Posts with tag: mortgages

Mortgage Trust Updates its Range of Buy-to-Let Products

Published On: July 5, 2016 at 9:19 am

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Mortgage Trust, a specialist lender, has updated its range of buy-to-let products for the summer months.

Mortgage Trust Updates its Range of Buy-to-Let Products

Mortgage Trust Updates its Range of Buy-to-Let Products

The new range includes two, three and five-year fixed rate deals, at up to 80% loan-to-value (LTV).

The lender’s competitive new rates begin at 2.95%.

Mortgage Trust offers a selection of products from The Paragon Group. Its mortgages are aimed at landlords with small portfolios, and are available throughout England, Wales and Scotland.

The new summer range includes a two-year fixed rate deal at 2.95% up to 75% LTV and a two-year fix at 3.25% up to 80% LTV.

For those planning their finances over the longer-term, the new range also offers a three-year fixed rate deal at 3.30%, available with no product fee.

The Director of Mortgages at Mortgage Trust, John Heron, comments: “With this product refresh, we are giving customers yet more choice, and a competitive range of products to support their investment plans. With short and longer-term fixes, and with lending up to 80% available, these products will support ongoing investment in buy-to-let, crucial for supporting the ever growing demand for private rented sector properties.”

Ahead of last month’s EU referendum result, finance expert Paul Mahoney, of Nova Financial, advised landlords to prepare their property investment strategy for the future.

Following the Brexit vote, property expert Howard Leicester insisted that the result may be beneficial for the buy-to-let sector.

Worryingly, however, recent research from Moneyfacts.co.uk found that the number of mortgages available for first time landlords has dropped significantly over the last five years.

If you are thinking of investing in the sector for the first time, you may struggle to find a competitive deal. However, this new range from Mortgage Trust may include a product that supports you on your buy-to-let journey.

Existing landlords will also benefit from the competitive rates on offer this summer.

Drop in Mortgages for First Time Landlords

Published On: July 5, 2016 at 8:47 am

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The number of buy-to-let mortgages for first time landlords has dropped to a record low, according to new research from Moneyfacts.co.uk.

Annually, however, the overall amount of buy-to-let mortgages has risen, which would lead one to believe that the availability of deals for first time landlords has also grown.

Five years ago, just 434 buy-to-let products were available for first time landlords, compared to 813 today. The proportion of buy-to-let mortgages available to first time landlords has also fallen, from 82% five years ago to 75% today.

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Drop in Mortgages for First Time Landlords

Drop in Mortgages for First Time Landlords

The Finance Expert at Moneyfacts.co.uk, Charlotte Nelson, comments: “Despite all the changes to regulation in the buy-to-let market, the number of buy-to-let mortgages has increased; however, first time landlords have been missing out on this boost in product numbers. Indeed, the percentage of the market that is available to new landlords has now dropped to just 75%, down by around 10% in two years.

“As first time landlords don’t have a proven track record in managing rental properties, offering them a buy-to-let mortgage poses a greater risk to the lender, and it’s this risk that is making the number of first time landlord deals remain relatively static.”

She continues: “The additional regulation in the buy-to-let market and the added economic uncertainty following the Brexit vote means even more lenders may reconsider whether first time landlords are a safe bet. As a result, would-be landlords are likely to face more probing questions about their finances than their more experienced counterparts.

“Nevertheless, high rents and rock-bottom mortgage rates mean that buy-to-let is still an attractive proposition for aspiring landlords, particularly those who are fed up with the dismal savings options currently available. However, buy-to-let is not without its risks, so anyone considering it as an option should seek the advice of an independent financial adviser to determine whether it is the best choice for them.”

Should You Continue With Your Property Purchase or Sale Following Brexit?

Published On: July 3, 2016 at 8:23 am

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Categories: Property News

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You were happily looking for a new property, or to sell your property, and the country voted for Brexit. What seemed like a solid, healthy investment may now seem less reliable. So should you continue with your purchase (or sale) now that the UK has decided to leave the EU?

The Governor of the Bank of England, Mark Carney, has recently announced that interest rates may be cut following the shock vote last week. The Bank of England’s full statement, released the day after the Brexit announcement, can be found here: /bank-england-releases-statement-following-eu-referendum-result/

Should You Continue With Your Property Purchase or Sale Following Brexit?

Should You Continue With Your Property Purchase or Sale Following Brexit?

If interest rates do come down, then mortgage costs will inevitably be affected, which could give you the opportunity for a better deal.

So, if you’ve had your offer accepted, secured a mortgage and maybe even exchanged contracts, should you pull out?

Naturally, if you have exchanged contracts, then there is nothing you can do without incurring significant penalties. However, if you haven’t got this far, it may be worth waiting to see whether mortgage rates come down in the near future. If they do, you could possibly renegotiate your mortgage to get a better deal.

