Marijana No Comments

Hundreds of buy-to-let mortgages withdrawn due to coronavirus

Online buy-to-let mortgage broker, Property Master, has warned that landlords will struggle to get mortgages as lenders pull product ranges, tighten lending criteria and widen margins, due to the impact of the coronavirus.

Some lenders have chosen to exit the buy-to-let mortgage market altogether for the foreseeable future.

These include Saffron Building Society, which offered a range of mortgages including for portfolio and limited company landlords, The Melton Mowbray Building Society and Barclays has withdrawn all products for portfolio landlords.

Together Money and Vida Homeloans have suspended lending in both the buy-to-let and residential products.

Tracker buy-to-let mortgages are being taken off the market. In recent days The Mortgage Works and HSBC have both withdrawn their tracker mortgages for the foreseeable future.

Lending criteria are being tightened

In recent times some lenders have been prepared to lend up to 85% of the value of a buy-to-let property. Fewer are prepared to do so now as fears grow of falling property prices.

Kensington Mortgages, for example, is one of those lenders that has reduced maximum loan-to-value lending criteria down from 85% to 75%.

Widening margins

Whilst landlords might expect a lower Bank of England base rate will lead to lower mortgage rates this is not always proving to be the case.Lenders concerned about the increased risk of tenants defaulting on rents and falling property prices may well choose to widen their margins and increase the cost of borrowing.

Some lenders have increased rates despite the 0.65% fall in base rate where margins as a result have increased by about 1%.

Comment

Angus Stewart, Property Master’s chief executive, said: “The competitive and attractive buy-to-let mortgage market appears to be going into reverse as the impact of the coronavirus begins to bite.

“Landlords are finding that their borrowing options are being drastically reduced as lenders respond to this new record low base rate environment and fears of falling house prices by withdrawing entire product ranges.

“We have had clients mid-way through a mortgage application only to find the process is halted and the product withdrawn before they can reach completion and the release of funds.”

“We can well imagine the difficulties lenders are facing when it comes to valuing properties and properly pricing risk. But we would urge them to continue to support landlord customers, especially those who were moving successfully through the mortgage application process and would otherwise have expected to be shortly in receipt of a loan.

“Similarly, we would urge banks to stand by the commitment made by the Government to provide payment holidays to landlord customers struggling as the current crisis impacts on the ability of tenants to pay their rent.”

By Joanne Atkin

Source: Mortgage Finance Gazette

Marijana No Comments

Hundreds of buy-to-let mortgages withdrawn due to coronavirus

Online buy-to-let mortgage broker, Property Master, has warned that landlords will struggle to get mortgages as lenders pull product ranges, tighten lending criteria and widen margins, due to the impact of the coronavirus.

Some lenders have chosen to exit the buy-to-let mortgage market altogether for the foreseeable future.

These include Saffron Building Society, which offered a range of mortgages including for portfolio and limited company landlords, The Melton Mowbray Building Society and Barclays has withdrawn all products for portfolio landlords.

Together Money and Vida Homeloans have suspended lending in both the buy-to-let and residential products.

Tracker buy-to-let mortgages are being taken off the market. In recent days The Mortgage Works and HSBC have both withdrawn their tracker mortgages for the foreseeable future.

Lending criteria are being tightened

In recent times some lenders have been prepared to lend up to 85% of the value of a buy-to-let property. Fewer are prepared to do so now as fears grow of falling property prices.

Kensington Mortgages, for example, is one of those lenders that has reduced maximum loan-to-value lending criteria down from 85% to 75%.

Widening margins

Whilst landlords might expect a lower Bank of England base rate will lead to lower mortgage rates this is not always proving to be the case.Lenders concerned about the increased risk of tenants defaulting on rents and falling property prices may well choose to widen their margins and increase the cost of borrowing.

Some lenders have increased rates despite the 0.65% fall in base rate where margins as a result have increased by about 1%.

Comment

Angus Stewart, Property Master’s chief executive, said: “The competitive and attractive buy-to-let mortgage market appears to be going into reverse as the impact of the coronavirus begins to bite.

“Landlords are finding that their borrowing options are being drastically reduced as lenders respond to this new record low base rate environment and fears of falling house prices by withdrawing entire product ranges.

