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Foundation Home Loans returns range to pre-lockdown structure

Foundation Home Loans has returned its buy-to-let (BTL) product range to its pre-lockdown structure with the reintroduction of large loan, early remortgage and short-term let products.

The lender has also introduced a number of rate reductions of up to 40bps across its 5-year BTL products for both individuals and limited company borrowers, with rates now available from 3.29%.

Advisers can now access a number of returning BTL products, including: large loan mortgage – a 3.29% 5-year fixed-rate available for F1 borrowers at 65% loan-to-value (LTV); early remortgage – a 3.65% 5-year fixed-rate available for F1 borrowers with a maximum 75% LTV; short-term let mortgages – both 2-year (3.99%) and 5-year (4.64%) fixed-rates available for F1 borrowers up to a maximum of 75% LTV.

These rate cuts and product returns follow last month’s introduction of additional products, which included a 5-year fixed fee product for F1 borrowers.

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Those rates have also seen reductions and are now offered at 3.74% up to 65% LTV or 3.99% up to 75% LTV, and come with a fixed fee of £1,995.

Foundation also introduced a number of criteria changes across the buy-to-let range in June including the reintroduction of a 125% interest cover ratio (ICR) for limited company borrowers and basic-rate taxpayers, while it is also offering products for first-time landlords again.

Jeff Knight, director of marketing at Foundation Home Loans, said: “It’s fair to say that the buy-to-let market is in a different place to where it was at the start of the year, but with each week we are marking that return to a ‘new normal’ and we are offering our adviser partners access to a wide range of products for their clients.

“We’ve seen a strong demand from intermediaries who say there are many landlords who want to make the most of the opportunity, refinancing in order to fund future purchases, and looking at diversification of their portfolios.

“These products will allow them to do that, and we are particularly pleased to be back in the short-term let space as we believe there will be a growing demand to utilise these properties, particularly in the holiday sector.

“Our sales team are available to support all advisers and help them place these cases, we have a strong appetite to lend and we are very positive about the buy-to-let market throughout the rest of 2020 and beyond.”

By Jessica Bird

Source: Mortgage Introducer

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Pent up demand fuels resurgence in the rental market

Lettings market activity in June was significantly higher than the same month last year, the Rental Index from Goodlord has shown.

After number of new tenancy applications were received during May, June saw that demand translate into completed lets.

The number of completed lets stayed above 2019 averages for all but six days of June, marking an extremely busy month for the industry.

The cost of renting rose by 3% across the England and Wales between May and June.

Void periods also dropped in five out of eight regions.

Tom Mundy, chief operating officer at Goodlord, said: “If May was characterised by a release of pent up market demand, then June was that demand translating into action.

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“The numbers throughout the month were incredibly impressive and show how hard the industry has been working to serve as many tenants and landlords as possible.

“We saw an unprecedented number of lets completed each day in June. It’s therefore no surprise to see those levels of demand starting to affect average rental costs and void periods.”

The biggest rent rise was seen in the South West, which saw average prices increase by 11% – from £859 per month to £965.

Wales wasn’t far behind, posting a 9% rise in average rental costs.

The average salary of a UK renter dipped slightly month-on-month, from £25,068 to £24,613.

BY RYAN BEMBRIDGE

Source: Property Wire

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Borrowing is on the way to returning to healthy levels

Despite Bank of England figures that showed mortgage approvals hit a record low of 9,300 in May, there are signs that borrowing is returning to normal levels, according to Hometrack.

The Bank of England’s Money and Credit Report showed that households repaid more loans than they took out in May, but that there was still a small increase in mortgage borrowing.

On net, households borrowed an additional £1.2bn secured on their homes, higher than £0.0bn in April, but weak compared to an average of £4.1bn in the six months to February 2020.

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David Ross, managing director of Hometrack, said: “The data released by the Bank of England is encouraging and shows that borrowing, while not at pre-COVID levels, is certainly returning.

“On a more positive note our data for June shows continued growth and is up on the same period in 2019.”

For the market to return to normal, Ross added, providers must continue to innovate and focus on the customer.

He said: “Continued stimulus is key to maintaining this growth.

“We urge mortgage providers to focus on delivering the very best customer experience, removing complexity through digitisation and ensuring fewer barriers to borrowing.

“This in turn will help grow new lending, helping the economy get back on its feet after the shock of COVID.”

By Jessica Bird

Source: Mortgage Introducer

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Swansea responds to demand for holiday let mortgage with rate cuts

Swansea Building Society has announced it is cutting rates on holiday let mortgages and is offering more flexible borrowing terms to customers wishing to take out these products.

The society said it was changing the calculation used to stress test the mortgage payment for buy-to-let and holiday lets to reflect the tax status of the main applicant.

