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Andrew Turner: Landlords should consider remortgages

Now is the time for landlords to review their existing portfolios and consider remortgaging to a lower, fixed rate buy-to-let mortgage, Andrew Turner, chief executive of Commercial Trust has argued.

He said this because of a variety of products in this competitive market, and the base rate being held at 0.75% yesterday, with Bank of England governor Mark Carney warning of possible interest rate rises in the future.

Turner (pictured) said: “The present window of opportunity for what may seem favourable buy-to-let conditions in a few months’ time, may be closing.

“For landlords with a buy-to-let mortgage on a variable or tracker rate, the implications of a rates rise or fall can change their annual payments by hundreds of pounds

“In an atmosphere where rates are almost at historic lows, the prospect of monthly payments increasing on a variable or tracker rate mortgage, should the Bank increase the base rate, will seem very unappealing.

“A fixed rate mortgage is safeguarded against base rate changes for the duration of its term, while variable and tracker rate mortgages might be susceptible to any changes. Mr Carney’s suggestion is that rates are more likely to go up rather than down.”

Moneyfacts has found that there are over 2,000 products available in the buy-to-let market now, a 12-year high.

Turner added: “A conversation with a specialist buy-to-let broker, can help to identify a clear strategy and the right type of buy-to-let deal for individual circumstances, faced with such choice.”

With a sluggish housing market, Turner said that tenant demand remains undiminished, as those unable to afford to buy a home, seek accommodation in the private rental sector.

He suggested for those with money to spend, the current environment may offer opportunity to invest in buy-to-let with lower house prices, soaring tenant demand and historically low interest rates.

Turner said: “I would suggest anyone holding off at the moment, faced with these facts, to consider what they are waiting for?

“The bigger question is how long current conditions will last? Mr Carney’s suggestion is that a change in interest rates is just around the corner. That could mean that the competitive deals currently available, may soon evaporate with any base rate change.

“So, whether you are a first-time landlord or considering remortgaging, while time is currently on your side regarding interest rates, how long will that last?”

By Michael Lloyd

Source: Mortgage Introducer

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Mortgage approvals up nearly 10%

The number of people being approved for a mortgage increased by nearly 10 per cent in March.

The latest data from UK Finance showed the number of approvals for home purchase were 9.3 per cent higher in March 2019 than the same month the year before.

Year-on-year, the number of people getting approved to remortgage increased by 11.1 per cent.

Gross mortgage lending across the residential market in March 2019 was £20bn – 0.5 per cent lower than the same month in 2018.

This fall was mainly seen in high street banks, where lending dropped by 3.5 per cent year-on-year.

Gareth Lewis, commercial director of property lender MT Finance, said the subdued lending in the first quarter came as no surprise due to the uncertainty surrounding Brexit.

He said: “There was never going to be a huge growth in lending in the first quarter. However, as far as the second quarter of the year and beyond is concerned, if the levels of activity we are seeing are anything to go by, the picture may be changing.

“With Brexit pushed back, far enough away for people to forget about it a little, and with fewer column inches in the papers, this is all a positive as it stops people from worrying about it too much.

“They are getting on with life, looking at opportunities to improve their portfolios – from an investment point of view, Brexit is getting less attention now, which has to be a good thing.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Mortgage approvals for home purchase are always a useful lead indicator of future market activity and these are no exception.

“They confirm what we have been seeing on the ground and in other surveys — that transactions are holding up reasonably well despite political and economic distractions as might be expected at this time of year.

“However, it is still tough to find common ground between even realistic buyers and sellers, and sales are certainly taking considerably longer, not least because as we are finding, buy-to-let investors have not been replaced completely by first-time buyers.

“The picture is very patchy and can vary considerably between areas which are quite close together and between London and elsewhere.”

By Imogen Tew

Source: FT Adviser

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One in five home loans were remortgage or product transfer

More than 1.6 million borrowers switched product or remortgaged in 2018, making up almost one in five of all homeowner mortgages, according to UK Finance.

