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Biggest choice in buy-to-let mortgages since 2007 for landlords

The number of buy-to-let mortgages has soared to 2,163, the highest since before the financial crisis hit in October 2007, according to research from Moneyfacts.co.uk.

In March 2017 the average two year fixed rate was 2.96 per cent and that has now gone up to 3.12 per cent following the Bank of England rate rise last year.

The average five year fixed rate in March 2017 was 3.77 per cent and but that has now fallen slightly to 3.61 per cent.

Darren Cook, finance expert at Moneyfacts.co.uk, said: “It is encouraging that buy to let landlords have more mortgage choice than they have had at any time in almost 12 years.

“Total product numbers have increased by 397 over the past year and by 706 over the past two years.

“Despite ongoing uncertainty in the property market, providers are not shying away from offering landlords a greater choice of products, although it is also evident from our research that heightened competition to try and attract buy-to-let business has not resulted in a fall in interest rates, as has recently happened in the residential mortgage sector.

“Indeed, the average two year fixed buy-to-let mortgage rate has increased by 0.20 per cent to 3.12 per cent since September 2018 and the average five year fixed rate has increased by 0.15 per cent over the same period.”

He argued that the recent increases to buy-to-let mortgages interest rates have been a result of mortgage providers attributing a little more to risk into their product rates due to uncertainty over future economic conditions.

Source: Simple Landlords Insurance

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Ipswich cuts buy-to-let rates and launches later life product

Ipswich Building Society has reduced the rates and fees on its existing buy-to-let 5-year fixed rate products and launched a product to its existing range of later life mortgages.

Both buy-to-let rates are a 5-year fix. There’s a 3.75% at 80% LTV, with a completion fee of £950 and an expat buy-to-let at 3.99% and 75% LTV with a completion fee of £999.

There’s also a 5-year fixed later life fixed rate at 3.50% and 75% LTV with a £500 completion fee and minimum loan of £25,000.

Richard Norrington, chief executive at Ipswich Building Society, said: “By recognising buyers’ demand for longer term mortgage products at this time, and adjusting our rates to reflect this, we are pleased to offer our borrowers stability with regards to their monthly mortgage commitments.

“Landlords, including those based overseas, and older borrowers often have an unusual set of circumstances or changing lifestyles and incomes.

“Our manual underwriting approach, which sees real people making the decisions about affordability, allows us to assist borrowers who may otherwise be denied access by the automated approach deployed by some mortgage lenders.”

All deals are available from five to 40-year terms up to a maximum loan of £500,000 and have an application fee of £199, CHAPs fee of £35 and a tiered valuation fee based on property value.

For standard buy-to-let and later life remortgage applications, there is a free valuation up to property value of £1m and fee assisted legals.

During the fixed rate period the products offer fee-free overpayments up to 50% of the original loan amount.

Source: Mortgage Introducer

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Buy To Let Mortgage Choice Hits New High

The choice in buy to let mortgage products has hit the highest level seen since before the global financial crisis.

Figures released by Moneyfacts have shown that landlord choice when it comes to buy to let mortgage finance products has increased hugely over the past few years.

Total product numbers have increased by 397 over the past year and by 706 over the past two years to now give buy to let investors a total choice of 2,162 products today.

The choice in buy to let finance products has not been higher since October 2007, when 3,305 products were available.

Interest rates on buy to let mortgages have started to creep up however, despite the huge choice. The average two-year fixed buy to let rate has increased by 0.20 per cent to 3.12 per cent since September 2018 and the average five-year fixed rate has increased by 0.15 per cent over the same period.

Finance expert at Moneyfacts, Darren Cook, said: ‘It is encouraging that buy to let landlords have more mortgage choice than they have had at any time in almost 12 years.

‘Despite ongoing uncertainty in the property market, providers are not shying away from offering landlords a greater choice of products, although it is also evident from our research that heightened competition to try and attract buy to let business has not resulted in a fall in interest rates, as has recently happened in the residential mortgage sector.’

He continued: ‘As there appears to have been no sustained increases in interest SWAP rates since September 2018, a strong argument can be made that the recent increases to buy to let mortgages interest rates have been a result of buy to let mortgage providers attributing a little more to risk into their product rates due to uncertainty over future economic conditions.’

