A new lender, Precise Mortgages, entered the contractor mortgage market yesterday. The group will lend funds to investment landlords providing they have at least 25% to put down as a deposit.

The company, which is backed by US venture capitalists, will offer contractor mortgages through intermediaries such as L&G Mortgage Club and Mortgage Next.

The chief executive of Precise Mortgages, Ian Lonergan, said that a significant mortgage shortfall has taken place over the last couple of years as some lenders have pulled out of the mortgage market or focused on lending only to borrowers with a very low credit risk.

He believes there is now a strong demand for new lenders to enter the UK market place.

The group has 3 different deals on offer; one of which is a two-year tracker loan with a starting rate of 5.79%.

Another group to enter the market place yesterday was Aldermore. They will provide discounted and fixed rate residential loans as well as buy-to-let mortgages.

The buy-to-let market started to improve earlier this year with new players such as the Bank of China entering the sector.

The Mortgage Works launched 7 new products for the buy-to-let market earlier this month. There are now a total of 301 products available for investment landlords; up from 215 at the start of the year. That is still a far cry from the 3,662 mortgages that were available in August 2007.

Rates on buy-to-let loans are also decreasing. 2 year fixed rate products now have an average rate of 5.65% as opposed to the 5.96% charged last September.

New products and reduced rates will indeed be good news for the beleaguered housing market. The CML has reported that gross lending now stands at its lowest for 10 years. £10.2 billion of new deals were agreed in April, down 12% on the previous month.

Michael Coogan, director-general of the CML wants the government to step in quickly to address the prospective funding gap that will occur when the support measures introduced during the economic crisis come to an end.

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Over the coming months, the FSA will be setting its final rules for the contractor mortgage market and the Council of Mortgage Lenders (CML) is hoping that this will not include regulations for the buy-to-let industry.

In October last year, the FSA proposed including buy-to-let mortgages in its remit and the Treasury has also been running various consultations about the possibility of extending the coverage of mortgage regulations in the UK. Yet despite the numerous buy-to-let scandals that emerged during the economic crisis, the CML feels that regulation would not boost consumer protection.

The Council of Mortgage Lenders believes that buy-to-let properties are commercial transactions undertaken for the purpose of investment. Director general, Michael Coogan said that for amateur property investors the problem is not with mortgage advice, rather the initial investment advice.

The CML does however believe that second-charge lending and selling on of mortgage books should be regulated.

With regards to second-charge lending they think that all secured lending should be regulated to create a coherent and comprehensive framework that is in line with EU regulations. They do however believe that that the impact on low-cost home-ownership should be properly taken into consideration first.

The CML is also wary about the dangers of “double” regulation where the power over the selling on of mortgage books has already been passed to a servicer or administrator. They agree that there are cases where consumers can suffer when mortgage books are sold on but that any new regulations should only cover interest rates, service levels and arrears management.

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