Of these, over one million (1,189,100) borrowers opted for a new deal with their existing provider through a product transfer, representing £158.7 billion of mortgage debt refinanced internally.

The total number of product transfers that were conducted on an advised basis was 624,900, worth £85.7 billion, while 564,300 transfers, worth £73 billion, were execution-only.

In the fourth quarter of 2018, there were 331,500 homeowners product transfers representing £46.1 billion of mortgage debt refinanced internally.

Of the total number of product transfers in the fourth quarter of 2018, 176,700 transfers, worth £25.2 billion, were conducted on an advised basis and 154,900 transfers, worth £20.9 billion, were execution-only.

These figures do not feature in any market data on remortgaging, or other published gross mortgage lending data.

Jackie Bennett, director of mortgages at UK Finance, said: “This shows a high level of customer engagement, as borrowers continue to take advantage of a competitive marketplace to switch to a product that best suits their needs.

“For those who need help in finding the right product, support is widely available through both direct channels and intermediaries, with more than half of borrowers taking advice for their new deal.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, commented: “It is good to see these stats are now being produced and that the product transfer market was a little larger than most people would have thought.

“Product transfers are good for lenders with big back books but for new lenders they are going to have to offer competitive products to compete and attract business away. From a borrower’s perspective, this makes it a great market.”

By Joanne Atkin

Source: Mortgage Finance Gazette

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Home purchase mortgage approvals plunge almost 10% on a year ago

Mortgage approvals for home purchase hit a six-month low in September, data from the main high street banks shows.

Figures from trade body UK Finance showed there were 37,352 mortgage approvals for house purchase last month, down 9.4% annually and the lowest figure since March 2018.

It is also the third consecutive month that approvals have dropped.

Lenders also approved fewer remortgages, down 7.4% annually to 27,676.

Commenting on the figures, Paul Hunt, managing director of financial technology firm Phoebus Software, said: “We are beginning to see something of a trend with the market waning in the past few months.

“However, recent reports show first-time buyer activity at a 14-month high and there are also growing signs that there is still a good amount of appetite with some estate agents reporting an increase in the number of properties coming to market.

“Nevertheless, to say we are heading into choppy waters is probably an understatement as the politics surrounding Brexit negotiations continue to cast doubt in people’s minds.

“However, with mortgage lenders having quotas to fill and targets to hit, we could see a raft of deals coming to market to tempt. As consumers turn to credit cards to fund their spending, the question will be whether, as we head towards Christmas, people choose property or the path of least resistance.”

Meanwhile, data from Mortgages for Business, based on its third quarter activity, has suggested buy-to-let mortgages for houses in multiple occupation (HMOs) have become the most popular form of borrowing by landlords.

The broker found that 32% of completed purchase transactions were for HMO buy-to-let loans, up from 32% in the second quarter.

Meanwhile, the proportion of standard buy-to-let purchase loans fell from 35% to 33% over the same period.

The broker also found that the proportion of buy-to-let transactions completed by limited companies increased from 42% to 44% between the second and third quarter.

However, their share of the value of lending fell from 44% to 43%.

Looking ahead, there was a drop in the proportion of applications submitted by landlords using a corporate structure from 48% in the second quarter to 44% in the third.

Source: Property Industry Eye

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Mortgage approvals fall to six-month low in September as experts warn of ‘fragile’ housing market

Mortgage approvals fell to their lowest value in half a year in September, according to the latest data from UK Finance, meaning every month of 2018 so far has dropped against 2017 approval numbers.

Lending amounted to £21.5bn for the month, the lowest since the £20.6bn recorded in April and a drop of 1.2 per cent on the same period in 2017.

High street banks’ mortgage approvals fell by 9.1 per cent year on year.

New house purchases fell 10.1 per cent and remortgages dropped 7.4 per cent, the data showed.

