Posts with tag: buy to let mortgages

Fee-Free Buy-to-Let Mortgage Products Rise

Published On: October 29, 2015 at 10:32 am

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The amount of arrangement fee-free buy-to-let mortgage products increased in the third quarter (Q3) of this year, revealed data from Mortgages for Business (MAB).

Fee-Free Buy-to-Let Mortgage Products Rise

Fee-Free Buy-to-Let Mortgage Products Rise

The figures from the latest Buy-to-Let Mortgage Costs Index show that 17% of products in Q3 were offered without lender arrangement fees, up from 13% in Q2. Flat fee products dropped slightly from 47% of all buy-to-let mortgages to 46% over the same period.

The greatest declines were experienced on products with percentage-based fees, falling from 40% of all buy-to-let products in Q2 to 37% in Q3.

Charges, including arrangement fees, valuation fees and legal costs, have continued to have a negative impact on total costs. On average, they now add an extra 0.48% to the headline rate, down from 0.52% in Q2. When the index first launched however, in Q1 2013, the average was 0.67%.

These decreases were also witnessed in the high loan-to-value (LTV) sector, which has previously seen an average 0.9% added to the headline rate. In Q3 2015, the average additional cost on high LTV rates was down to 0.67% after three consecutive falling quarters.

The study also found that despite absolute product numbers by initial term – one to five-year rates and loan term products – rising across all categories, the market share of two-year loans has dropped annually from 54% in Q3 2014 to 43% now.

Longer term products, especially three and five-year rates, have increased their market share, gaining 9% of the market between them.

Finance Director at MAB, Simon Whittaker, comments: “The recent falls in swap rates, almost back to levels similar to the start of the year, have helped lenders trim prices, but whilst they continue to be attracted to the buy-to-let space, they are having to be ever more creative to find the balance between maintaining their margins and offering competitive products.

“When looking at the market and the wider economy, the balance seems to have tilted towards there being no increase in bank rate for quite a few months yet.”1 

1 https://www.landlordtoday.co.uk/breaking-news/2015/10/fee-free-btl-products-increase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tougher Buy-to-Let Mortgage Regulation to be Announced Soon

Published On: October 26, 2015 at 4:11 pm

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Chancellor George Osborne has revealed that the Bank of England (BoE) could soon receive powers to regulate the mortgages that small landlords use to buy investment properties.

The Treasury is currently discussing whether to give the BoE the powers it has requested to limit the size of mortgages relative to rental payments. However, it has not announced whether the powers will be granted.

Tougher Buy-to-Let Mortgage Regulation to be Announced Soon

Tougher Buy-to-Let Mortgage Regulation to be Announced Soon

Questioned over the rumours, Osborne responded: “I’d better wait until we actually make the announcement, but [this will be] as soon as possible.”1

Mortgage experts have expressed concern over the plans to intervene in the sector.

Executive Director of the Intermediary Mortgage Lenders Association (IMLA), Peter Williams, says: “The Government stated its intention earlier this year to hold a post-election consultation to assess the evidence for granting powers of direction over buy-to-let lending to the Financial Policy Committee [FPC]. It was therefore very disappointing to hear the Chancellor apparently jump the gun at yesterday’s Treasury Select Committee.

“It suggests a stage of evidence-led policy making has been removed and that the consultation may be limited to what those powers will be when, rather than if, they are granted.”2 

Individual mortgage lenders also addressed the announcement.

Managing Director of Aldermore Group, Charles Haresnape, explains that the lender welcomes any policy that improves the private rental sector, but insists it is important that any powers granted do not threaten the market.

“The private rented sector is a vital component of the UK housing market and policy levers must be used to support the sector in driving additional capacity,” he says. “It is important that the FPC works closely with the sector and uses any powers sparingly and appropriately, and not unnecessarily remove any momentum from the private rented market.”2 

Steve Griffiths, Head of Sales and Distribution at Kensington Mortgages, states that it will be interesting to see what powers the BoE is given when further details are announced later this year: “The rental sector is becoming increasingly important to the UK housing market and many people are staying in rented accommodation for much longer than we have seen historically.