“We have had clients mid-way through a mortgage application only to find the process is halted and the product withdrawn before they can reach completion and the release of funds.”

“We can well imagine the difficulties lenders are facing when it comes to valuing properties and properly pricing risk. But we would urge them to continue to support landlord customers, especially those who were moving successfully through the mortgage application process and would otherwise have expected to be shortly in receipt of a loan.

“Similarly, we would urge banks to stand by the commitment made by the Government to provide payment holidays to landlord customers struggling as the current crisis impacts on the ability of tenants to pay their rent.”

By Joanne Atkin

Source: Mortgage Finance Gazette

Marijana No Comments

Nationwide confirms buy-to-let repayment holiday

Nationwide has extended its repayment holidays to cover buy-to-let mortgages.

The Housing Secretary and Prime Minister have both outlined plans to protect landlords and tenants against the impact of the coronavirus pandemic.

Henry Jordan, Nationwide’s director of mortgages, said: “As the UK’s second largest buy-to-let mortgage provider we feel it is important to extend protection to landlords and their tenants during this uncertain period.

“We have extended mortgage payment holidays to include rental properties so that landlords with tenants who are unable to meet rental payments because of coronavirus are protected as much as possible.

“These payment breaks will be able to be arranged via The Mortgage Works – Nationwide’s buy-to-let arm.

“We would encourage tenants to speak to their landlords if they are impacted or worried about coronavirus to ensure that steps can be taken to support them at this time.”

Housing Secretary Robert Jenrick MP said of the changes: “The government is clear – no renter who has lost income due to coronavirus will be forced out of their home, nor will any landlord face unmanageable debts.

“These are extraordinary times and renters and landlords alike are of course worried about paying their rent and mortgage.

“Which is why we are urgently introducing emergency legislation to protect tenants in social and private accommodation from an eviction process being started.

“These changes will protect all renters and private landlords ensuring everyone gets the support they need at this very difficult time.”

Ben Beadle, chief executive of the National Residential Landlords Association, added: Landlord groups welcomes government support.

“We recognise the exceptional circumstances and we will work collaboratively with government to ensure these measures protect both landlords and tenants.

By Ryan Fowler

Source: Mortgage Introducer

Marijana No Comments

Two-year fixed rates grow in popularity among buy-to-let landlords

The percentage of landlords opting for two-year fixed rate buy-to-let mortgages in the final quarter of 2019 was 26% – a 12-month high – and up from 8% the previous year.

These figures are from Mortgages for Business, which says the growing number of landlords opting for shorter-term rates has been fuelled by the shorter Early Repayment Charge (ERC) periods, which are typically attached to these types of products.

Shorter ERC periods allow landlords to refinance sooner without occurring a penalty – an option which became more popular in the uncertain political climate at the back end of last year.

Five-year fixed rates still most popular

However, despite the majority of landlords (95%) choosing fixed rates over a variable product (down slightly from 97% in the previous quarter) five-year fixed rate products remain the most popular term chosen by 68% of landlords (down from 70% in Q3 and 72% in Q2 2019).

This is mainly because lenders are still applying less rigorous stress tests to five-year products than to shorter-term products which, in effect, means landlords can borrow more using them than with their two or three-year counterparts.

More interest in variable rates

There has been an increase in the popularity of the tracker and discounted rate products, up from 2% in Q3 to 4% in Q4 2019 as landlords respond to increased speculation that the Bank Rate could be cut in the near future.

Steve Olejnik, managing director of Mortgages for Business, said: “Recent political uncertainty has led more landlords to opt for two-year fixed rates over longer-term fixed rate products.

“Landlords are drawn to the shorter Early Repayment Charge periods associated with these types of products, which provide greater flexibility.

“Given we now have more certainty in the political system, we forecast that landlords may start to look at longer term fixes again in the future.”

Limited company rates

There are 49 buy-to-let lenders in the UK and 31 of them offer limited company mortgages.

Rates available to landlords borrowing via a limited company on average were 0.7% points higher than those available to landlords borrowing personally – up from 0.6% points in the previous quarter.

The number of products available to limited companies for both two-year (288) and five-year fixed rates (322) grew in Q4 2019.

Olejnik said: “More landlords are expanding their portfolios through a limited company which has proven to be a more effective borrowing vehicle both from a tax perspective and financially. Lenders have responded to that and demand has fuelled an increase in the number of products available.