Eric Leenders, managing director of personal finance for UK Finance, said: “The mortgage market softened slightly in September, following strong remortgaging activity in the months preceding the recent base rate rise.

“The overall economic backdrop remains strong, with inflation falling back, a lower chance of further interest rate rises and high levels of employment, and we do not expect to see a more significant downturn in the housing market unless the wider economy starts to falter,” said Yopa chief property analyst Mike Scott.

Jeremy Leaf, north London estate agent and a former Rics residential chairman, added: “These figures reflect what we are seeing on the ground – we are still in a needs-driven, fragile market even though listings and demand are improving.

“Cautious buyers, as well as lack of competition especially for smaller stock, means transactions are taking much longer.

“We are hoping that Budget measures don’t knock the market completely off course and help to improve accessibility for first-time buyers in particular, as they are the lifeblood of the market.”

Howard Archer, chief economic advisor at EY Item Club, warned that the low approvals rate would impact house price growth, estimating a growth rate of around 2.5 per cent for 2018 and again in 2019.

“Caution over making house purchases may well be magnified by current heightened uncertainties over Brexit,” he added.

“Potential house buyers may also be concerned that they are likely to further interest rate hikes over the medium term following August’s hike.”

UK Finance also found that personal borrowing through loans and overdrafts grew by 2.3 per cent in the year to September, as credit card spending hit £10bn last month – 3.4 per cent higher than last September.

Outstanding levels of credit card borrowing also grew by 5.7 per cent over the past 12 months.​

Leenders said: “There has been modest year-on-year growth in card spending. However, borrowing through personal loans and overdrafts has contracted slightly in recent months, suggesting demand for unsecured household finance is becoming more subdued.

“Consumers are increasingly choosing to keep cash close to hand, with deposits held in instant access accounts showing steady growth.”

Source: City A.M.

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Buy-to-let mortgages slip as legislative changes push more landlords away

Mortgages for new buy-to-let house purchases slid 1.5% year on year in November 2017, while buy-to-let remortgages dropped by 3.6%, amid further signs that legislative changes are causing landlords to flee the market.

That’s according to new figures from UK Finance, which found there were 6,600 new buy-to-let house purchase mortgages during the month. By value, this was £900m worth of lending, which was the same as a year ago.

There were 13,500 new buy-to-let remortgages in November 2017, worth a total of £2.1bn and down 4.5% on a year ago.

But there was better news when it comes to first-time buyers and home movers.

There were 34,800 new first-time buyer mortgages in the month, up 15.2% on the same month a year earlier. That equated to £5.6bn of new lending, up 16.7% on a year ago.

UK Finance found that the average first-time buyer is 30 and has an annual income of £40,000.

Meanwhile, there were 36,200 new home mover mortgages, which was a 16.8% increase on last year. The £7.5bn of lending in the month was 19% more year on year. The average home mover is 39 and has an income of £54,000, according to UK Finance.

There were 38,400 home owner remortgages during November, some 8.5% more than the same month a year ago. The £6.5bn of remortgaging was 10.2% up year on year.

Paul Smee, head of mortgages at UK Finance, said: “The data shows housing market activity remains buoyant, despite November’s rise in the base rate.

“Steady increases in lending for house purchases together with increases in home owner remortgages reflect a keenness among consumers to benefit from still historically low interest rates, and a highly competitive marketplace.

“In contrast, declines in buy-to-let lending reflect the changing regulatory and fiscal environment for landlord businesses, where some landlords might be inclined to reappraise the viability of their portfolios.”

Source: Property Industry Eye

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Buy-to-let remortgage spike expected in April

The industry is expecting a surge in buy-to-let business in April 2018 – two years on from the rush to get deals done before the 3% stamp duty surcharge was introduced.

A number of people took out 2-year fixes before April 2016, meaning a significant amount of landlords will be looking to refinance around that time this year.

Geoff Hall, managing director of Berkeley Alexander, said: “In the insurance world, I suspect there’ll be quite a lot of activity around Spring on buy-to-let.

