Posts with tag: mortgages

Brace of providers launch new mortgage deals

Published On: September 16, 2016 at 11:47 am

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A brace of mortgage providers have today moved to launch new fixed rate deals.

Paragon Mortgages and Yorkshire Building Society have announced fresh three and five year deals-the former targeting buy-to-let landlords specifically.

New rates

This morning, Paragon announced their new five-year fixed-rate buy-to-let mortgage for both individual and limited company landlords. Interest rates start from 3.75%.

These fixed rates are available at LTV ratios of up to 75%, with the range including funding for self-contained units, alongside more complex HMO properties.

The new longer-term fixed-rate products include a more revised interest coverage calculation, which is based on an interest rate assumption of 4%. The interest coverage ration is set at a minimum of 125% for single, self-contained units and 130% for more complex HMO properties.

John Heron, Managing Director of Paragon Mortgages, observed: ‘with the outlook for interest rates now much lower for longer, we have been able to deliver these longer term fixed rates aimed at professional landlords including those borrowing through limited companies and those purchasing HMOs. These are the first products we have launched which feature an interest coverage calculation that reflects lower interest rate expectations and the reduced risk that customers on longer-term fixed rates benefit from.’[1]

Brace of providers launch new mortgage deals

Brace of providers launch new mortgage deals

Cuts

Meanwhile, Yorkshire Building Society has announced that it has cut selected three and five-year fixed rate mortgages by 0.14%.

These cuts are applicable to three and five-year fixes 65%, 75% and 85% LTVs for both purchase or remortgage.

New three-year fixed rate deals include a 75% LTV at 1.88% and an 85% LTV at 2.03%. Five-year fixes are available from 1.98% at 65% LTV and 2.08% at 75% LTV. Each of these mortgages comes with a fee of £845.

Brendan Gilligan, Mortgage Product Manager for Yorkshire Building Society, noted: ‘we always try to offer our customers a range of mortgage options and good long-term value for money. Our rate reductions will offer borrowers with a range of deposits competitive rates and the security of knowing how much their mortgage repayments will be for the next couple of years, especially during this time of economic uncertainty.’[1]

[1] http://www.propertyreporter.co.uk/finance/paragon-announces-new-five-year-btl-fixes.html

Buy-to-Let Lending Up by Almost 40% Over the Past Year

Published On: September 13, 2016 at 1:36 pm

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Buy-to-let lending has risen by almost 40% over the past year, defying new Government measures to curb investment in the private rental sector.

Buy-to-Let Lending Up by Almost 40% Over the Past Year

Buy-to-Let Lending Up by Almost 40% Over the Past Year

According to the latest figures from the National Association of Commercial Finance Brokers (NACFB), buy-to-let has had a very strong year, despite the various tax changes that have been announced over the past 18 months.

The organisation found that landlord borrowing has not been materially affected by April’s Stamp Duty hike, when the 3% surcharge for buy-to-let investors and second homebuyers was introduced.

Almost £5 billion worth of business was written by NACFB for buy-to-let landlords in the year from July to June, marking a 39.1% increase on the previous 12 months.

Alongside the Stamp Duty surcharge, landlords have been faced with the 10% Wear and Tear Allowance cut and forthcoming restrictions to mortgage interest tax relief.

The body also reports that small business lending has hit an all-time high over the past 12 months, despite a backdrop of political and economic uncertainty surrounding the EU referendum. Lending has risen by almost 30% to reach £20.7 billion.

However, while traditional forms of lending – such as commercial mortgages – have had an impressive 12 months, lending in the alternative finance space, which includes peer-to-peer and crowdfunding, has slowed. Business written by NACFB brokers over the last year has dropped by 14.4%, down from £848m to £725m.

Despite this, other areas have also experienced strong growth, including invoice finance (22.8%), leasing and equipment finance (10.5%), development finance (49.8%) and bridging finance (74.6%).

The organisation’s Adam Tyler comments: “It’s been a phenomenal and record breaking year across the commercial finance sector. With the UK’s SME community showing a real appetite for growth, despite the uncertainty of Brexit, we have seen small business lending at levels above even those registered before the financial crash.

“Interestingly, the figures show that there has been a significant switch by small businesses back to traditional forms of lending. The alternative finance sector has grown at such a pace that it was inevitable that rate of growth couldn’t be sustained. Peer-to-peer will always have its place, but alternative forms of funding are no longer the only future; they are just one of many forms of finance available to small and medium-sized businesses.