It would also consider income from Airbnb lettings and it would accept projected income. What’s more, Swansea said it would look at lending on unusual properties on both buy-to-let and holiday let cases.

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Borrowers will now also be able to take advantage of the newly-reduced rates. Swansea revealed it had cut rates to 3.55% variable (previously 4.25% variable) on mortgages with a loan-to-value (LTV) ratio of up to 60% and to 3.95% variable (previously 4.75% variable) on mortgages with an LTV of up to 70%.

The move comes after Swansea reported a big increase in enquiries for holiday let mortgages in recent months. This appears to be a response to ongoing restrictions on overseas travel due to the Coronavirus.

Alun Williams, chief executive of Swansea Building Society, said: “We are proud that we have remained open for both our savings and mortgage customers through the crisis, supporting our members in every way we can.

“As lockdown now eases, we are seeing an uptake in enquiry levels especially around the more specialist mortgage areas such as holiday let and self-build and we are delighted to be able to lower our rates on buy-to-let and holiday let mortgages in particular.”

By Kate Saines

Source: Mortgage Finance Gazette

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Housing market starts to reopen in Scotland as lockdown eases

From Monday 29 June, restrictions on housing moves will be eased in Scotland as part of the easing of its lockdown measures.

This will allow valuations and viewings to take place, and marks the initial stage in the reopening of the Scottish housing market.

This development in Scotland follows a similar move to ease lockdown on 19 June in Wales, which saw the government allow viewings to take place in vacant properties, and to ease restrictions on house moves where a sale has been agreed, but not yet completed.

In England, it has been more than a month since equivalent changes were made on 13 May.

First Minister Nicola Sturgeon, said: “The sacrifices that have been made – and I know how hard and at times painful they have been – have suppressed the virus.

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“They have also protected the NHS, and have undoubtedly saved a significant number of lives.

“They have also brought us to the position where we can now look ahead with a bit more clarity to our path out of lockdown, and I hope details announced today will provide people and businesses with more certainty in their forward planning.

“But let me be clear that each step on this path depends on us continuing to beat the virus back. That is why we must do everything in our power to avoid steps being reversed.

“The central point in all of this is the virus has not – and it will not – go away of its own accord. It will pose a real and significant threat to us for some time to come.

“Maintaining our progress also means all of us abiding by public health guidance.

“Wearing face coverings in enclosed spaces, avoiding crowded places, washing our hands and cleaning surfaces regularly, maintaining physical distancing, agreeing to immediately self-isolate and get a test if we have symptoms – all of these basic protections matter now more than ever as we all get out and about a bit more.”

A statement from the Welsh First Minister, Mark Drakeford MS, said: “This package marks a significant unlocking of the regulations and, for many aspects of daily life in Wales, we are moving into the amber phase of our traffic light system.

“We have been able to do this because of the actions everyone in Wales has taken to date in complying with the stay-at-home and stay local rules.

“We need everyone to continue to take steps to protect themselves and their loved ones as we find a way to live and work alongside coronavirus.

“This means working from home wherever possible, maintaining social distancing and frequent handwashing.

“For some people it may mean wearing a face covering in certain situations, for others it will mean continuing to shield.

“I want to thank everyone for everything they have done so far. Together we can keep Wales safe.”

Mark Hayward, chief executive at NAEA Propertymark and David Cox, chief executive of ARLA Propertymark, said: “It’s great news for consumers and the industry in Scotland that the property market is reopening on Monday.

“Whilst it is not a return to normal, the new guidelines will allow members of the public to view, purchase, rent and move into new properties…reinvigorating the housing market and boosting the economy.

“Of course, safety is paramount, and we encourage all agents to follow the Propertymark guidelines on property viewings and moves closely to protect themselves and others.”

By Jessica Bird

Source: Mortgage Introducer

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HMRC: Property transactions up 16% month-on-month

Residential property transactions were up 16% on a monthly basis in May as the UK eased its way out of lockdown.

HMRC figures revealed that there were 48,450 residential transactions during the month, but that is still 49.6% lower than in May 2019.

Non -residential property transactions stood at 5,880, 42.2% lower than May 2019 and 14.1% higher than April 2020.

Andrea Olivari, co-founder at digital lender Selina Finance, said: “On the whole, there are gradual signs that the property market is moving, with the latest industry figures revealing an average house price increase of 1.9%.

“So the rise in property transactions is reassuring, particularly given the figures are taken from May and the market wasn’t officially re-opened until mid-way through the month.

“It will be interesting to see if this trend continues throughout June or whether these figures are down to a release of pent up demand from the lockdown period.

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“Whether the increase continues in the long term is dependent on an array of factors, particularly the “new normal” of homeworking post-COVID and how this influences homebuying decisions.”

