Almost half of recent buy-to-let property investors could be in negative equity by the middle of next year if prices continue to fall, according to ratings.

PropertyWire – Monday, 24 November 2008

They are property investors who took out large mortgages towards the end of the boom, typically interest only, and often buying city centre apartments where prices have since collapsed.

Rating agency Standard & Poor’s has found that over 50% of buy-to-let loans were taken out during 2006 and 2007 when lending practices were at their most generous. Typically, a buy-to-let borrower took out an 85% loan, leaving them at risk if property prices fell just 15%.

It believes that up to four in ten of buy-to-let borrowers will owe more on their mortgage than their property is worth by next June if property prices fall by between 25% and 30% from their 2007 peak. Full Article