Buy-to-let mortgage products numbers rise

The number of buy-to-let mortgage products available increased by 72 to 1,981 in Q4 2019 up from 1,909 in the previous quarter. In addition, the number of buy-to-let products available to limited companies increased by 51 to 738 up from 687 in Q3 2019.

Olejnik added: “The increase in the number of products available to limited companies gives landlords more choice. Since Brexit was assured by the clear General Election result in December, British house prices have risen at their fastest rate since 2002, according to Rightmove.

“Houses in Multiple Occupation (HMOs) continued to produce the most substantial yields for landlords handling more complex portfolios, in at 9.2% Q4 2019.”

By Joanne Atkin

Source: Mortgage Finance Gazette

Marijana No Comments

Arrears down 9% but repossessions rise by 17%

The fourth quarter of 2019 saw a 9% annual decrease in the number of residential mortgage arrears of 2.5% or more of the outstanding balance, according to UK Finance.

In Q4 there were 70,880 cases in arrears and within this total, 21,770 homeowner mortgages had significant arrears (10% or more of the outstanding balance). This was also 9% fewer than in the same quarter of the previous year.

Residential repossessions

The number of homeowner possessions rose by 17% to 1,330 in Q4 2019 but UK Finance points out this is from a very low base, with 59 in every 100,000 homeowner mortgages being taken into possession in 2019.

This increase in possessions has been driven in part by a backlog of historic cases which are being processed in line with the latest regulatory requirements.

Buy-to-let

There were 4,390 buy-to-let mortgages in arrears of 2.5 per cent or more of the outstanding balance in Q4 2019, which is 0.22 per cent of all buy-to-let mortgages outstanding. This figure is down 7% fewer on the same quarter of the previous year.

Within the total, there were 1,160 buy-to-let mortgages with more significant arrears of 10% or more of the outstanding balance – 3% fewer than in the same quarter of 2018.

There was a 20% rise in buy-to-let mortgaged properties taken into possession in Q4 2019, taking the number to 660. Again, this is from a low base with 137 in every 100,000 buy-to-let mortgages being taken into possession in 2019.

Levels remain well below those seen between 2009 and 2014 and this increase is driven in part by a backlog of historic cases which are being processed on the same basis as the latest regulatory requirements in the residential sector.

By Joanne Atkin

Source: Mortgage Finance Gazette

Marijana No Comments

Cost of buy-to let fixed rate mortgages declines

Research by online mortgage broker Property Master has revealed that the cost of all the fixed rate buy-to-let mortgage categories it tracks are down year-on-year.

Some rates have fallen by nearly £50 per month, which represents a saving of almost £3,000 over the course of a 5-year fixed rate mortgage.

Angus Stewart, chief executive at Property Master, said: “Another fall in the cost of borrowing is very good news for landlords.

“We know that there are landlords languishing on expensive SVR mortgages as the uncertainty around Brexit and political instability has put them off moving on to a more competitive fixed rate.

“With the current record low rates on offer these landlords should act quickly because if the “Boris bounce” becomes a reality it may allow interest rates to begin to rise back to more normal levels.”

“We are expecting a particularly busy next few months.

“This April it will be four years since significant changes were made to Stamp Duty.

“The decision by the then government to slap on a 3% surcharge on buy-to-let properties led to a mini-boom as landlords rushed to buy properties to beat the deadline.

“We suspect many of those landlords will be coming to the end of fixed rate mortgages around now and should be pleasantly surprised at what the market is prepared to offer them in terms of a good deal.”

Property Master’s February 2020 Mortgage Tracker shows the biggest year-on-year fall in cost was for 5-year fixed rate buy-to-let mortgage offers for 65% of the value of a property.

The monthly cost of a typical £150,000 mortgage for 65% of the value of the property fixed for five years fell by £48 per month between February 2019 and February 2020.

Year-on-year falls for 2-year fixed rate buy-to-let mortgage offers were more modest.

The cost of a typical 2-year fixed rate mortgage for £150,000 for 75% of the value of the property was down £25 per month year-on-year and for 65% of the value of a property by £19 per month.

However, both categories are at the lowest level they have been since Property Master began tracking rates in April 2018.

