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Paragon: Rise in BTL remortgages shows landlords raising capital

Landlords raising capital has contributed to an increase in the number of buy-to-let (BTL) remortgages in the second quarter of the year, according to research by Paragon Bank.

Mortgage intermediaries indicated that remortgages accounted for 60% of BTL cases in the second quarter, up from 48% in the previous quarter, as new lending for house purchase fell as a result of the lockdown.

The ability to secure a better interest rate (54%) was the most common reason for remortgaging; however, 30% of landlords said that they remortgaged to raise capital, making this the second most common driver, accounting for double the remaining reasons combined.

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Landlords who own four or more properties accounted for the highest proportion of buy-to-let mortgage business, rising from 25% in quarter one to 28% over the last three months.

Moray Hulme, director for mortgage sales at Paragon, said: “These findings are encouraging for the sector because they show that landlords have not only been resilient during the recent challenges but have been planning for the future.

“The data also supports the idea that there is a shift towards a professionalisation of the private rented sector.

“This is positive because a higher number of professional landlords has been shown to correlate with higher standards in the sector.”

By Jessica Bird

Source: Mortgage Introducer

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Stamp Duty holiday and falling mortgage costs provide timely buy-to-let boost

After years of cracking down on landlords, the chancellor’s Stamp Duty holiday is a shot in the arm for the industry.

It’s not been an easy few years for the nation’s landlords.

A succession of decisions by the Government has chipped away at just how attractive it is for people to invest in property, particularly if they want to do so on a small scale and have maybe one or two buy-to-lets in a portfolio.

But a couple of recent changes may have made the prospect far more enticing.

Say goodbye to Stamp Duty (for now)

It was no great surprise when the Chancellor stood up in the House of Commons to announce a Stamp Duty holiday.

The nil rate threshold is temporarily being hiked from £125,000 to £500,000, meaning that nine out of every 10 buyers in England and Northern Ireland won’t have to pay any.

The surprise came in the revelation that this is being applied to landlords as well as those buying a property they intend to live in themselves.

Just a few years ago a higher rate of Stamp Duty was introduced for those buying a second home, in a bid to make buy-to-let less appealing (or more profitable for the Government, depending on your point of view).

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While this 3% surcharge still applies ‒ landlords can’t avoid Stamp Duty entirely ‒ it does mean they will enjoy smaller Stamp Duty bills as a result.

For example, before the changes, if I wanted to buy a £250,000 investment property I would pay 3% on the first £125,000 and then 5% on the remainder, meaning a total tax bill of £10,000.

That tax bill will now drop to £7,500, a tidy saving, especially if you’re looking to buy more than one investment property.

Falling mortgage costs

Another significant source of optimism for all would-be property investors has been the shifting state of the buy-to-let mortgage market.

Perhaps unsurprisingly, the number of buy-to-let mortgages on offer has dropped significantly as a result of the Covid-19 crisis.

According to data from financial information site Moneyfacts, the number of buy-to-let deals stood at 2,897 in March, but had crashed to just 1,455 in May.

The reopening of the housing market has led to a rise in the number of products on the market though, with product numbers jumping to 1,738 in July.

Still a long way down on the pre-pandemic, but a clear move in a more positive direction.

It’s not just the numbers of products that are likely to give landlords hope though, but the rates being charged on them too.

Moneyfacts data shows the average rate on two-year fixed rate buy-to-let deals in March stood at 2.77%, while on five-year deals it was 3.24%.

By July, this had fallen to 2.61% and 2.97% respectively.

Part of this will be down to the fact that lenders are far warier about lending at higher loan-to-values currently.

But equally, now that the market is moving again, lenders will want what business there is. And that competition will likely feed into some decent deals for landlords.

Jenny don’t be hasty

That said, there’s no doubt that moving into buy-to-let at the moment could be a nervy move.