“There was a change of regulation in April 2016 so there was a rush to do buy-to-let mortgages.

“A lot of those mortgages will be on a 2-year fix and they’ll be expiring on April 2018 so they’ll be a lot of buy-to-let mortgage activity around then.”

Estate agent chain Haart reported a 35% increase in property exchange activity in the last week before the regulation was enforced at the beginning of April 2016.

Paul Brett, managing director of intermediaries at buy-to-let lender Landbay, said: “I agree with him. I think it was very, very busy two years ago because of that and lots of 2-year deals will be coming to maturity.

“It still may not be as attractive as refinancing. The main thing for brokers is to keep their eyes on the ball in terms of interest rates and products and to widen their horizons, not to keep with the same lenders.

“There are several not as prominent lenders, but with attractive rates and products.”

Kevin Paterson, managing director at The Source, also agreed but thought there may be more activity in other areas, for example insurance.

He said: “There was a spike in new business then so there would be a spike in remortgage activity April this year.

“The interest to me is not just remortagege, but across the market.

“Are we going to see some buy-to-let insurance come to the end? That’s something to be aware of. It’s worth brokers seeing what business they did and deciding on what’s their action plan and what they’re doing about it, like looking to rebroke to a good deal.”

Paterson added: “An interesting counter point to a spike in remortgage activity, is we may we also see a spike in more properties coming onto the market as some of the amateur landlords may leave, which may be a boost for the housing market.

“They might come out and dump the property and not have to pay stamp duty.”

Despite predicting activity in April this year, Hall doesn’t expect the year to be much different overall.

He said: “I don’t think we’ll see a great deal of change this year. It’s going to be too early to see what happens with Brexit.

“I don’t think there’ll be a huge pick up point in the economy this year because of Brexit but I don’t think there’s going to be a massive dip.

“I’m hoping that interest rates don’t go up too far. I think that would be a big mistake if they do.”

Source: Mortgage Introducer

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Home owners in UK rushed to remortgage ahead of expected rate raise, new data shows

Some 88% of remortgage applications were successful in the third quarter of 2017 in the UK, up 8% year on year and the highest proportion in the last two years, the latest figures reveal.

Lenders and brokers both report there was an increase in demand for five year fixed mortgages which should come as no surprise as an increase in interest rates which came earlier this month had been widely expected.

The data from the Intermediary Mortgage Lenders Association (IMLA) confirms that home owners planned to take advantage of ultra-low rates and protect themselves against future rate rises.

Overall a positive picture for the mortgage market emerges from the IMLA’s quarterly report with total mortgage applications that led to offers increasing by 13% year on year

Some 76% of brokers reported an increase in demand for five year fixed rates during the first six months of the year, with 23% stating that demand had increased substantially while 69% said demand had increased, with 16% noticing a substantial increase.

The positive outlook is reflected across all segments of the mortgage market, as buy to let, first time buyers and home mover and specialist lending segments also showed signs of strength, as the percentage of offers to completions increased across the board.

‘After a decade of record low interest rates, the timing of a possible rise was widely debated before November’s decision, both within the Bank of England and in the mortgage market, and this was clearly resonated in homes across the UK too,’ said Peter Williams, Executive Director of IMLA.

‘As a rise became more of a certainty, significant numbers of home owners have rushed to secure fixed rate mortgages priced to a 0.25% Bank rate for the next two, three, five or even 10 years,’ he pointed out.

He also explained that while customers who remain on tracker and standard variable rates are now adjusting to the first increase in monthly loan repayments in the last 10 years, unwavering borrower demand and lender supply should maintain competitive residential loan to value (LTV) mortgage pricing in what is now a rate rise environment.

‘Despite uncertainty in the wider economy, our data also shows the intermediary channel continuing its recent success in matching consumers with suitable products, helped by strong competition and appetite to lend within the boundaries of careful affordability rules,’ he added.

Source: Property Wire