Anna Clare Harper, author of Strategic Property Investing and co-founder of property fund Anglo Residential, added: “Recent events and practical restrictions such as physical valuations and obtaining finance mean it is hardly a surprise that property transactions have fallen dramatically year-on-year.

“However, what we can see from the HMRC data and from what we are hearing from investors, appetite is responding quickly.

“We are seeing the signs of strong appetite to move forward with investments in the UK residential market in particular.”

By Ryan Fowler

Source: Mortgage Introducer

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UK house price growth to remain positive over the next quarter – Zoopla

The latest Zoopla House Price Index has been published, with the bulk of new pricing evidence coming from sales agreed before the lockdown.

Data on pricing for new sales agreed in the last four weeks is starting to feed through and points to a resumption in the upward pressure on house prices seen at the start of the year.

As an example, average asking prices for properties marked as sold on Zoopla, which were rising at 7% in the first three months of the year, have returned to registering a similar growth rate over the first two weeks of June.

Near-term outlook for house prices

Most of these new sales agreed are likely to complete between August and October 2020, which Zoopla expects will show sustained UK house price growth of between +2% to +3% over the next quarter, once they feed into the index.

While some have forecast annual house price falls over calendar year 2020, the portal expects any price falls in the house price indices only to crystallise in the final months of the year.

Economic impacts of COVID-19 to hit home in H2 2020

After an initial rebound, demand is expected to weaken over the summer months as the economic impact of COVID starts to materialise, with figures reported last week by the ONS indicating an acceleration in unemployment.

Caution amongst lenders and more limited availability of 90% loan to value (LTV) mortgages will reduce demand, particularly amongst first-time buyers who, over recent years, have been the engine of the housing market.

In 2019, a fifth of all homebuyers purchased a home with a deposit of 10% or less, so a decrease in the availability of 90%+ LTV mortgages could preclude this cohort of would-be buyers from entering the market, effectively reducing demand.

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Government and central bank support will continue to play an important role in how the economy fares with a knock-on impact for the strength of consumer sentiment.

Retail sales, for example, rebounded more than many expected in May.

While almost a fifth of mortgage holders have taken payment holidays, borrowers are able to take these up until the end of October 2020, meaning support is extended for the rest of the mortgaged sector up until April 2021.

Further support and innovation to support the economy and the housing market cannot be ruled out in these unprecedented times, which will limit the downside, albeit not completely.

Strongest sales rebound in northern cities

New sales agreed, subject to contract, have grown the most in England where the market is open for business.

The rebound in sales has been strongest in northern England, led by Leeds, Sheffield and Manchester where sales are up to 20% higher than in February 2020.

In cities where sales are not keeping pace with pre-COVID levels, including Glasgow, Newcastle and Cambridge, this is down to a lower supply of homes for sale.

Level of homes for sale (inventory) in these cities is significantly lower than last year.

While the new flow of homes for sale is back to pre-COVID levels, the number of homes for sale per estate agency branch is 15% lower than a year ago.

This is a result of the market closure at what is a busy time of year.

Stock levels in Cambridge, for example, are up to 40% lower year-on-year.

Zoopla says that the lack of supply supports their view of house price growth holding steady in the short term.

House price growth

UK house price growth is up 2.4% on the year, and has increased from 1.6% at the start of 2020.

The 20 city index registered slower growth over May, slowing to +2.1% from 2.4% in April as less pricing evidence dragged the growth rate lower.

The city with the highest rate of house price growth over the past 12 months is Nottingham (4.3%), followed by Manchester (3.9%).

Meanwhile, Oxford (-0.6%) and Aberdeen (-2%) have recorded modest price falls.

Regional momentum

Activity levels are expected to rebound in Scotland, Wales and Northern Ireland as these markets reopen and pent up demand is released.

These countries account for less than a fifth of UK housing sales but more activity will support headline measures of demand and market activity in the immediate term.

The Welsh market opened on Monday but demand for homes has been building since the English market reopened, gaining momentum over the last two weeks.

Demand for housing in Wales has now rebounded close to what has been recorded in England.

Sales agreed, however, remain 65% lower than pre-COVID levels in Wales as the physical viewing of property has not been permitted.

Zoopla expects sales volumes to increase over the rest of June and into July, mirroring the rebound in England.

Scotland’s market, which reopens later in June, has seen a similar trend with demand recently returning to pre-COVID levels, but with sales volumes lagging well behind.

Commenting on the findings Richard Donnell, Director of Research & Insight, said:

“The rebound in housing market activity has taken many in the industry by surprise.

“It is welcome news given the projections for falling economic growth and rising unemployment.

“Estate agents and developers are responding and using the upsurge in demand to rebuild their sales pipelines and open up their developments.