Yes, there remains healthy demand for rental properties ‒ the shortage of housing hasn’t disappeared, and while people will struggle to purchase their own home, they will have to rely on rental properties.

But taking on any tenant is a big gamble at the moment. With significant unemployment seemingly on the way, how confident can you truly be that they will be able to maintain their rental payments?

There’s only so much due diligence you can do on a tenant ‒ you can’t really have a chat with their boss to find out what the chances of them getting the boot in the next year are.

Fortune favours the brave

Landlords are often painted as the pantomime villains of the housing market, a little unfairly in my view.

But the truth is that the Stamp Duty holiday is a real boon for investors, who could also benefit from lender competition and enjoy cheaper funding when purchasing their next buy-to-let property.

The big test will be just how robustly they run the rule over prospective tenants, to ensure they don’t end up with costly void periods. It doesn’t matter how much you saved on your Stamp Duty bill or mortgage, if you end up with an empty rental property.

By John Fitzsimons

Source: Love Money

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Buy-to-let benefits from increased choice and competitive rates

Landlords are benefiting from an increased choice of buy-to-let products as more mortgages return to the market following the dip caused by the pandemic.

Data from Moneyfacts.co.uk showed, having plunged to a total of 1,455 products in May, the buy-to-let mortgage market has received a boost of 283 more products as lenders increase their ranges.

The two-year fixed rate market now has 134 more products and there are an additional 164 options in the five-year fixed rate sector than compared to the start of May.

However, things are still not as buoyant as they were before the Covid-19 crisis began in March, when there were 2,897 buy-to-let mortgages available.

Eleanor Williams, finance expert at Moneyfacts, said its latest research revealed the buy-to-let sector had adapted well to conditions caused by the pandemic and there were indications landlords may have cause for positivity.

“The latest Rental Index research from lettings platform Goodlord indicates that in June, new tenancy applications remained at 90% above 2019 levels,” Williams added.

“Subsequently, they have recorded increases in rental costs and also void periods reducing, as tenant demand for new properties remains strong now that the market has reopened.

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“This news should be a boost to landlords, who after a difficult few months can see that choice is beginning to return to their sector.”

Vote of confidence

Kevin Roberts, director, Legal & General Mortgage Club said the news more choice was returning to the market was a vote of confidence in the buy-to-let sector and a sure sign that it remained open for business.

He added: “At Legal & General Mortgage Club, our data even shows that despite the pandemic landlords still have a positive view of the buy-to-let sector.

“Nearly three in every five landlords (57%) told us that the crisis has had no impact on their plans to stay in the market and more than one in ten (16%) even have plans to buy more property over the coming months.”

Competitive rates

Moneyfacts data also showed rates were currently competitive, especially when compared to January.

The average rate for two-year fixed rate mortgages on 1 July was 0.21% less than at the start of the year, while the five-year fixed rate has fallen by 0.22% over the same time period.

Buy-to-let mortgage market analysis
Product numbersJan-20Mar-20Apr-20May-20Jul-20
BTL product count – fixed and variable rates2,5832,8971,8871,4551,738
Two-year fixed rates BTL – all LTVs823914610491625
Two-year fixed rates BTL – 80% LTV11914157931
Two-year fixed rates BTL – 60% LTV126124129148144
Five-year fixed rates BTL – all LTVs8791,000695480644
Five-year fixed rates BTL – 80% LTV11015069619
Five-year fixed rates BTL – 60% LTV128133140155146
Average RatesJan-20Mar-20Apr-20May-20Jul-20
BTL two-year fixed – all LTVs2.82%2.77%2.71%2.51%2.61%
 BTL two-year fixed – 80% LTV3.64%3.56%3.80%3.61%3.18%
 BTL two-year fixed – 60% LTV1.92%1.89%2.24%2.39%2.28%
BTL five-year fixed – all LTVs3.19%3.24%3.16%2.94%2.97%
 BTL five-year fixed – 80% LTV4.03%3.98%4.18%4.32%3.82%
 BTL five-year fixed – 60% LTV2.32%2.31%2.62%2.76%2.65%
Data shown is as at first working day of month, unless otherwise stated. Source: Moneyfacts.co.uk

By Kate Saines

Source: Mortgage Finance Gazette

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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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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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Skipton reintroduces 85% LTV products

The Skipton Building Society is reintroducing lending at 85% LTV for its standard residential, new build and shared ownership range and also reducing rates on a range of mortgage products.

