Posts with tag: lenders

Lender competition leading to remortgaging surge

Published On: August 3, 2017 at 9:41 am

Tags: lenders,mortgages,remortgages,remortgaging

New data released by LMS has revealed strong competition between lenders looking to offer the best rates has led to a recent surge in remortgage activity.

21% of remortgagors lowered their total overall mortgage payments in June, a rise from the 15% in May and the greatest number since December 2016. 84% lowered their mortgage rate during June – a rise from 82% in May.

Homeowners

The volume of homeowners remortgaging rose for the second straight month. 35,913 remortgaged during June, in comparison to 32,600 in May – a rise of 9%.

Annually, the number of people remortgaging increased by 10%, from the 32,300 seen in June 2016.

Andy Knee, Chief Executive of LMS, commented: ‘The remortgage market had an excellent month in June. More homeowners saved on their monthly repayments by remortgaging in June, compared to May. This was driven by the intense competition between lenders, many of whom have been offering mortgage products with rock bottom rates to entice remortgagors to switch.’[1]

In addition, there was a large rise in the number of remortgagors expecting a rate rise during June. 47% of remortgagors believe that rates will increase during the next year, up from 40% in May. In fact, this was the highest rate since February.

Lender competition leading to remortgaging surge

Rate Rises

Mr Knee went on to say: ‘In June, the market was bracing itself for a rate rise – there was considerable speculation that the Monetary Policy Committee was going to increase rates in the foreseeable future. Remortgagors thought the tide was about to turn, with a greater number expecting a rate rise in the next twelve months.’

‘This fuelled the ongoing shift to fixed five-year deals, but half way through July, inflation fell to 2.6% from 2.9% the month before. It was the first rate drop in the annual rate since October. Economists had expected it to remain at 2.9% – a four year high. That decline eases pressure on the Bank of England to raise interest rates and we’ll have to see how this plays out with remortgagors in July’s Remortgage Report.’[1]

[1] http://www.propertyreporter.co.uk/finance/remortgage-surge-attributed-to-lender-war.html

Buy-to-let rates slow, but products increase

Published On: August 1, 2017 at 8:41 am

Author: Em Morley

Categories: Finance News

Tags: Buy-to-Let,buy-to-let mortgage product,lenders,mortgages

New research from Moneyfacts indicates that the average two-year fixed buy-to-let rate has slipped by 0.31% in the last year. However, it is only down by 1 basis point in 2017, from 2.92% in January to 2.91% in July.

Despite the slow pace of decline in recent months, the market has now recovered from the significant fall in products evident at the beginning of the year.

Indeed, the number of products now available on the market has increased from 1,408 at the beginning of the year, to 1,610 today.

Bolstered

Charlotte Nelson, Finance Expert at MoneyFacts, observed: ‘The BTL market has seen some turbulent times, with significant tax changes, tougher affordability rules and more changes to come into force in September. It is little wonder many thought the BTL mortgage market might show signs of strain. And yet, rates have continued on a downward path. Since the introduction of new regulation in January, however, the pace of the reductions has slowed considerably.’

‘Product numbers have been bolstered since the dramatic fall that occurred in January, giving landlords looking for a mortgage deal today more choice. This shows that after the initial shock of the changes in January, providers are keen to recover and keep the market buoyant,’ she continued.[1]

Buy-to-let rates slow, but products increase

Nelson went on to say that providers are beginning to gear up for more legislation changes, levied by the Prudential Regulation Authority.

‘Providers are now starting to gear up for further regulatory changes. From 30 September, lenders will have to apply stricter standards for landlords with four or more properties. Given that 89% of the mortgage deals on the market today are available for borrowers with four or more properties in their portfolio, these changes will affect a large chunk of the market.’

‘Faced with these changes, it is likely that competition among providers may start to ebb initially, with the providers instead focusing on their core range and getting their criteria up to date. With the added uncertainty in the economy, landlords looking for a mortgage deal are likely to face a bumpy road for a while. Anyone unsure of their options should seek out independent financial advice,’ she concluded.[1]

[1] http://www.propertyreporter.co.uk/finance/buy-to-let-rates-plateau-but-products-soar-ahead-of-pra-changes.html

Smaller UK mortgage lenders seeing strong growth

Published On: June 21, 2017 at 9:55 am

Author: Em Morley

Categories: Finance News

Tags: Buy-to-Let,lenders,Mortgage lending,mortgages

The most recent report released by CML shows that small and medium sized mortgage lenders are seeing strong growth. This comes despite the 10 biggest lenders continuing to take up the most business in the market.

In 2015, medium-sized lenders saw strong growth, with a 56% increase in annual lending volumes. In 2016 however, there was a more steady rate of growth experienced by these lenders.

Instead, those classified in the next tier down – between 21-30 by volume of lending – saw improved growth.

Lending Rises

These firms saw volumes increase by 60% in aggregate and include names such as Paragon, Nottingham BS, Tesco Bank and Fleet Mortgages.

The proportion of new lending by the top ten firms remained steady at 84% during 2016. However, there were some considerable movements.

For example, Lloyds Banking Group remained the largest mortgage lender in the UK, but saw a fall in its market share, from 17.3% in 2015 to 15.6% last year.

Santander UK also saw a fall in its market share, from 11.8% to 10.4%. The Royal Bank of Scotland however saw its share rise from 1.8% to 12.9% – a rise to sit at third place in the lending list.

Smaller UK mortgage lenders seeing strong growth

Challenger Headway

One particular trend that has continued for the last couple of years was the rise in challenger banks and specialist lenders making headway in the list. TSB Bank saw the most significant growth, with its market share rising by 0.5%.