By Jessica Nangle

Source: Mortgage Introducer

Marijana No Comments

Buy-to-let rates fall but question mark hovers over optimism for market

Buy-to-let two and five-year fixed rates have fallen on average by more than a quarter of a percent year-on-year, analysis from Moneyfacts.co.uk revealed.

The average two-year fixed rate has dropped from 3.07 per cent in February 2019 to 2.75 per cent this month.

The five-year average fixed rate has fallen from 3.56 per cent to 3.20 per cent over the same period.

According to Moneyfacts’ analysis, if a landlord had a five-year fixed rate mortgage in 2015 and was looking to refinance, the average rate has dropped by 1.19 per cent. This would mean a difference of £1,947 a year in monthly repayments if a landlord were to take a loan of £250,000 on a 25-year term compared to back in 2015 for the same amount and term.

Rachel Springall, finance expert at Moneyfacts.co.uk, said: “Lenders have cut rates on both short-term and long-term deals by around 0.30 per cent year-on-year, so there could be borrowers looking to switch their deal. Cutting down on monthly loan payments may be at the forefront of landlord’s minds considering the mortgage tax relief changes.

“Since April 2017, mortgage interest tax relief for buy-to-let landlords – which allowed them to deduct mortgage expenses from rental income to reduce a tax bill – has slowly been phased out. Indeed, by April this year it will be gone entirely, which means landlords could face a larger tax bill and less rental income as a result. This shake-up may deter potential landlords who feel their profit margins will be tightened, but despite this, optimism for 2020 appears resilient and lenders are clearly working hard to entice prospective borrowers. However, it is hard to tell whether this will wane as the year progresses.”

Landlords expect business to increase

Using a limited company to buy properties, rather than purchasing houses as an individual, is one way to side step the cuts to mortgage interest relief, although limited companies do come with their own tax burden.

Nigel Terrington, chief executive of Paragon Bank, said it was too early to tell whether recent positive surveys highlighting landlords’ improved confidence could be sustained.

The changes to tax relief for landlords and the introduction of three per cent stamp duty on second homes has caused thousands of landlords to exit the market or look for alternative ways to make money from the rental market. As well as setting up as a limited company, landlords are also looking to the holiday let market.

Research by the Association of Residential Letting Agents (ARLA) and Capital Economics found that of the overall landlord population, 2.7 per cent have changed from long-term tenants to short-term lets. This equates to 46,000 properties made unavailable to local people looking for a home. In London the issue is bigger, with four per cent of investors now offering short-term lets over homes previously used for longer term rentals.

The number of active listings on Airbnb in the UK increased by a third to 223,000 in 2018 from 168,000 in 2017, the research showed.

And in the capital, the number of active listings on Airbnb jumped four-fold from 18,000 in 2015 to 77,000 in 2019.

In Edinburgh short-term lets tripled in just three years, with 32,000 active listings in 2019, up from 11,000 in 2016.

Written by: Samantha Partington

Source: Your Money

Marijana No Comments

FACT Report Shows Buy To Let Mortgage Market Stable

The buy to let mortgage market is stable according to the latest FACT (Financial Adviser Confidence Tracking) report from Paragon.

The FACT report, based on interviews with 201 mortgage intermediaries, revealed a slowdown in overall mortgage business during Q3 2019, but stability in the buy to let market.

The average number of mortgages introduced per office in Q3 2019 was 21.9, down 3 per cent from 22.5 in the second quarter and the lowest figures since Q2 2017. The average number of mortgages introduced per adviser also fell, down from 7.9 to 7.4.

Despite this slowdown, the FACT report showed that the buy to let market has remained relatively stable since a notable decline in 2016 and comprised 17 per cent of mortgages introduced in the quarter, up 2 per cent from 15 per cent in Q2 2019.

Remortgaging was again the principal type of borrowing amongst homeowners, accounting for 46 per cent of mortgages introduced in Q3 and maintaining the disparity that has been widening at modest pace over the last five years. Elsewhere, next time buyers accounted for 18 per cent of new business, down from 19 per cent in the previous quarter, and first-time buyers fell from 18 per cent to 16 per cent.

