Posts with tag: mortgages

Mortgage Tracker reveals decline in costs for Five-Year Fixed Rate Buy-to-Let Mortgages

Published On: May 9, 2018 at 9:02 am

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Since the beginning of the year, the cost of five-year fixed rates for buy-to-let mortgages have been falling, according to a new Mortgage Tracker launched yesterday by Property Master, the mortgage broker. This is despite speculation that the Bank of England may at some point decide to increase base rates yet again.

The Mortgage Tracker also revealed a decline in two-year fixed rates based on 65% and 75% of the value of the property, from January to 1st May this year. The only increase over this five-month period was for two-year fixed rate mortgages for 50% of the value of a buy-to-let property, which was by 0.42%.

Angus Stewart, Chief Executive of Property Master has commented: “This is quite a significant increase and perhaps reflects that there are fewer lenders discriminating at the 50% LTV level. Lenders are clearly taking margin here and giving back on other LTV levels.”

The tracker also highlighted the savings to be had on fixed rate buy-to-let interest only mortgages. For a five-year fixed rate, on a property worth £180,000, the savings ranged from £5 to £15 per month. Looking at two-year fixed rates, some included savings of £10 to £15 a month.

Stewart also said: “There are some very good deals out there for landlords, despite worries over any future increase in base rates. The Monetary Policy Committee meets again this coming Thursday (10thMay) so we will see what happens then but there may be other factors operating in the buy-to-let market which explains the decline in costs that we have seen.

“Our findings come on the back of recent research revealing that the number of buy-to-let products currently on the market has reached a record high, so it could be that we are seeing landlords benefiting from unprecedented competition amongst lenders for their business.  This is very good news indeed.”

The Property Master Mortgage Tracker takes into account a range of buy-to-let mortgages for an interest only loan on a typical £180,000 property. It looks at rates from a range of big lenders, including Barclays, NatWest, RBS, TSB, Virgin Money, and BM Solutions.

FCA says Results of Latest Mortgage Market Study are ‘Reassuring’

Published On: May 8, 2018 at 9:41 am

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The Financial Conduct Authority (FCA) released its Mortgage Market Study last Friday, the results of which they have stated are ‘reassuring’.

With mortgage debt accounting for over 80% of total UK household liabilities, ensuring that you have the right mortgage to suit your situation is imperative.

The FCA has stated within the report their vision for the market, informing that it is one in which “borrowers who can afford a mortgage can choose suitable and good value products and services, firms have a culture of treating all consumers fairly, and competition and proportionate regulation empower consumers to make effective choices before taking out, and throughout the life of, a mortgage”.

It is promising to see such a declaration of interest in fairness within the market, and hopefully such ideals will be of further influence to other professionals.

The findings recorded within the report include the following:

  • There are about eight million regulated, first-charge residential mortgages. These are worth at least £1 trillion, amounting to one of the largest retail financial markets.
  • 2016 saw 1.9 million mortgage transactions, including around 80% that were advised and 50% that were arranged by an intermediary.
  • Overall, they found a mortgage market that is working well, but has fallen short of their vision in certain ways.

The FCA has pointed out that “the picture is complex”, and the report goes on to discuss matters in more detail. The full report can be accessed here.

Ishaan Malhi, CEO and founder of Mortgage Broker Trussle, has commented: “It was a long wait, but it’s good to see the findings of the FCA’s Mortgage Market Study finally published. It couldn’t have come at a more crucial time, with so many home owners finding it difficult to compare deals, unnecessarily overpaying interest, or trapped on Standard Variable Rate deals.

“Trussle was borne out of the same frustrations and inefficiencies highlighted in today’s report. Since we began we’ve championed the use of technology to deliver a simple, intuitive, and convenient service to help consumers choose and switch to the most suitable and cost-effective deal. The industry as a whole has made baby steps towards embracing technology and innovation to educate and empower consumers in recent years, but I hope this report galvanizes everyone to do more.

“The inclusion of robust qualitative and quantitative insight supports many of the problems we identified and have been working hard to solve since we launched two years ago. We hope the industry stands up and takes notice of its shortcomings. Today’s home owners deserve a better mortgage experience and it’s clear to see the potential of technology in delivering that.”

Buy to Let Mortgage Index Shows Five-Year Fixed Rates Continue to Fall

Published On: May 8, 2018 at 8:03 am

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There is a continuing decline in the pricing of five-year fixed rate buy to let mortgage products, according to the latest Buy to Let Mortgage Index published by Mortgages for Business. This is despite a steady year in five-year swaps, and suggests that lenders are reducing margins in an attempt to remain competitive.

The Buy to Let Mortgage Index has also revealed that the costs were absorbed across low, medium and high loan-to-value products, resulting in five-year fixed rates appearing even more attractive to landlords looking for longer term certainty over their outgoings. Lenders also absorbed more costs across two and three year fixed rate products.