“There has never been a better time for businesses to secure finance, as the commercial finance sector continues to innovate and diversify. The challenge is to make sure the message reaches SMEs that there are many routes to funding.”

Landlords, have you continued to invest in buy-to-let this year, despite the tax changes you face?

Investec cuts buy-to-let mortgage rates by 1%

Published On: September 8, 2016 at 10:02 am

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Investec Private Bank has moved to introduce a new range of loan-to-value (LTV) bands across its buy-to-let mortgage product range. Borrowing rates have been slashed by up to 1%.

The lenders says its new buy-to-let mortgage rates will begin at 2.5%, plus three-month Libor at 50% LTV. In addition, Investec is also launching a 60% LTV from 2.75% and a 70% LTV at 3.10%.

Services

Investec provides both buy-to-let and residential mortgages to people looking to borrow between £250,000 and £10m, with a minimum annual income of £300,000 and assets totalling at least £3m.

Peter Izard, business development manager at Investec Private Banking, noted, ‘despite recent tax changes, the buy-to-let market remains an attractive proposition for investors. We’re delighted to be announcing these significant rate cuts today, which will be a real boost for landlords seeking larger loans.’[1]

Investec cuts buy-to-let mortgage rates by 1%

Investec cuts buy-to-let mortgage rates by 1%

Alterations

The Bank is one in a number of lenders to cut buy-to-let mortgage rates in recent days, with competition fierce in the market.

Santander cut rates by up to 0.25% on some fixed products, while Virgin Money’s reductions have seen buy-to-let rates at 75% start from 2.19%. Natwest has reduced its standard buy-to-let two year fixed range for both purchase and remortgage by between 19-23 bps. Accord Buy-to-Let also announced plans to expand into the consumer buy-to-let market in the coming months.

Chris Maggs, Accord Buy-to-Let’s commercial manager, noted, ‘despite the uncertainty in the buy-to-let arena we believe that it will remain a robust market.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/9/investec-slash-buy-to-let-mortgage-rates-by-up-to-1

Dudley Building Society Updates Buy-to-Let Range

Published On: September 2, 2016 at 8:32 am

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Dudley Building Society has released its latest set of updates for its buy-to-let range, featuring new products, comprehensive rate reductions and improved criteria.

Dudley Building Society Updates Buy-to-Let Range

Dudley Building Society Updates Buy-to-Let Range

The society, which announced strong annual results for the 2015/16 financial year, with pre-tax profits of £1,335,000, is responding to a buy-to-let sector that “needs encouragement”, according to the firm’s Head of Credit, Jonathan Moore.

The updates include a reduction in interest rates across all products, with all fixed rate products cut by 0.30%. Rates now start at just 2.99%, with products now including options with no Early Repayment Charges (ERCs).

Dudley has also introduced brand new three and five-year discount products, with a maximum ERC period of three years.

The majority of products now carry a new maximum borrowing value of £1m, up from £500,000, while the minimum income required has been reduced to £20,000 per application.

In addition, Dudley’s stressed rate calculation has been simplified, through the removal of separate requirements for flats. Loan-to-value (LTV) requirements on background residential property have also been cut.

Moore says: “Landlords have been in the firing line over the past 12 months because of the Stamp Duty changes and, with the tapering effect on tax relief due to start in 2017, it is important that lenders like the Dudley do everything that we can to provide the kind of products that offer value, flexibility and a common sense approach to underwriting buy-to-let mortgages.

“Therefore, our partners will be pleased with the overall reduction in rates, some of which start from 2.99%. We have introduced new three and five-year discounted products, as well as options which have no ERCs. Dudley Building Society continues to lead the way by working exclusively through intermediaries and being among the first to abolish upper age limits for applicants. On top of which has been our commitment to manual underwriting and a holistic approach to every enquiry, which has given us a deserved reputation for the kind of service that brokers require for their customers.”

Do these new updates encourage you to invest further in the buy-to-let sector?

New initiative to help tenants strengthen credit score

Published On: August 30, 2016 at 3:05 pm

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A new initiative has been launched in order to help private tenants improve their credit histories by recording rental payments. As such, they will then receive recognition in the same way as mortgage payers.

The scheme has been announced by Experian, which believes many renters stand to lose out on an opportunity to build up their credit scores. They will in turn be at a disadvantage when attempting to secure online deals for features such as car insurance and mobile phone contracts.

