Posts with tag: buy to let mortgages

Amount of Buy-to-Let Mortgages Down

Published On: May 11, 2015 at 2:29 pm

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The amount of buy-to-let mortgage deals available dropped by over a quarter in April, found the latest Buy-to-Let Product Index.

Mortgages for Business found that 609 buy-to-let mortgages were available last month, down from a high of 863 in March.

Amount of Buy-to-Let Mortgages Down

Amount of Buy-to-Let Mortgages Down

31 different lenders offered the deals, and there are a few reasons why the total available mortgages decreased by 254.

One possible reason is that there was a break in between lenders taking products off the market and launching new ones.

The study also indicates that competition in the market caused providers to remove some products so that operation could run smoothly during periods of high demand.

Of all the buy-to-let mortgages available, 46% were at 75% loan-to-value (LTV), up from 38% in March and 40% in February.

Higher LTV deals were offered, but these came with tougher conditions and cost more to the borrower.

9% of products had 80% LTV and 1% were at 85% LTV.

Fixed rate and tracker mortgages were similarly priced, however fixed rates were seemingly more competitive.

Mortgages for Business found that fixed rate two, three, or five-year deals offered better rates than trackers, especially at low LTV ratios.

Monthly figures indicate that fixed rates grew between March and April, from 3.53% to 4.02% for a two-year, 4.46% to 4.82% for a three-year, and 4.38% to 4.83% for a five-year.

Tracker buy-to-let mortgages also increased, with five-year rates up from 4.11% in March to 4.85% in April.

Two and three-year trackers also rose from 3.93% to 5.08%, and from 3.39% to 3.81% correspondingly. These numbers are averages and do not include fees.

 

 

Pension reforms lead to more BTL mortgages

Published On: April 30, 2015 at 10:37 am

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Changes in pension regulations have led to an influx of lower rate buy-to-let mortgages becoming available on the market.

Figures from Moneyfacts, a financial product analyst firm, indicate that investors can now choose from 226 different fixed-rate mortgage deals, as opposed to 162 just six months ago. Additional statistics from the same report show that the average two-year fixed-rate deal has dropped to 3.45% from 3.7% over the same period.

Pension reforms

The new pension regulations, which came into effect on April 6th, saw those over the age of 55 able to access their savings as a taxable, lump sum. Many are using this to subsequently invest in the property market.

As such, lenders are subject to fewer restrictions on their buy-to-let mortgages, with the transaction now being treated as business lending. This is in contrast to residential lending, regulated by the Financial Conduct Authority.

Charlotte Nelson of Moneyfacts.co.uk, believes that buy-to-let mortgages are, ‘experiencing a renaissance, becoming not only more widely available but cheaper too.’ She continued, saying, ‘with more five-year fixed rate deals charging below 5% than ever before, it is little wonder that the newly emancipated pensioners are genuinely considering buy-to-let as a retirement option.’[1]

Pension reforms lead to more BTL mortgages

Pension reforms lead to more BTL mortgages

Seek assistance

Nelson warns however that investors looking at purchasing a property as an alternative to a pension must, ‘seek the guidance of a financial advisor who can access a larger portion of the market.’ She continued by saying, ‘with easy savings to be made,’ with the right advice, people are more likely to be, ‘recouping more in rent, which will allow you to get a bigger return on an investment.’[2]

A word of warning has been issued by HMRC experts, who claim that pension-savers that do not ensure that they have tax-efficient methods of withdrawals could face large bills.

[1-2] http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/11552236/Pension-freedoms-spark-flood-of-cheap-buy-to-let-mortgages.html

 

 

Bank of England report shows BTL rise

Published On: April 28, 2015 at 10:29 am

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The latest Bank of England report on the Buy-to-Let market has underlined the continuing growth in the sector.

Statistics from the report show that Buy-to-Let mortgages represented15% of the overall outstanding residential mortgage loans at the end of 2014. Gross advances of new loans have recovered to reach the same levels as in 2005.[1]

 

Encouraging

Statistics from the report show that overall gross lending stands at £27.4bn. This reflects the major increase in supply and demand, with Buy-to-Let now accounting for 45% of all house purchases in the residential sector. Buy-to-Let remortgages have followed a similar trend, increasing to 52% of all transactions. This can be attributed to a larger variety of products and reductions in specific criteria.[2]

Additionally, the number of Buy-to-Let products widely advertised has more than doubled since the end of the financial crisis. Despite the majority of loans standing below 75% Loan to Value (LTV), there his been a rise in loans between 80-85% LTV since 2013.[3]

Bank of England report shows BTL rise

Bank of England report shows BTL rise

 

Possession orders

More encouraging news came with the Council of Mortgage Lenders (CML) indicating that arrears on Buy-to-Let lending fell again during 2014. However, the rate of possession for Buy-to-Let properties was double that of owner-occupier homes. The CML suggested that this was down to lenders offering more options and often more time to help owner-occupiers to battle through periods of financial hardship.

 

[1-3] http://www.property118.com/bank-england-report-buy-to-let-market/74174/

 

Year on Year rise in Buy to Let Mortgages

Published On: April 20, 2015 at 10:21 am

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Latest figures have shown that buy-to-let mortgages rose steadily in the twelve months from February last year.