“The quality and variety of such accommodation has improved significantly following the growth of buy-to-let, and it is vital that these standards are maintained in the future. It would be short-sighted to limit landlords’ ability to deliver quality rented accommodation when many people rely on this sector.”2 

1 https://www.landlordtoday.co.uk/breaking-news/2015/10/osborne-says-tougher-buy-to-let-regulation-on-its-way

2 https://www.landlordtoday.co.uk/breaking-news/2015/10/osborne-has-jumped-the-gun-on-btl-regulation-say-lenders

New Buy-to-Let Deals on the Market

Published On: October 22, 2015 at 10:59 am

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The end of the year, usually a quiet time for the property market, could experience heightened activity in the buy-to-let sector, as mortgage lenders compete to introduce new products.

Aldermore Bank, Coventry Building Society and 3mc have all revealed new mortgage rates for buy-to-let investors.

New Buy-to-Let Deals on the Market

New Buy-to-Let Deals on the Market

Aldermore has launched a new limited edition remortgage deal, including its lowest ever five-year buy-to-let fixed rate.

The range includes five-year fixed rates from 3.99% up to 80% loan-to-value (LTV), with the rental calculation based on the product pay rate.

It has also cut its reversion fees by 1% and introduced free legal fees on its standard range.

This deal is available on all new business applications across Aldermore’s standard and specialist buy-to-let ranges and includes a 1.5% completion fee.

Group Managing Director at Aldermore, Charles Haresnape, says: “There has never been a better time to take advantage of historic low interest rates and our new limited edition offering is available on a first come, first served basis.”1 

The Coventry Building Society has improved its five-year buy-to-let range, including a deal at a 3.35% rate up to 65% LTV.

This mortgage is booking fee free and includes a valuation of up to £700. It has early repayment charges of 5% until 31st January 2017, 3% to 31st January 2019 and 1% until 31st January 2021.

National packager and mortgage club 3mc, based in Cheshire, is now trialling Foundation Home Loans’ (FHL) new limited company buy-to-let product before its formal launch in November.

The product includes six fixed rate deals over two, three and five years, starting at 4.19% for two years up to 65% LTV.

Clients are able to purchase an existing property in a company name using a director’s loan.

Managing Director of 3mc, Doug Hall, explains why a limited company buy-to-let may be a viable option for landlords: “The effect of the Chancellor’s move to restrict tax relief will accelerate the need for more established landlords to look carefully at how they best manage their portfolios in a way that continues to maximise rental yields and minimise costs.

“These products from FHL will provide new options for brokers with landlord clients.”1

1 https://www.landlordtoday.co.uk/breaking-news/2015/10/lenders-unleash-series-of-buy-to-let-deals

Reducing Buy-to-Let Investment Will Harm Tenants, Warns Report

Published On: October 20, 2015 at 3:52 pm

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Introducing measures to reduce the amount of investment in the private rental sector will only increase rent prices and harm tenants, warns a new report from the Intermediary Mortgage Lenders Association (IMLA).

Reducing Buy-to-Let Investment Will Harm Tenants, Warns Report

Reducing Buy-to-Let Investment Will Harm Tenants, Warns ReportLenders Association (IMLA).

The study, entitled Segmenting the UK Mortgage Market, assesses key issues facing the main sectors of the mortgage market. The market divisions are: First time buyers, moving homeowners, buy-to-let investors, lifetime borrowers, remortgagers and further advances.

Analysing the possible effect of the buy-to-let tax changes announced in the summer Budget, the IMLA says the reduction in mortgage interest tax relief will push some landlords into making losses after tax and raise the effective tax rate on their investment above 100%.

The IMLA argues that this may switch the market in favour of owner-occupiers by cutting the price that landlords are willing to pay for a property.

However, the risk of these changes, and therefore greater buy-to-let mortgage regulation, is the reduced supply of available rental homes at a time when the population is growing and low housing supply is fuelling demand in the private rental sector. The IMLA also believes that institutional investment will not make up the difference.

The IMLA research reveals that total lending across the whole mortgage market this year was below its 2014 level for January to May. Since, there has been a sharp improvement, suggesting that 2015 will end up being a reflection of 2014.

The strongest recovery was in the buy-to-let sector. However, when compared to recent years, this is unsurprising. Between 2007-09, the market saw an 81% decrease. This compares with a 60% fall in remortgaging, 56% decrease in activity by home movers and 53% drop amongst first time buyers over the same period.

Buy-to-let lending levels remained 40% below the 2007 record in 2014. The IMLA believes that the market is responding to, rather than fuelling growth, in tenant demand.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Buy-to-Let Property Sales Up by 50% in a Year

Published On: October 8, 2015 at 9:57 am

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reform of leasehold

Buy-to-let property sales rose by more than 50% in August, compared with the same month last year, at a total value of £3.31 billion, according to market research company Equifax Touchstone.

