortgages.
Sarah Coles, Head of Personal Finance at Hargreaves Lansdown, commented on the development, stating, “New buy-to-let mortgages have fallen off a cliff among older landlords, with the number of these loans halving in a year.” Coles emphasized the broader impact on the market, noting that older individuals comprise over a fifth of all buy-to-let loans. As they increasingly reconsider the viability of being private landlords, it results in a domino effect, with more properties being sold, thereby exerting additional pressure on rising rents.
Coles offered a slightly optimistic perspective, stating, “The more positive news is that the pressure has been easing since these figures were released and lower mortgage rates will have taken less of a toll in recent months.” However, she cautioned against relying on swift rate cuts for financial relief in retirement, as falling mortgage rates have slowed down amid the market grappling with the unexpected persistence of inflation.
This shift in the buy-to-let mortgage landscape among older landlords underscores the complex interplay of economic factors influencing the property market, with potential ramifications for both property owners and tenants alike.