A series of new products has been introduced to Skipton’s repriced mortgage range as it resumes lending standard residential lending at 80/85% LTV, with rate decreases across the HTB range, and has reduced rates on its interest-only product range; however, Skipton’s new residential range is not available on interest-only.

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Highlights of Skipton’s new mortgage range include:

  • For purchase and remortgage, 2-year fixes at 1.37% to 60% LTV (fee free) and 1.59% to 85% LTV (£995 fee); 5-year fixes at 1.35% to 60% LTV (£1,995 fee) and 1.76% to 75% LTV (fee free);
  • For Help to Buy, (purchase and remortgage) a fee free 2-year fix at 1.89% to 75% LTV;
  • 2-year fee free shared ownership fix at 2.69% to 85% LTV;
  • Buy-to-let (purchase and remortgage) fee free 2-year fixes at 1.99% to 60% LTV and 2.34% to 75% LTV, and 5-year fixes at 1.79% to 60% LTV (£1,995 fee) and 2.19% to 70% LTV (£995 fee).

Skipton recently announced that under a revised affordability approach, it will accept cases from applicants who have been furloughed. However, affordability will be assessed on the new, furloughed income, including any top up contributions made by the employer. The maximum LTV where any applicant is relying on furloughed income is 60%. Product transfers are excluded from these restrictions, unless the applicant is also seeking additional funds.

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Alex Beavis (pictured), Skipton’s head of mortgages, said: “We’re delighted to reintroduce lending at 85% loan to value and reduce rates on many products giving borrowers more choice and better value. As a mutual, we strive to help people buy their own homes and through this difficult time we have maintained high levels of service to ensure our customers get the best experience when buying or remortgaging.

“Our reintroduction of 85% LTV deals for new build, shared ownership and residential purchases and support for furloughed workers demonstrates this commitment.

“In order to help us continue to support our customers, I encourage anyone who needs to speak to us to make use of our online FAQ pages, webchat and email services in order to avoid longer telephone wait times in our contact centre.”

By Kevin Rose

Source: Best Advice

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Early signs of BTL mortgage market recovery

Moneyfacts UK Mortgage Trends Treasury Report data, not yet published, reveals that there are glimmers of hope emerging for the Buy to Let mortgage market, following the significant initial impact of the Coronavirus pandemic. In welcome news to many landlords, the choice in products has increased, and some higher loan-to-value (LTV) average rates have reduced. These shifts are likely to be linked with lenders’ focus on supporting existing borrowers alleviating and of course the Government guidance on valuation restrictions lifting.

Overall, there are 280 more BTL products available now than there were at the start of May 2020. The product choice at 75% LTV has increased by 46 two year fixed rate deals and 54 more products are available in the five year fixed rate bracket. The picture at 80% LTV is similar, with this traditionally smaller sector increasing by 26 two year fixed rate products and 20 more options available for those seeking a five year fixed rate over the month.

Average interest rates on fixed BTL mortgages have risen slightly for two and five year fixed rates overall, likely due to the increase in the number of products that these averages are based on. However, there is cause for celebration for landlords who have only a 20% deposit available, as rates on both two and five year fixed rate BTL products at 80% LTV have reduced, by 0.49% and 0.67% respectively, which will be great news for those considering purchasing or at remortgaging at this LTV.

