Investors haven't gone away, you know, but the investment game has changed quite drastically, writes Jack Fagan

PROPERTY INVESTORS looking to take advantage of lower house and apartment prices can still find a reasonably attractive mortgage if they are prepared to shop around. This may well mean moving away from their old bank which is probably concentrating on core business - first-timers and families trading up.

With a grim tide of economic news coming at us on a daily basis, most buy-to-let investors have been sitting tight in recent months - largely because of uncertainty about when property prices will stop falling. Anyone who thinks that investors have bowed out of the scene can think again: they haven't gone away, you know, and there are many - mainly small business people - with adequate cash to fund a deposit on the right property.

Cuts of €100,000 and more on new homes are no longer unusual and, if you are brave enough to take a chance of finding a tenant in the outer suburbs or even in some provincial towns, then you can expect to get an even better deal from the builders.

However, the investment game has changed quite drastically since we first heard rumblings from America about subprime mortgages. Then came the credit crises, quickly followed by a realisation that the economy is in serious trouble. Buy-to-let investors accustomed to drawing down 100 per cent (and more) mortgages in the good times will have to get used to a whole new ball game from now on. They will have to come up with a fairly decent deposit before the banks will even consider giving out a mortgage.

With cash now a somewhat scarce commodity, the credit unions seem to be the only ones dishing it out without much fuss. While the deposit condition now applies to virtually all deals, there are always exceptions, particularly if you happen to be an investor with a good track record and a comfortable margin between outstanding loans and up-to-date value of existing properties. AIB is one of the banks that generally makes an exception in these cases.

To find out the precise ground rules at the moment for buy-to-let investments, Brian Maloney's MMPI office in Donnybrook made contact this week with at least five companies still in the business. Two others, Permanent TSB and Bank of Scotland, are no longer funding residential investments and are sticking to the owner-occupier market.

First Active, now to be merged with its parent Ulster Bank, is offering clients no more than 50 per cent of the cost of a residential investment at the relatively high variable rate of 5.15 per cent. Both ICS and Haven are still willing to make 70 per cent of the purchase price available at fairly similar rates of 5.2 and 5.19 per cent.

The Belgian bank, KBC (owners of IIB), is offering the best overall deal, an 80 per cent mortgage at a variable interest rate of 4.24 per cent. AIB is prepared to offer 85 per cent of the purchase price but its variable rate is higher at 4.7 per cent. Both KBC and Haven will also give borrowers the option of paying interest-only if they buy a one-bed apartment in The Red Arches at The Coast in Baldoyle (€225,000) or a two-bed apartment in Cannon Hall in the north Dublin docklands which is due to go on the market shortly at around €215,000. The other lenders say that interest-only repayments on these and other schemes is "negotiable".

Meanwhile, investors who would like to cash-in on the property bargains in London and other major UK cities are likely to be put off by the fact that buy-to-let mortgages there have barely fallen in the past year, in spite of fairly drastic interest rate cuts.

The average two-year fixed rate residential investment has remained at about 6.3 per cent for the past 12 months despite the fact that the base rate has plummeted from 5.5 to a mere 1.5 per cent. The difference between buy-to-let and base rates is because falling property prices have prompted lenders to pull away from buy-to-let, which they view as a greater risk than standard residential business. The number of buy-to-let mortgage deals in the UK has fallen by more than 90 per cent in the past 18 months.