In terms of buy to let business completed in Q3 2019, first-time landlords grew from 11 per cent to 13 per cent and remortgaging climbed from 52 per cent to 55 per cent. However, the proportion of landlords raising finance for portfolio extension was smaller, down from 23 per cent of business in the second quarter to 20 per cent.

Looking ahead, the FACT report showed intermediaries forecast a 2 per cent pick-up in overall business over the next 12 months and a 1 per cent increase in buy to let.

John Heron, Director of Mortgages at Paragon, said: ‘After a number of years of instability and negative sentiment in the buy to let market, it’s encouraging to see mortgage intermediaries forecasting increased buy to let business over the next 12 months. However, the market overall has been constrained by the current Brexit uncertainty and it remains difficult to see exactly when this will end.’

The FACT Index score, designed to establish advisers’ overall confidence in the mortgage market is 97.8 for Q3, down 11.2 compared with six months ago and the lowest score recorded since Q1 2017.

Source: Residential Landlord

Marijana No Comments

BTL mortgage cost decline slows

The fall in the cost of buy-to-let mortgages has slowed, online mortgage broker Property Master has found.

Property Master’s Mortgage Tracker for October showed costs dropped in four out of the six categories tracked but interest rates stayed the same for the remaining two categories.

Angus Stewart, chief executive at Property Master, said: “The previous quarter saw our report record two across the board falls in the cost of all the fixed rate buy-to-let mortgage categories we track.

“But as we go into the last quarter of this year, we have seen this decline stall – at least in the cost of 2-year fixed rates.

“The further reduction in some 5-year fixed rates provides some landlords with an incentive to fix their commitments at what may be the lowest rate we will see for some time.

“Lenders have been awash with funds recently which has been driving competition and lower mortgage costs.

“As ever the biggest influencer on interest rates going forward will be predicting the future strength of the UK economy which whilst Brexit remains unresolved is obviously very difficult indeed.

“It is unclear whether there will need to be a further fall in interests rates to stimulate the economy and this will be driven by whether or not we leave the EU at the end of this month and if we do whether or not it is with a deal.

“The Monetary Policy Committee meeting on 7 November will be a critical review point.”

The biggest fall in monthly cost was for 5-year fixed rate buy-to-let mortgage offers for 50% of the value of a property.

The monthly cost of this type of mortgage saw a monthly decline of £25.

By Michael Lloyd

Source: Mortgage Introducer

Marijana No Comments

Only 37% of BTL products available directly from lenders

Research from Paragon Bank shows that 57% of landlords are most likely to source their next buy-to-let mortgage from their existing broker, while 41% state they would be most likely to go direct to a lender for a buy-to-let mortgage. According to Moneyfacts.co.uk, currently 37% of buy-to-let mortgage products are available directly.

The research from Paragon Bank also revealed that there is little variance in the attitude towards retaining their current mortgage broker between portfolio and non-portfolio landlords, with 59% and 50% respectively saying they are most likely to remain with their current broker. (A portfolio landlord has four or more properties).

Landlords pausing on increasing their portfolios

Only 8% of landlords expect to purchase property in the next quarter, almost reaching the historic low of 6% in quarter four 2018. While those selling properties decreased by only one percentage point from 23% to 22%. In quarter three in 2014, the gap between landlords expecting to sell and those expecting to buy was equal, whereas the current gap now sits at 15%.

An area where portfolio and non-portfolio landlords differ is on the expectation of purchasing a property in the next quarter. Only 1% of non-portfolio landlords expect to purchase, while 10% of portfolio landlords expect to buy.

John Heron, director of mortgages at Paragon, said: “With so much change in the private rented sector (PRS) in recent years, landlords have had to adapt quickly to higher taxation, which has impacted returns on their portfolios. Throughout that time, landlords will have relied more heavily than ever on intermediaries to help them get the very best deals available. Therefore, it is no surprise that, while the future remains unpredictable, landlords are maintaining some stability by reusing the same brokers for their next mortgage.

“It’s surprising, however, to hear that some landlords are considering approaching a lender directly for their next mortgage. This does not match well with the actual behaviour of landlords, particularly in the portfolio segment where nine out of 10 landlords use an intermediary.”

Paragon Bank’s PRS Trends Report for quarter three 2019 was conducted with over 200 buy-to-let landlords, of which the large majority have been renting for over 10 years and are classed as professional landlords with three or more properties.

Source: Property118