Source: Residential Landlord

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Number of buy-to-let mortgages at post-crisis high

The number of buy-to-let (BTL) mortgage products on the market has reached a post-financial crisis high giving landlords the most choice in nearly 12 years.

Almost 400 BTL products have been added to the market in the last year, taking the total to more than 2,000 and the highest number since October 2007, when 3,305 deals were available.

According to Moneyfacts there are 2,162 BTL deals available today – up from 1,765 last March and 1,982 in September, including 467 for limited company landlords not using special purpose vehicles.

However, in contrast to the residential mortgage market, where intense competition is driving interest rates down, BTL lenders have pushed rates up over the last five months.

Between March 2017 and September 2018 the average two-year fixed rate buy-to-let mortgage was around 2.86% to 2.96%. However, it is now at 3.12%.

The average five-year fixed rate deal has also increased since September 2018, rising from 3.46% to 3.61% – although this is not quite as high as the 3.77% in March 2017.

For limited company products not involving special purpose vehicles, the average two-year fixed rate is at 4.08% and the average five-year fix is at 4.53%.

Moneyfacts spokesman Darren Cook said: “The disparity in the direction of movement between BTL and residential interest rates may be due to the way these two types of lending are primarily assessed. BTL mortgage providers generally consider the potential rental income and affordability during assessment, whereas residential mortgage providers typically look back at income earned by the borrower and affordability.”

Source: Your Money

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Buy To Let Investment Mortgage Rates Stay Low

Despite buy to let investors having to cope with more changes, at least buy to let investment mortgage rates remain at historically low levels.

Minimum three-year tenancies, deposit caps, and even possible rent controls have been proposed which could cause landlords further upheaval, while changes to mortgage interest tax relief will continue to be phased in this year.

However, with buy to let investment mortgage rates at such low levels, property investors are able to fix their mortgage rate for five years at below 2 per cent.

Five-year fixed investment mortgage rates in particular have grown in popularity since the Bank of England brought in stricter rental income rules for two-year fixes.

The lowest rate deal on the market is at 1.99 per cent from Nationwide’s buy to let investment mortgage arm, The Mortgage Works.

However, rates have risen slightly according to Moneyfacts’ Rachel Springall. She said: ‘In just one month, the average two-year fixed buy to let mortgage has risen from 3.06 per cent to 3.11 per cent today and the average five-year fixed buy to let mortgage has risen from 3.54 per cent to 3.56 per cent today.

‘While it’s inevitable for rates to rise after last year’s base rate decision, raising rates from what was once record lows, it is worth keeping in mind that three years ago the average rates were 3.25 per cent and 4.15 per cent respectively.’

The cheapest two-year fix on the market at the moment is 1.40 per cent at 60 per cent loan-to-value with a £1,745 arrangement fee from Sainsbury’s Bank – just 0.01 per cent more expensive than the cheapest residential mortgage.

Also on offer is a 1.49 per cent deal at 65 per cent LTV with a £2,275 fee from The Mortgage Works.

The Mortgage Works also has the aforementioned five-year fix at 1.99 per cent with a fee of £2,275 at 50 per cent LTV, while Skipton has a 60 per cent LTV deal at 2.09 per cent with a fee of £1,995.

For landlords who want to fix their buy to let investment mortgage rate for longer, The Mortgage Works is also offering a 10-year fix at 65 per cent LTV at 2.74 per cent with a £1,745 fee.

Further good news for landlords is that some lenders are starting to ease their affordability criteria.

Tipton and Coseley Building Society has reduced its interest cover ratio to 125 per cent for basic rate tax payers and 130 per cent for higher rate tax payers.

This means that landlords’ projected rental income will now have to cover a minimum 125 per cent of the mortgage payments, rather than 145 per cent.

It is not all bad news in 2019 for buy to let landlords it seems.

Source: Residential Landlord

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Leeds doubles its buy-to-let cashback incentives to £1,000

Leeds Building Society has increased the cashback incentives available on selected 2 and 5-year buy-to-let cashback incentives from £500 to £1,000.