Buy-to-Let Property Sales Up by 50% in a Year

Buy-to-Let Property Sales Up by 50% in a Year

From January to August this year, buy-to-let sales had hit £25.62 billion, a 30% increase on January to August 2014.

Equifax Touchstone believes that buy-to-let investors are attracted to the market by the continued economic recovery, low interest rates and competitive deals from lenders.

Additionally, private rent prices have grown by more than 10% since the start of the year.

Despite seeing annual growth, buy-to-let sales actually dropped in August by 12.5% from the £3.77 billion reported in July.

However, this is common during the summer holiday period and is considerably less than the fall in sales recorded last year, of 21%.

The figures cover 92% of the intermediated lending market. Residential sales between January and August rose by 14.8% compared to the same period in 2014.

Including the buy-to-let sales growth, total sales for January to August were up by 18% annually. The average value of a residential mortgage in August was £183,337, compared with £170,371 in August 2014. The typical buy-to-let loan was worth £158,782 compared to £143,546 last August.

Relationship Manager at Equifax Touchstone, Iain Hill, says: “We have seen promising signs of growth in the buy-to-let lending market in the past year, as demand continues to rise and this has been further consolidated by last month’s figures. We expect this upward trend to continue in the coming months.

“Despite a fall in sales in August, which was slightly more than expected given the robust nature of the market so far this year, it’s promising to see sustained year-on-year growth.

“The current favourable market conditions, supported by low interest rates and the greater capacity for lenders to offer mortgages, have encouraged borrowers to enter the market.”1

1 http://www.propertyindustryeye.com/buy-to-let-sales-rise-by-50-in-one-year/

 

BTL mortgage options rise to nearly 1,000

Published On: October 6, 2015 at 3:47 pm

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The number of buy-to-let mortgage products available soared to almost 1,000 during the third quarter of the year, according to a new report.

Data from the latest Complex Buy to Let Index from specialist brokers Mortgages for Business show that options for buy-to-let investors rose by 11% during the last three months.

Annually, there has been an increase of 35% in these products.

Yielding success?

‘Vanilla’ buy to let properties offer the lowest gross yield to landlords, with a further fall of 0.8% recorded in quarter three of this year to 5%. Annually, these yields have fallen by 0.9%.[1]

Moreover, between the second and three quarters of 2015, yields on multi-unit freehold blocks feel from 7.1% to 6.1%. Year-on-year, yields for this type of property have fallen by 2.5%.[1]

In comparison, HMO’s performed reasonably well, with yields only falling by just 0.1% in quarter three.

‘The number of new mortgages coming onto the market has rocketed in recent months,’ said David Whittaker. ‘There is huge interest in mortgages suitable for limited companies as landlords take advice from their accountants.’[1]

Continuing, Whittaker suggested that, ‘as rents fail to keep pace with racing property prices, yields are continuing to plateau. Returns on vanilla buy to let have now fallen to the 5% mark. Landlords will reasonable borrowing costs and a strong portfolio of these sorts of properties will still be making a solid income from such investments but this changes the case for those considering new purchases. With average yields on HMO’s still nearer 10%, more complex property types are likely to attract a growing portion of new investment.’[1]

BTL mortgage options rise to nearly 1,000

BTL mortgage options rise to nearly 1,000

Remortgaging rises

Further data from the report shows that remortgaging performed better than new purchase loans for the fourth consecutive quarter. During the third quarter of this year, 66% of vanilla buy to let loans were for remortgaging, in comparison to 34% for new property purchases. [1]

For multi-unit freehold blocks, remortgaging accounted for 89% of all new mortgages in the period, up by 7% month-on-month and by 22% on the same period one year ago.

Whittaker feels that there is, ‘a change of mood for landlords. Recent unfriendly noises from the Government and Bank of England have contributed but mostly this represents a natural cooling in the buy to let industry after an exceptionally strong first half of 2015.’[1]

‘Consolidation is the order of the day. Landlords are taking full advantage of record low borrowing rates while this lasts. The fact the landlords are choosing in vastly larger numbers to remortgage rental property rather than purchase shows they are looking to get a competitive fixed rate mortgage,’ he added.[1]

[1] http://www.propertywire.com/news/europe/uk-landlords-buy-let-2015100611062.html