Rise

Statistics from the Council of Mortgage Lenders have revealed that 15,900 buy to let loans were taken out in February. Despite this figure being down 13% from January, this signaled an 11% rise from February 2014.[1]

 

These loans totalled £2.2 billion, down 12% from January but up 16% from February last year. Buy-to-let remortgaging followed a similar pattern, falling 19% from January, to 8,400. However, this was a substantial increase of 23% from twelve months ago.[2]

 

Overall value of these loans amounted to £1.3bn, a very large increase of 31% year-on-year.[3]

Year on Year rise in Buy to Let Mortgages

Year on Year rise in Buy to Let Mortgages

 

Paul Smee, director general of the Council of Mortgage Lenders, said that the rise in buy-to-let activity was due, ‘almost completely to remortgaging which is typically strong in the buy-to-let market.’[4]

[1-4] http://www.landlordtoday.co.uk/news_features/Buy-to-let-mortgages%3A-steady-rise-year-on-year

 

 

Mortgage Lending Dropped by 16% in February

Published On: April 15, 2015 at 4:05 pm

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The amount of mortgages offered to first time buyers and those moving home dropped by 16% in the year to February, the Council of Mortgage Lenders (CML) found.

The CML says that the normal lending dip in the early part of the year has been worsened by the general election, which may have caused buyers to avoid moving until they find out who will be in power. An upturn in lending is expected in the summer.

Bucking the trend, lending to buy-to-let investors has increased yearly by 11% from February 2014. 15,900 loans were approved in February 2015 worth a collective £2.2 billion.1

Some estate agents believe that new pension rules, allowing over-55s to withdraw from their retirement savings, have encouraged them to invest in the buy-to-let market.

Yesterday, we revealed that buy-to-let investors have seen 1,400% returns. Read more here: /1400-returns-create-buy-let-landlords/.

Mortgage Lending Dropped by 16% in February

Mortgage Lending Dropped by 16% in February

The CML found that so far the rise in buy-to-let lending has “almost completely” been a consequence of remortgaging. Lenders have been cutting their mortgage rates recently, as they expect an increase to the Bank of England’s (BoE) base rate to not be until next year.

For those stepping onto the property ladder for the first time, 18,700 loans with a total value of £2.7 billion were approved in February. This is a 1% drop on January and a 16% decrease on February 2014.1

However, the CML said that this was the second strongest February for first time lending since 2007, behind only February 2014 levels.

First time buyers needed an average deposit of 19% in February, compared with 17% in January. As mortgages are fairly cheap, first time buyers’ repayments make up 19% of their income, down from 24.8% in December 2007.1

The Office for National Statistics (ONS) also revealed that the average price paid for a home by first time buyers in February was £205,000, a rise of 7.4% on the previous year.1

For people moving house, 21,900 loans were made at a total worth of £4.1 billion in February, a 2% fall on January and 16% less than in February 2014.1

Director General of the CML, Paul Smee, says: “Seasonal factors have played their part in dampening house purchase lending activity in February. This typical seasonal trend may also be exacerbated by uncertainty ahead of the general election, but we still expect to see an upturn in the spring and summer months.

“Buy-to-let, in contrast, has shown year-on-year lending increases, due almost completely to remortgaging which is typically strong in the buy-to-let market.”1

Chief Executive of mortgage brokers SPF Private Clients, Mark Harris, says that in March, the mortgage market picked up, as is expected in spring.

He explains: “Buy-to-let lending is up year-on-year, proving its enduring popularity. The relaxation of pension rules this month is likely to provide a further boost for the sector. A combination of cheap mortgage rates, easing criteria and poor savings rates are convincing many that investment property is a sensible home for their money.

“Once election uncertainty is out of the way, we expect to see a flurry of activity in the mortgage market. There will certainly be plenty of cheap mortgage rates to tempt buyers.”1

1 http://www.theguardian.com/business/2015/apr/14/mortgage-lending-dips-16-in-february

Treasury Defines Accidental Landlord

Published On: February 4, 2015 at 11:54 am

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The Treasury has established a definition for accidental landlord, as it looks toward applying the EU’s Mortgage Credit Directive.

Treasury Defines Accidental Landlord

Treasury Defines Accidental Landlord

The Treasury, who published draft legislation last week, have defined consumer buy-to-let contracts, known as accidental landlords, as any contract the borrower has not entered “wholly or predominantly” for business purposes.1

It launched its initial conference on the Directive in September, when it claimed accidental landlords would be put under regulatory scrutiny, however, a definition was not confirmed.

If a property has been inherited or bought as a residential lodging before a change in circumstances that led to it being rented, these transactions will be caught under the new system, and treated as a regulated mortgage contract under Mortgage Conduct of Business (MCOB) rules.

If the borrower on a buy-to-let contract has clearly stated that the property will be used for rental purposes, they will remain unregulated, unless the lender believes the borrower to be lying.

The new rules will not apply to loan applications submitted before 21st March 2016.

Furthermore, the Treasury has confirmed that responsibility for guaranteeing regulatory compliance regarding buy-to-let contracts lies with the broker firm, not the individual adviser.

Association of Mortgage Intermediaries (AMI) Chief Executive, Robert Sinclair, says: “The clarification on what comprises regulated consumer buy-to-let is positive.”1

Paul Broadhead, Head of Mortgage Policy at the Building Societies Association (BSA), adds: “The BSA is still of the view that the Directive will offer little or no benefit to UK consumers but will add cost, complexity, and confusion to the mortgage process.

“However, we welcome the Government’s approach to implementation, putting in place the minimum requirements to meet European law.

“The introduction of an appropriate framework for consumer buy-to-let will keep the majority of buy-to-let lending outside the scope of regulation, minimising the disruption to the market.”1

1 http://www.mortgagestrategy.co.uk/news-and-features/sectors/regulation/regulation-news/uk-defines-accidental-landlord/2018179.article