The majority of mortgages are offered on a fixed rate basis. However, if interest rates remain as low as expected, it could be more affordable than ever to have a tracker mortgage.

Some lenders will allow you to change your mortgage if you pay an arrangement fee, although this changes from lender to lender. It is important to keep in touch with your mortgage provider at this time, to find out which deals are available and how much it would cost to renegotiate.

If interest rates drop by a quarter point or so, which is likely, and your lender does not react to the change, but others have and are offering better deals, it could be wise to change. However, be aware that this could take some time and could be costly.

Although Zoopla reported before the EU referendum that house prices would fall by 20% if we voted to leave, the latest house price indices suggest that values are continuing to climb. Whether they decline or not will be down to wider economic conditions, although current uncertainty may lead to a decrease in transactions.

If demand does wane, this could actually be a good thing for buyers. Fewer homebuyers in the market will give greater buying power and the opportunity to negotiate lower prices.

If you have been looking for a property for a long time and have finally found the one you want, it’s a good idea to go for it at this point in time, as property prices don’t look to be coming down substantially.

However, if you’ve only recently started your search, it could be wise to hold tight for a while to see whether prices come down.

General economic uncertainty will naturally affect the housing market, particularly in the near future. But since the UK will not officially leave the EU for two years, the sector will likely stabilise in this period.

If the markets do slow down in terms of activity, then mortgage lenders will need to be more competitive, which is positive for homebuyers and movers.

The London property market especially is expected to remain buoyant during this time, which is particularly good news for investors, who may find bargains during this volatile period.

Whether you decide to wait and see what happens to house prices and mortgage rates or take the plunge, the property market appears to be holding itself up in the face of uncertainty.

Mortgage Lending Soars in May, But Uncertainty is Expected for the Near Future

Published On: June 28, 2016 at 10:50 am

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Mortgage lending soared in May, hitting the highest level for the month since 2008, according to the Council of Mortgage Lenders (CML). However, uncertainty is expected to hit the property market in the near future, following the Brexit vote.

The CML estimates that gross mortgage lending reached £18.2 billion in May, up by 4% on April and 14% higher than in May last year.

Mortgage Lending Soars in May, But Uncertainty is Expected for the Near Future

Mortgage Lending Soars in May, But Uncertainty is Expected for the Near Future

In April, mortgage lending totalled £17.6 billion, while it stood at just £16 billion in May 2015.

This year’s figure for May marks the highest level for the month since 2008, when gross lending reached £23.7 billion.

The Senior Economist at the CML, Mohammad Jamei, says: “Looking ahead, there is likely to be considerable uncertainty as a result of the EU referendum decision.

“We expect this to affect sentiment and reduce activity below levels that would otherwise be expected in the near term, as both buyers and sellers adopt a wait-and-see attitude until the dust begins to settle.

“Market fundamentals underpinning house prices still look sound, and we do not expect significant house price falls, especially given the current supply-demand imbalance.”

Research conducted over the weekend claims that many homeowners are feeling discouraged from selling their properties due to the EU referendum outcome.

The Chief Executive of the National Association of Commercial Finance Brokers, Adam Tyler, comments: “A wait-and-see attitude and increased caution among buyers and sellers alike is inevitable after the unprecedented political turbulence of the past few days.

“Market fundamentals still look sound and the sharp imbalance between supply and demand will prevent a material decline in prices. Sentiment may have shifted dramatically over the past few days, but the structural imbalance between supply and demand is as strong as ever.”

He explains: “Demand naturally tapered off in the buy-to-let sector following the Stamp Duty surcharge, but it may experience a bounce after Friday’s referendum result.

“Current market and politico-economic volatility could benefit buy-to-let as investors once again look to bricks and mortar as a safe port in a storm, despite the new entry premium.”

Tyler adds: “The fact that the bank rate is now more likely to go down than up in the near term will provide further support to the property market. Understandably, there’s a lot of hysteria surrounding the trajectory of the property market, but our own view is that the reality will prove to be relatively benign.”

The Bank of England’s full response to the Brexit can be found here: /bank-england-releases-statement-following-eu-referendum-result

Investors could pay £10,000 more to secure mortgage

Published On: June 16, 2016 at 8:53 am

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Buy-to-let landlords are set to fork out a further £10,000 to secure a mortgage, following a crackdown on so-called dangerous debts by British lenders.

This new clamp down on worrying debts by lenders is pushing up mortgage costs for buy-to-let landlords. It is thought that banks and building societies will begin to make the substantial fee changes from September 2016.