Throughout the quarter, we have also seen an overall fall in the average pricing rates available to landlords borrowing via limited companies, with the exception five year fixed rates, which have increased to 4.3% from 4.2%.

Despite the unchanging number of lenders offering products to corporates, sitting currently at 16, the total number of products available has increased by 1%, resulting in a 25% lift of availability to the entire market. Limited companies are generally seeing higher rates than those available on the market. This is due to the cheapest products being typically offered by lenders without the systems or underwriting skills in place to offer such products to limited companies.

The index also revealed that a number of buy to let mortgages free of lender arrangement fees have grown for the fourth consecutive quarter. 19% of all products were without lender agreement fees in Q1, an increase from just 11% in Q2 of 2017. 39% of the products included flat fees charged at an average of £1,441. Looking at the remaining products, lenders were charging an arrangement fee based on a percentage of the loan amount, which is typically 0.5-3%.

David Whittaker, Chief Executive Officer of Mortgages for Business, has commented: “Change has been the only constant in the buy to let market in recent years so we felt it was time to take a more holistic approach to tracking and analysing industry developments. This new Buy to Let Mortgage Index combines and replaces four previous indices plus our commentary on the money markets.

“Whilst the current picture shows that lenders and landlords have much to accommodate, the data reveals that slowly, both are moving towards solutions which should keep buy to let a popular if less prolific investment in the years to come.”

Number of BTL Deals Passes 2,000 for the First Time

Published On: May 2, 2018 at 8:10 am

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In the last couple of years, we have seen turbulent changes in the property industry for both landlords and buy-to-let (BTL) providers. There have been various significant changes to regulations and taxation, such as the 3% Stamp Duty surcharge and the new Minimum Energy Efficiency Standards (MEES).

However, this does not seem to have had too drastic an impact on the market, as the latest research from moneyfacts.co.uk shows that the number of buy-to-let products has reached an all-time high. For the first time on record, it has passed the 2000 mark.

Charlotte Nelson, Finance Expert at moneyfacts.co.uk, has commented: “The buy-to-let (BTL) market has seen quite a rollercoaster ride over the past year, including multiple changes that have required both landlords and providers to rethink their options.

“However, this hasn’t appeared to deter providers, marking an increase of 464 deals in just one year, which has seen the BTL market break yet another record and rise past the 2,000 mark for the first time on moneyfacts.co.uk’s records.

“The Prudential Regulation Authority (PRA) rules launched at the end of September 2017, which saw lenders having to apply stricter standards to those with four or more properties, could explain the boost to product numbers. Providers may well have opted to offer two different products to cater to the different borrower types.

“Last week, moneyfacts.co.uk reported that the number of limited company fixed rate options were on the rise. These extra products, which cater for landlords looking to reassess their options after the tax changes, are yet another reason why the overall product numbers have been boosted.

“Amid this upheaval, the market has seen many landlords and aspiring landlords take a step back to assess their options and figure out whether they are making the right choice. As a result, BTL providers are now competing for a smaller pool of customers. Offering variety in their range is one way in which they can compete.

“While it has been a tough time for the BTL market, the fact that the number of available deals is still growing shows it is still a viable option. However, any borrowers considering becoming a BTL landlord should seek the advice of a financial adviser, to ensure this is the right choice for them.”

Buy-to-Let Mortgage Rates Rising from Record Lows

Published On: October 30, 2017 at 10:57 am

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The buy-to-let market has been hit from all sides of late, with tougher affordability rules and key regulatory changes. Now, to make matters worse, buy-to-let mortgage rates are rising from record lows.

According to the latest data from Moneyfacts.co.uk, the average buy-to-let mortgage rate is on the rise. In fact, since 1st October 2017, the average two-year fixed rate has increased by 0.05% and is on target to get back to the rate seen in September, before the latest set of lending changes came into force.

At present, the average two-year buy-to-let fixed rate is 2.84% – up from 2.79% at the start of October, but down from 2.86% in September.

Meanwhile, the average five-year fixed rate is 3.44% – up from 3.43% at the beginning of the month, but down from 3.49% in September.

Buy-to-Let Mortgage Rates Rising from Record Lows

Buy-to-Let Mortgage Rates Rising from Record Lows

Moneyfacts also recently reported that the number of buy-to-let mortgages available has dropped slightly.

The Finance Expert at Moneyfacts, Charlotte Nelson, says: “It has been a turbulent time for the buy-to-let market, thanks to multiple rule changes, and there’s no sign of calmer waters, as rates are starting to creep up from their record lows. While a 0.05% increase appears insignificant, it marks a turnaround in the buy-to-let sector, so landlords are now faced with not only more hoops to jump through, but higher rates as well.

“As in the residential mortgage market, much of the rise in buy-to-let rates can be attributed to base rate speculation causing swap rates to increase significantly. This has given lenders little choice but to increase their mortgage rates, with 18 individual providers so far having upped theirs since the start of September.”