“We see returning pent up demand and new buyers entering the market creating upward pressure on prices in the face of a lower supply of homes for sale which has been exacerbated by the lockdown.

“House price growth is set to hold up in the near term and we expect the downward pressure on prices to come in the final months of the year as demand weakens.

“While the average asking price for homes marked as sold on Zoopla are 7% higher than a year ago this is down to an increase in sales in higher value markets where activity has remained subdued in recent years.

“We do not expect the rate of growth in the Zoopla House Price Index to reach this level, rather it is expected to hold steady at 2%.

“The Welsh housing market opened this week and levels of demand have already returned close to the levels seen in England in anticipation of the market reopening. Scotland, where the market reopens on 29 June has also seen demand rise back to pre-COVID levels but sales remain more than two thirds lower and are expected to rebound in the coming weeks.”

Source: Property Industry Eye

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Lender raises £400m mortgage funding

Specialist lender Kensington Mortgages has raised £400m of funding through the wholesale financial markets.

The deal, which was announced to the market last week (June 17), was one of the first residential mortgage-backed securitisations (RMBS) to be sold to investors since the onset of the coronavirus crisis, according to the lender.

RMBS consist of bundles of mortgage loans, which are sold on as bonds to investors. The securities were purchased by global institutional investors.

Kensington said it will use the funds to support complex and underserved borrowers get on the property ladder.

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Alex Maddox, capital markets director at Kensington Mortgages, said: “The global financial markets are a hugely important source of funds for the UK housing market.

“While everyone assumes that the flow of money supporting British housing is all about the big banks, that’s not been true for many years.

“About 20 per cent of the cash underpinning UK house purchases is coming from pension funds and debt investors around the world.

“At the start of the Covid-19 pandemic, the Bank of England was quick to ensure that funding was made available to banks and building societies so they could keep lending – which was welcome. With wholesale markets reopening, non-bank lenders such as ourselves can play a more active role in the market again, and help more people towards a house purchase.”

Kensington Mortgages is a specialist lender that offers mortgages to those who find it difficult to borrow from high street lenders.

By Chloe Cheung

Source: FT Adviser

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Buy-to-let yields improve in the North East

Buy-to-let yields in the North East have increased by 0.12% to 5.09% in the first quarter of 2020, research from peer-to-peer investment platform Sourced Capital has found.

At the other end of the spectrum they’ve fallen by -0.22% in London to 4.10%.

Stephen Moss, managing director of Sourced Capital, said: “Turning a profit in the buy-to-let sector remains a tough ask with a number of government changes denting profitability and yields remaining largely flat.

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“With COVID-19 presenting additional hurdles such as rental arrears and longer void periods, many are now turning to alternative options such as the peer to peer sector for a safer, more hands-off investment.

“However, that’s not to say that a buy-to-let property won’t make a great investment should you place your money in the right pockets of the market. Buy-to-let returns are based on fine margins and so an annual increase of 0.7% isn’t as insignificant as it may seem.”

Across England they’ve typically fallen by -0.1% year-on-year.

Looking more locally, Corby has seen an uplift of 0.7% on an annual basis. Charnwood, Newcastle and Exeter have also seen positive growth with a jump of 0.5%.

Harlow in Essex and the Orkney Islands have enjoyed a 0.4% increase, along with Ealing which enjoyed the largest increase of all London boroughs.

BY RYAN BEMBRIDGE

Source: Property Wire

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Scottish Building Society scraps deposits for first-time buyers

Scottish Building Society are helping first-time buyers by scrapping deposits on new-build mortgages.

Under the Scottish government’s First Home Fund, prospective homeowners trying to get on the property ladder need to find a minimum of 5%.

However, the society has agreed to accept the 5% from house builders, removing the need for buyers to find the cash for a deposit.

Paul Denton, CEO at the Scottish Building Society, said: “As we seek to rebuild the economy post-COVID-19, it is important that as many people as possible have access to affordable housing.

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“We were proud to be one of the first lenders to take applications for the Scottish government’s First Home Fund. Getting a deposit together is the main barrier for customers trying to get on the property ladder; in some cases, one that has been exacerbated by the impact of lockdown on personal finances.

“Removing the requirement for buyers to find that 5% is good news for buyers and good news for a housing industry that is vital for Scotland’s future economic prosperity.

“This is a small but life-changing step and we would welcome further Government initiatives, such as a freeze in land tax, to accelerate the recovery.”

The First Home Fund was launched by First Minister Nicola Sturgeon to make the housing market fairer by providing a total of £150m until March 2021, helping at least 6,000 people buy their first home.

All first-time buyers in Scotland can apply for an interest-free loan of up to £25,000 towards the cost of a home, if at least 25% of the property cost is covered by a mortgage.

By Ryan Fowler

Source: Mortgage Introducer