PRA crackdown

Industry watchdog, the Prudential Regulation Authority (PRA), is concerned that some buy-to-let landlords are stretching themselves too thinly and will as such face difficulties when interest rates eventually rise.

As a result, the PRA is to force lenders to enforce stricter criteria tests, to ensure their investor can afford the repayments on the loan.

At present, investors must prove they can earn enough from their rental yields to cover their repayments. However, the new plans will require plans to see whether or not they could continue to meet these payments, should rates rise by 2%.

Tests

Under these new tests, banks and building societies will demand evidence of a yield of at least 5.2% to qualify for a 25% deposit loan. In essence, this would mean that a borrower would have to earn £7,800 per year in rent on a £150,000 home before paying their mortgage.

This means that investors would either have to raise rents or cut borrowing to ensure that they are covered.

Peter Armistead, of Armistead Property, believes savvy investors will be able to cope with these changes by purchasing cheaper property, with greater yields.

Mr Armistead said, ‘clearly, the investors most at risk are those with smaller deposits who buy property in parts of the UK where rents are low compared with house prices.’[1]

Investors could pay £10,000 more to secure mortgage

Investors could pay £10,000 more to secure mortgage

Regional rates

Continuing, Armistead said, ‘this is a particular problem in places such as London and the South-East where the average annual returns between 2010 and 2015, was just 4.86% in outer London and 4.71% in the City, according to LendInvest. House prices in London are about five times what they are in parts of the North West, but salaries are only 30% higher.’[1]

‘Manchester and Liverpool deliver some of the best rental yields, with Manchester recording average annual rental yields of 6.02% over five years, followed by Liverpool with 5.15% yields. An average residential property in Manchester is just £155,000, while a flat in a good area, costs as little as £120,000. A property in Manchester can provide a 5% minimum cash rental yield and a typical 12% total cash yield, including 7% capital appreciation. Demand for rental accommodation is strong and by comparison with other regions, housing is cheaper,’ Armistead added.[1]

Concluding, Mr Armistead said, ‘Landlords will find the best returns in urban areas, with a concentration of students and young professionals. If investors can purchase cheaper properties with better yields, they will have the opportunity to protect and boost their profits in the longer term.’[1]

[1] http://www.propertyreporter.co.uk/landlords/pra-crackdown-sees-btl-investors-pay-an-extra-10000.html

Stamp Duty Deadline Causes Huge Drop in Buy-to-Let Borrowing

Published On: June 16, 2016 at 8:31 am

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The 1st April Stamp Duty deadline has caused a huge monthly drop in buy-to-let lending, according to the latest Council of Mortgage Lenders (CML) report.

Landlords borrowed £2.5 billion in April, down by a huge 65% on March and 7% on the previous year. A total of 16,100 loans were approved, down by 64% compared to the previous month and 10% on April 2015.

Stamp Duty Deadline Causes Huge Drop in Buy-to-Let Borrowing

Stamp Duty Deadline Causes Huge Drop in Buy-to-Let Borrowing

As of 1st April, buy-to-let landlords and second homebuyers are charged an extra 3% in Stamp Duty on property purchases. This caused a rush of investors to flood the market in the first three months of the year.

Homeowners borrowed £8.1 billion for house purchase in April, down by 40% on the month and 4% annually. They took out 47,300 loans, down by 31% on March and 5% on April last year.

The report also found that first time buyers borrowed £3.9 billion, marking a decline of 11% month-on-month, but up by 15% on the year. This equated to 25,100 loans, down by 9% on March, but up by 7% yearly.

Those moving home borrowed £4.3 billion, down by a significant 53% on March and 14% compared to the previous year. This represented 22,200 loans, down by 46% monthly and 15% year-on-year.

Remortgage borrowing totalled £6 billion in April, up by 25% on March and 40% on April 2015. This came to 34,800 loans, up by 23% on the month and 30% on last year.

The Director of e.surv chartered surveyors, Richard Sexton, comments on the figures: “Concerns about a potential Brexit could account for a slight lending market slowdown, with May seeing house purchase loans total 65,113 – down 1.7% from April. Alongside this, lenders are adapting to much calmer market conditions after the rush of buy-to-let activity at the start of the year.

“Lending to first time buyers in particular has eased off slightly on a monthly basis, as a temporary caution enters the market. But lenders are committed to helping first timers get a foot on the property ladder in the long run. Since last year, significant effort has been made to support first timers through a variety of flexible mortgage deals offering low rates and even enabling family support.”

Sexton adds: “Buy-to-let borrowing may also be taking a breather, but the lending market remains buoyant. A remortgaging rush shows no sign of slowing as we approach summer, with homeowners taking advantage of more mortgage options, rising wages and a static interest rate. All this activity suggests that the next couple of months will see an increasingly resilient and balanced lending environment.”