She continues: “The beginning of this month marked another significant change in the buy-to-let mortgage market, as lenders are now required to apply stricter underwriting criteria to portfolio landlords. This has seen the buy-to-let mortgage market shift away from landlords who have three or fewer properties, with a 13% drop in the number of products available to this group since the start of October.

“This portfolio change may have had a more practical effect on rates as well, with lenders not just being a little more cautious; some lenders may have had to change their process behind the scenes to accommodate the new rules, and this extra cost may be impacting these providers’ pricing activity.”

Nelson concludes: “With all the changes and now the rising buy-to-let rates, it is going to be more difficult for individual landlords to make a profit that is worth their efforts. Landlords will have to weigh up the costs to figure out what their best possible option may now be. Anyone who is unsure should seek the advice of a financial adviser.”

Meanwhile, specialist lender Together is further enhancing its offering for landlords and property investors with a new holiday let product, which has been created in response to demand from professional landlords looking to let their properties on a short-term basis.

A growing number of investors are turning to holiday lets as an alternative to traditional buy-to-let, thanks to attractive rental yields and websites like Airbnb, which have revolutionised the holiday let sector.

Market demand for holiday lets is buoyed by record numbers of tourists visiting the UK, estimated to be 40m this year, and more Britons staying at home for their holidays post-Brexit.

Marc Goldberg, the Commercial CEO at Together, comments: “Our aim is to support landlords and investors by providing innovative finance products that are tailored to their needs. Holiday lets can deliver high yields and there’s strong market demand, so we’re delighted to launch this new product, which we believe will complement our existing offering in this sector.”

Loans of up to £2m are available for purchase or remortgage, while terms range from four to 30 years, with a minimum five-year term on fixed rate loans.

The holiday let product is also available on a second charge basis, for landlords looking to raise additional finance on their rental property.

Figures for Final Month of Lending Before PRA Changes Revealed

Published On: October 25, 2017 at 9:22 am

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Figures for Final Month of Lending Before PRA Changes Revealed

Figures for Final Month of Lending Before PRA Changes Revealed

UK Finance has released the latest figures for the mortgage lending market, which show the scope of the sector in the final month before new lending rules for portfolio landlords were introduced.

UK Finance estimates that gross mortgage lending for September was £21.4 billion, which is 5% higher than a year ago. High street banks carried out almost two-thirds of this lending, or £13.7 billion.

From 30th September 2017, lenders have been required by the Bank of England’s Prudential Regulation Authority (PRA) to introduce stricter criteria on portfolio landlords – defined as those with four or more mortgaged buy-to-let properties. We have created a guide to help you understand these changes: /landlords-guide-pra-portfolio-underwriting-changes/

Commenting on the data, the Senior Economist at UK Finance, Mohammad Jamei, says: “As we near the end of 2017, our data is showing that housing market activity has built up modest momentum since the start of the year, helped by an increase in first time buyer numbers.”

John Goodall, the CEO and Co-Founder of buy-to-let specialist Landbay, also responds to the figures: “Mortgage lending activity dipped slightly in September, but remains significantly up on last year’s levels, as borrowers continue to take advantage of record low interest rates and loan-to-value [LTV] deals. These more accommodating borrowing conditions are, however, set to change in the coming months, as the prospect of the first interest rate rise in almost a decade looms large, putting pressure on borrowers and potentially putting off first time buyers.

“September’s figures also offer some insight into the final month of lending before the PRA’s portfolio landlord changes came into effect. While these new regulations are a good thing for the sustainability of the buy-to-let sector, we may see a dip in lending in the coming months as the sector adjusts to both the new regulations and a possible rate change.”

John Bagshaw, the Corporate Services Director of Connells Survey & Valuation, offers his thoughts: “Having benefited from a decade of low interest rates, consumers are sensing the risk that this era is nearing an end. Many older mortgage deals are expiring this autumn, which will mean moving onto more expensive Standard Variable Rates. As a result, homeowners on these deals are opting to refinance, taking advantage of the intense competition in the mortgage market right now. With so much economic uncertainty and hints of a base rate rise, many are choosing to lock into a lower rate to see them through the next few years.”

We also have a response from John Eastgate, the Sales and Marketing Director of OneSavings Bank: “Mortgage lending has grown modestly since the start of the year and is heading towards the levels last seen in 2008. Despite growing concerns around affordability, much of this demand is coming from first time buyers, largely driven by Government initiatives such as Help to Buy. With a rate rise in the offing, however, borrowers may well have to face up to the reality that they’ve missed the opportunity to secure the lowest mortgage rates in history.

“The mortgage market continues to demonstrate sustainable growth, but not without challenge. Real wage growth is in negative territory, and supply shortages continue to drive up prices, albeit modestly, in most parts of the country. Nevertheless, with property transactions on an even keel, neither seem to be a threat to ongoing growth.”