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Buy-to-let product choice reaches 14-year high

There are signs of confidence in the buy-to-let sector, as data suggests demand for rental properties may remain strong in 2022, according to Moneyfacts.

According to Moneyfacts, there was an increase from December to January of 222 products on offer to landlords, bringing the current total to 3,528. It said it was the most since September 2007 and was nearly 1,000 more than in January 2020, before the Covid-19 pandemic.

The site also said the provision of mortgages for those with smaller deposits or levels of equity was a sign of confidence in the BTL sector, saying that 28 products were now available at 85% loan-to-value (LTV). This is the most since March 2020 when it was just 32 and a rebound from January last year when the figure was zero.

The average overall two-year fixed BTL rate has increased, Moneyfacts said, for the second consecutive month, rising by 0.04% to 2.94%, making it the highest since September when it was 2.94%. In contrast, the average overall five-year fixed rate had held steady at 3.18% since October 2021, the lowest it had recorded since the 3.06% in August 2020.

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More choice for landlords

Eleanor Williams, spokesperson at Moneyfacts, said: “The level of product choice available to landlords has continued to increase for the eighth consecutive month, with the number of options across all the LTV tiers improving.

“The rise of 222 deals is the highest month-on-month increase in availability that we have recorded since July 2021. At 3,528 total deals on offer, this is the largest number of BTL products we have seen in more than 14 years.”

This occurred, she said, despite the pandemic and changes to regulations and taxation.

“BTL lenders seem keen to entice borrowers,” Williams added, “as there are almost 1,000 more products available now than there were two years ago in January 2020, before the onset of the pandemic.”

“Following the increase in base rate by the Bank of England last month, we have seen the average two-year fixed rate for all LTVs rise by 0.04% since last month to 2.94%, a shift which echoed recent changes in the residential mortgage sector.”

Landlords looking to secure a five-year fixed rate in the brackets between 65% and 80% LTV, she said, “will find that the average five-year fixed rates in these tiers fell month-on-month, which is great news for those hoping to protect themselves from potential future rate rises with the stability of a mid-term fixed rate deal.”

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As an example, she said that landlords who “took out a 75% LTV five-year fixed rate in 2017 and are looking for an equivalent deal now will find that, at 3.19%, the average rate is 0.70% lower now than when they secured their previous deal.”

However, she added, “Landlords who have a smaller level of deposit or equity, however, may find that, as with the two-year fixed rate, the average five-year fixed rate in the top 85% LTV tier has risen. Increasing by a significant 0.30% this month, at 5.52% this is now 0.23% above where the equivalent rate sat in January 2017.”

More risk in a niche lending area

Williams said buy-to-let lending remained a “niche” area as it was viewed as high risk by lender.

She added: “Therefore, it takes very little movement, or just a slight adjustment from any of the handful of lenders who operate in this arena, to make a notable impact to the average rates.”

Citing the latest rental market report from Zoopla, she said that “rental demand grew to a 13-year high in the third quarter of 2021, and while demand for property continues to outstrip supply, it also recorded an increase in average UK rents of 4.6% over the year.”

She added: “Our latest data suggests that providers seem prepared to offer a variety of deals for landlords who are either investing in property or are looking to lock into a new deal, so anyone considering their next move in the BTL arena would be wise to seek advice from an independent broker to assess the changing market.”

Written by: Su Fowler

Source: Your Money

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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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Mortgage product numbers rise by 9.3%

The number of mortgage products available on the market has risen by 9.3% over the past 12 months to a record high of 14,437, according to the latest data from Mortgage Brain.

Within this increase of 1,233 products, remortgage deals saw the strongest growth, with product numbers increasing by 7.4% to a total of 9,718.

Despite the upheaval seen in the buy-to-let sector in recent years, the number of products for landlords to choose from has still grown by 4.5% since February 2019 to 4,263.

Product numbers rose across all LTV bands, with deals available at an LTV of 70% or more seeing the sharpest uplift.

There are 9,350 deals to choose from at this level, an increase of 15.1% since February 2019.

At the other end of the scale, the number of products available to borrowers at 90% LTV has grown by 3.2% over this time period.

Looking over a three-year period the rise in products is even more significant, with the total number of mortgage deals on the market jumping by 72.7%.

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This rise is most pronounced in buy-to-let, with product numbers rising by 2,007 (89%).

Mark Lofthouse, chief executive officer of Mortgage Brain, said: “Mortgage borrowers are the big beneficiaries of the heightened competition within the mortgage market now, with a greater level of choice than ever before.

“What’s more, this increase isn’t limited to a single area of the market, with products of all types and across all LTV bands seeing an uplift over the last year.

“The sheer number of deals to choose from demonstrates the value provided by mortgage brokers in helping their clients navigate these competitive waters.

“But they too need to think carefully about what technology they can use to help them sift through the many home loans lenders have on offer.”

By Jessica Nangle

Source: Mortgage Introducer

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Buy To Let Mortgage Lending Ends Year On A High

Buy to let mortgage lending ended 2019 on a high, according to the latest UK Finance Mortgage Lending Trends Statistics just released.

There were 5,700 buy to let mortgages for new property purchases completed in December 2019, 3.6 per cent more than December 2018.

There were 13,300 remortgages in the buy to let sector, 2.3 per cent more than in the same month in 2018.

Buy to let lenders reacted positively to the newly released buy to let mortgage lending figures.

Shaun Church, Director at Private Finance commented: ‘After a period of continuous decline, the buy to let market is finally starting to show signs that it is regaining strength, with buy to let purchase activity up 3.6 per cent year on year. News of a strengthening buy to let market should be welcomed by landlords and renters alike. An increase in buy to let purchase activity will mean a greater supply of rental housing stock, generating more choice and more competitive prices to be enjoyed by renters up and down the UK.

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‘With the Budget around the corner, the Government might be tempted to tweak buy to let regulation further. However, with the buy to let market now more professionalised and starting to show glimmers of growth, we strongly urge the Government to focus on redressing other areas of the market which are in need of attention, primarily the challenges facing last-time buyers and second-steppers.”

Damian Thompson, Group Managing Director – Retail Finance at Aldermore, said: ‘It is encouraging that 2019 finished with the strongest quarter of the year for buy to let volumes, but the sector remains in a ‘new normal’ since the regulatory change, with a continued split between muted house purchase activity and more buoyant remortgaging.

‘Landlords have become more diversified in their needs, with many moving away from a growth strategy focusing more on portfolio management, and the sector is gradually adjusting to the shift towards professionalisation. Whatever a landlord’s future intentions, the increase in regulatory measures and more complicated mortgage applications means specialist lenders are now more vital to the market.’

Source: Residential Landlord