Highlights of the updated cashback range, which include a free standard valuation, include two buy-to-let mortgages at 60% loan-to-value, both with no fee. There’s a 2-year product at 2.69% and a 5-year at 2.74%.

Matt Bartle, Leeds Building Society’s director of products, said: “We’ve increased the cashback incentives available on some of our buy-to-let products while maintaining our product rates.

“Of course, landlords can choose how to spend the £1,000 cashback available. Cash freed up at the start of the mortgage could go towards redecorating costs and fees associated with finding tenants.

“Increasing cashback available on our buy-to-let range is a further example of how we’ve used our expertise and experience in the market to understand and respond to the needs of customers.”

The launch of the products follows the introduction of the ‘Easy Start’buy-to-let mortgage, with an interest rate of 0% for the first three months.

The society has reduced the rate of its 5-year Easy Start mortgage, which is available up to 70% LTV, by 0.21% to 3.03%, with a 0% interest rate for the first three months.

Source: Mortgage Introducer

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Fewer people purchasing buy-to-lets

Significantly fewer people acquired buy-to-let properties in Q3 2018, HMRC figures have showed.

Additional properties, for which stamp duty land tax is payable at the standard rate plus 3%, have seen a fall of 11% (7,400) compared to the same period in 2017.

And Hamptons showed that the number of homes bought by landlords had dropped by a third over the last three years with a 13% decrease last year alone.

Michael Lynn, chief executive at Relendex, said: “Property remains an investable asset class, however there is a trend borne out by these figures that people are moving away from investment in buy-to-let.

“There are several reasons for this including the higher rate of stamp duty land tax, the lack of access to funds and the uncertainty caused by Brexit.

“These factors all leave investors looking for new and innovative ways to maximise their savings.  Peer-to-Peer allows lenders to invest in specific property projects and access their money when they want it through an active resale market.

“What’s more, lenders can get high returns on their money, on average 8%, whilst having the security of knowing that they have invested in a stable asset. It is important that Peer-to-Peer investment properties are treated with the same care and attention that would be put into a buy-to-let.

“Loans should be secured on the properties themselves and have a loan to value ratio which safeguards the investment and that money will be paid back.

“If this is done correctly Peer-to-Peer allows lenders to get the returns associated with buy-to-let without having the hassle of managing the property themselves.”

The higher rate stamp duty land tax was introduced in 2016 for those purchasing second properties which includes buy-to lets.

Between Q2 and Q3 2018 additional dwellings transactions increased by 7% to 58,400. Compared to last year, it has fallen by 11% (7,400).

For the last four quarters additional dwellings have made up about 24% of all liable transactions and have generally increased as a proportion of residential transactions.

Source: Mortgage Introducer

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The Nottingham adds buy-to-let flats after broker demand

The Nottingham has responded to feedback from brokers who are looking for mortgages on buy-to-let flats.

The building society is offering mortgages with up to 65 per cent loan to value where the maximum loan is £500,000 and the term runs to a maximum of 35 years.

Properties in blocks of flats where there are no more than 10 floors, and with a valuation of at least £100,000, can be considered. But apartments above the fourth floor must have lift access.

Individual properties, which must have a footprint of at least 35 square metres, need to be at least two years old and previously occupied. The flats or studios must be leasehold with a minimum of 85 years left on the lease.

Nikki Warren-Dean, head of intermediary sales for The Nottingham, said: “Our business development managers across the country relayed that brokers were increasingly asking for us to consider lending against buy-to-let flats.

“That feedback, twinned with the strategic pillar of The Nottingham to grow and reward our membership, led to the decision to add buy-to-let flats to our criteria.”

Ms Warren-Dean added the new portfolio additions may appeal to landlords and mortgage advisers looking for a rental calculation of 160 per cent at 4.25 per cent.

The Nottingham, which offers a wide range of estate agent services including mortgages and savings, has 67 branches across 11 counties as well as an online estate agent presence.

Jorden Abbs, director of operations at specialist UK broker Commercial Trust, said: “We welcome any steps made by lenders to widen their criteria. Increasing choice can only be advantageous to landlords.