Activity for this particular group was significantly up, with Precise Mortgages, Metro Bank, and Fleet Mortgages seeing rises of 54%, 67% and 150% respectively.

Gross overall lending in 2016 amounted to £245bn, up 11% on 2015. This was a slightly higher rate of market growth than the 9% seen in the year before. In addition, there was a corresponding increase in marketplace competition. 60 lenders appeared in the CML table for lending in 2016 – made up of those who lent over £50m- up from 55 in the preceding year.

Industry expert suggests buy-to-let lending will fall

Published On: May 18, 2017 at 9:13 am

Author: Em Morley

Categories: Finance News

Tags: Buy-to-Let,buy-to-let mortgage lending,landlords,lenders,Mortgage lending

A leading industry peer has revealed that he believes gross buy-to-let mortgage lending is likely to fall in the next two years.

However, David Whittaker, of Mortgages for Business, feels the share of lending through limited companies should increase.

Reduction

Speaking at yesterday’s FSE Manchester event, Mr Whittaker said that 2017 would see a reduction in the £40bn worth of buy-to-let lending completed during 2016.

He predicted that this would also slip further in 2018.

In addition, he forecasted that 8/9% of this lending would be for limited company buy-to-let in 2017- with this anticipated to rise to 20% during 2018.

Mr Whittaker highlighted data from two lenders- Keystone and Paragon- which both indicate an increase in buy-to-let purchase applications from limited companies. In fact, Keystone’s data indicates that during Q4 of 2016, 3 in 4 applications were through a limited company.

Industry expert suggests buy-to-let lending will fall

Underwriting Changes

Whittaker has urged both advisers and clients to be ready for the second part of the PRA buy-to-let underwriting changes, which lenders must introduce by the start of October.

‘We will all have to be prepared for much more paperwork,’ Whittaker noted.[1]

There was also a call for an industry debate regarding the appropriate level of reward for advisers, taking into account the increase in work required for buy-to-let transactions.

Mr Whittaker feels that 15% of all vanilla buy-to-let businesses will have moved into the specialist portfolio and complex sectors, where procuration fees are greater.

‘A seismic change is going on and we need a propert debate on this. If they (the lenders) pay us property, they’ll get the work as they want it,’ he stated.[1]

[1] http://www.propertyreporter.co.uk/finance/btl-lending-predicted-to-fall.html

Barclays launches new 10 year BTL fix

Published On: January 31, 2017 at 2:30 pm

Author: Em Morley

Categories: Finance News

Tags: Barclays,buy to let mortgages,Buy-to-Let,interest,lenders

Barclays has become the latest lender to offer buy-to-let landlords an opportunity to take advantage of low interest rates. However, the Bank has moved to offer this incentive for a full decade.

The ten-year buy-to-let let mortgage is fixed at 2.99% and comes with a £2,000 fee. It is not subject to strict rental income requirements due to the length of the loan, which has led to suggestions that some buy-to-let investors could brrow more than could on other shorter-term fixed deals.

Stringent Checks

For mortgage products with terms up to five years, the lender requires landlords to illustrate their rental income can cover their mortgage payment by a ratio of 145%, should their mortgage rate increase to 5.5%. However, this rule is waived in favour of a more flexible ‘affordability calculator, on products of five years or more.

Jonathan Harris, director of mortgage broker Anderson Harris, said on the new product: ‘A 10-year fix for buy-to-let is unheard of and the result of changing circumstances for the sector. What is exciting about this product is that the affordability calculator takes into account the applicant’s overall income and expenditure position – so massively benefits those applicants with strong incomes and limited commitments.’[1]

Barclays launches new 10 year BTL fix

‘The upshot is that they can borrow more than previously – a welcome innovation to recent restrictive practices in the buy-to-let market,’ he added.[1]

Landlords considering this product should be wary that the product comes with an exit charge of 5%, which could be a gamble should investors be unsure of what their future holds.

[1] https://www.landlordtoday.co.uk/breaking-news/2017/1/barclays-unveils-10-year-fix-buy-to-let-mortgage-at-2-99

Leeds Building Society brings in tighter lending criteria for borrowers

Published On: December 8, 2016 at 3:03 pm

Author: Em Morley

Categories: Finance News

Tags: Bank of England,borrowers,Leeds Building Society,lenders

The Leeds Building Society has become the latest buy-to-let mortgage lender to alter its criteria for borrowers, ahead of amendments planned for next year.

The changes come as a result of new guidelines forwarded by the Bank of England, giving them greater powers of mortgage lending.

Changes to stress tests

From the New Year, lenders are permitted to assess if their borrowers can repay loans, should interest rates rise by 5.5%. In turn, borrowers must give evidence that their rental income can cover 145% of the mortgage outgoings. This means that in effect landlords will be able to borrow less.

One final change is that lenders must also take into account a landlord’s overall tax position, when agreeing whether to agree a mortgage. At present, the Bank of England demand has yet to be finalised.

Leeds Building Society will insist on an income coverage ratio for buy-to-let and holiday let mortgages of 140%, not 125%.

Leeds Building Society brings in tighter lending criteria for borrowers

Richard Fearon, chief commercial officer at the society, noted: ‘We believe the combination of an income coverage ratio of 140 per cent, a specific and lower stress test rate for re-mortgages, our supporting criteria and market expertise brings a unique proposition to the buy to let market.’[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/12/another-buy-to-let-lender-introduces-stiffer-criteria-for-investors