Boosts

Alongside helping to strengthen credit histories, The Rental Exchange also plans to give support to the electronic verification of a tenants’ identity when they search for financial assistance online.

One of the initial agents in Britain to pioneer the scheme is Karl Tatler Lettings, with properties across Liverpool.

Head of Lettings at Karl Tatler, Dave Seed, observed, ‘the initiative is a way to strengthen your credit report, without needing to take on new credit or debt, just by paying your rent on time each month. People should not be a financial disadvantage for renting and deserve equal access to services many of us frequently use.’[1]

‘Landlords will also benefit from our partnership with Experian. The Rental Exchange will provide added confidence and reassurance in the quality of tenant such a scheme will attract. These tenants will have a greater incentive and motivation to pay their rent on time as it will directly impact their credit score, potentially leading to even lower rents.’[1]

New initiative to help tenants strengthen credit score

New initiative to help tenants strengthen credit score

Services

Rental Exchange partner at Experian, Mark Goodfellow, said, ‘what many people don’t realise is that you need a good credit rating to access mainstream financial services, from bank accounts, credit cards, personal loans and mortgages, to mobile phone and utilities contracts. In the past, building a good credit rating has been easier for homeowners than for tenants, because mortgage payments are factored in, but with The Rental Exchange we want to help level the credit rating playing field.’ [1]

[1] http://www.propertyreporter.co.uk/finance/new-initiative-helps-tenants-strengthen-credit-score.html

Have the Banks Overreacted Toward Buy-to-Let Landlords Following Brexit?

Published On: August 24, 2016 at 11:13 am

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Although Britain has not yet triggered Article 50, which gives the country two years to negotiate an exit from the EU, banks have reacted to the Brexit by curbing lending for buy-to-let landlords. But have they overreacted?

Although landlords may be concerned about the future of property investment following changes by the banks, one expert believes it is all a knee-jerk reaction.

Have the Banks Overreacted Toward Buy-to-Let Landlords Following Brexit?

Have the Banks Overreacted Toward Buy-to-Let Landlords Following Brexit?

Newcastle BS, Barclays, Foundation Home Loans and TSB have all recently announced that they are trying to limit buy-to-let lending, with TSB increasing its rental coverage ratio by 20% to 145%.

For loan-to-value (LTV) ratios up to 65%, the rental cover calculation will be 145% or 5% of the pay rate, whichever is higher. For LTVs between 65.01-75%, the calculation will be 145% or 5.5% of the pay rate.

However, other banks have shrugged off Brexit concerns and remain committed to their lending practices, despite warnings over risky loan exposure following the Brexit.

Shawbrook, Metro Bank and Virgin Money have all reported strong growth for the first half of the year, thanks to a surge in lending to both individuals and companies.

A recent forecast from estate agent Countrywide says that house prices will drop by just 1% in 2017, before rising by 2% in 2018. However, the firm believes that the cooling market is not just down to uncertainty about Brexit and has highlighted the impact of the Stamp Duty surcharge on the industry.

According to Peter Armistead, of Armistead Property, banks have overreacted to the Brexit news, at a time when we do not know what the consequences of the vote will be for buy-to-let landlords.

He says: “It is worth taking all the scaremongering with a pinch of salt. While the future for the buy-to-let market looks certain, what is clear is that mortgage interest rates remain very attractive. Buy-to-let investors who are in a position to buy now could benefit from not only low mortgage rates, but lower property prices.

“The buy-to-let market is strong and continues to provide essential housing for a growing UK population. It is estimated that two million Britons are now private landlords, collectively renting out five million properties. With rising demand for rental property and a growing shortage of accommodation, the buy-to-let market will continue to give a good return on investment.”

He continues: “Even before Brexit, the buy-to-let market was slowing, due to the new tax measures introduced by the chancellor. Although the Government is trying to curb the buy-to-let market, property investment is robust in the long term. However, lending may be further constrained and the banking industry may be hit harder in a few years.

“So far, figures from the Halifax and Nationwide show a slowdown from earlier in the year, when many investors rushed to get deals done before April. However, the market has not seen the type of falls that project fear was predicting before the referendum. The slowdown is pretty much in line with seasonal expectations following the bull market of January to April 2016.”

Armistead adds: “The market does not like uncertainty and we may have several years of this, along with potentially more issues to deal with.”