“I look forward to seeing how The Nottingham’s offering for buy to let flats evolves as they become more confident in this area of lending.”

Aaron Strutt, communications director at Trinity Financial, said: “We’ve not been aware of a particular issue with buy-to-let mortgages for flats. In many parts of the country this type of property is particularly popular with borrowers.

“Perhaps The Nottingham’s entrance to the market is in response to demand for mortgages on high rise flats, which some lenders may be less willing to offer. I could see that being an issue on occasion.”

Source: FT Adviser

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Mortgage lending for buy-to-let home buyers falls by nearly a fifth year-on-year

Mortgage lending for buy-to-let house purchases fell by around a fifth annually in September as the market remains subdued, a trade association has reported.

Lending to first-time buyers and home movers was also down compared with a year earlier – while re-mortgaging plateaued, UK Finance said.

Some 5,200 new buy-to-let home purchase mortgages were handed out in September, marking an 18.8% decrease on the same month a year earlier.

There were 29,400 new first-time buyer mortgages completed in September, 4.5% fewer than in the same month a year earlier.

And a further 29,400 new home mover mortgages were completed – 8.4% down compared with September 2017.

Meanwhile, 35,600 new home owner re-mortgages were completed in September, edging down 0.6% on the same month a year earlier.

And there were 12,300 new buy-to-let remortgages completed, slightly down by 0.8% on September 2018.

Buy-to-let investors have faced various tax changes in recent years, including a stamp duty hike on the purchase of second homes.

Jackie Bennett, director of mortgages at UK Finance, said re-mortgaging for both residential and buy-to-let properties has levelled out after a period of strong growth.

She said: “This reflects the number of fixed-rate loans reaching maturity.”

Ms Bennett continued: “Buy-to-let home purchases have eased again in September, suggesting lending in this market remains subdued as a result of recent tax, regulatory and legislative changes.

“Demand for house purchases for both first-time buyers and home movers has also lessened, as affordability constraints continue to bear down on consumer demand for new loans particularly in London and the South East.”

Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said: “Buy-to-let investors are still not returning to the market or buying for the first time in sufficient quantities to provide support at the bottom end of the market and first-time buyers are not taking up the slack.

“The result is a bit of a standoff until clearer political and economic direction becomes apparent.”

Source: Yahoo Finance UK

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Andrew Turner: Buy-to-let mortgage rate rises expected

Buy-to-let mortgage rates are expected to rise so landlords should take advantage of the current low rate deals while they are still available, Andrew Turner, chief executive, at specialist buy-to let broker Commercial Trust, has argued.

He said at the moment there are some historically low rates for both tracker and fixed rate buy-to-let mortgage products.

Turner said: “This has been the case for some time and is reflective of a hugely competitive market place, where lenders are trying to outdo one another with enticing mortgage deals, encompassing low rates, low fees, or incentives such as cash-back or free valuations.

“With over 2,000 products in the buy-to-let marketplace it is clear that there is a myriad of choice for investors. This volume of choice brings with it complexity, where the lowest rate does not necessarily equate to the cheapest overall deal.”

The Bank of England’s Monetary Policy Committee (MPC) has implemented two base rate rises in the last 12 months, yet the added cost to lenders has not shown itself in any significant way in the deals they are offering.

Turner added: “In my view this will have to change. The bumpy road of Brexit may see the base rate brought down slightly, once things settle, but I think it is unlikely and in any event, there is not too much scope for reduction.

“My view is that the overall picture for the next decade is a gradual upward trend in rates.”

UK Finance buy-to-let data shows strength in remortgaging, whilst the changes in buy-to-let have tempered purchases somewhat.

In November, its statistics indicated that buy-to let remortgaging activity in 2018 would exceed its forecasts by approximately £3bn, while a similar figure would represent a shortfall in its forecasts for buy-to-let purchase business in the year.

Turner said: “It can be no coincidence that there has been a surge in landlord activity around buy-to-let remortgages, with such uncertainty affecting their businesses.

“For this reason, if you are concerned that rates are set to trend upwards, fixing now at a competitive low rate and for a period suited to you, could bring you a great deal of security through turbulent times.”

Source: Mortgage Introducer