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Buy-to-let market analysis
Product numbersMay-20Jun-20Difference
BTL product count (fixed and variable)14551735280
Two-year fixed rate BTL all LTVs491597106
Two-year fixed rate BTL at 75% LTV16521146
Two-year fixed rate BTL at 80% LTV93526
Five-year fixed rate BTL all LTVs480607127
Five-year fixed rate BTL at 75% LTV17623054
Five-year fixed rate BTL at 80% LTV62620
Average ratesMay-20Jun-20Difference
Two-year fixed rate BTL all LTVs2.51%2.59%0.08%
Two-year fixed rate BTL at 75% LTV2.60%2.64%0.04%
Two-year fixed rate BTL at 80% LTV3.61%3.12%-0.49%
Five-year fixed rate BTL all LTVs2.94%3.03%0.09%
Five-year fixed rate BTL at 75% LTV3.15%3.17%0.02%
Five-year fixed rate BTL at 80% LTV4.32%3.65%-0.67%
Source: Moneyfacts Treasury Reports. Data shown is as at the first of the month unless otherwise stated.

Eleanor Williams, Finance Expert at Moneyfacts, said:

“The Bank of England base rate currently remains at its lowest ever level of 0.10%, resulting in further despair for savers. However, those looking to invest their money in property now that the mortgage market has reopened may feel now is a good time to explore their options, particularly with rates becoming more competitive and product choice beginning to return this month.

“A recent survey from Rightmove, which was conducted as the property market reopened at the end of May 2020, revealed that demand from tenants for rental properties increased by 33% when compared to the same time period last year. Therefore, the increase in buy-to-let product choice will be welcome news to landlords.

“This positive growth in choice is reflected in the higher LTV tiers, with deals for landlords with just a 25% or 20% deposit or equity keeping pace across two and five-year fixed rate options. This is encouraging considering that early in the Covid-19 crisis, providers were focused on supporting existing customers and restrictions meant that physical valuations were not feasible, seeing many lenders reduce their offerings to lower risk, lower LTV products. These developments left those with less equity or deposit un-catered for.

“Average rates have increased slightly over the last month, likely impacted by the higher number of mortgage products available from which this average is calculated. The overall two-year fixed rate sees a 0.08% rise, while the five-year fixed equivalent increased by 0.09%. However, landlords who may be concerned about increasing mortgage rates will be heartened to see that at 80% LTV, the two-year fixed average rate has dropped month-on-month. In this same bracket, those looking for longer-term protection from interest rate volatility and considering locking into a five-year fixed rate deal will also find rates have fallen over the same period – which sees it sit lower than the March 2020 figure of 3.98% as a result.

“As we begin to see indications that the buy-to-let market may be starting to recover, the full economic impact of the current crisis is still not yet clear for tenants and landlords alike. However, those who are in a position to consider capitalising on possible falls in house prices to expand their property portfolios or indeed those looking to switch their current deal, may wish to move quickly. If they do decide to make a move, they would be wise to seek advice from an independent, qualified financial adviser regarding their options, as criteria and requirements continue to be updated.”

Source: Property118

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The Mortgage Lender reduces fees on large buy-to-let loans

The Mortgage Lender has reduced completion fees on buy-to-let loans above £500k to 0.5% and 0.75% for loans over £750k.

The reduced fees are available for individual, limited company and HMO/MUB applications up to 75% loan-to-value (LTV).

Rates starting at 3.59% for a 5-year fix at 70% LTV.

Steve Griffiths, sales director at The Mortgage Lender, said: “Reducing the completion fee on landlord loans over £500,000 provides brokers and their clients with better value in an important area of the market which has seen a reduction in lenders and products during the recent crisis.

“The reintroduction of physical valuations in England last month was the beginning of a return to normal and that trend will accelerate as brokers deal with pent up demand for refinancing options.

To find out more about how we can assist you with your BTL Mortgage please click here

“Larger loans can present more complex scenarios so our business development team are on hand – virtually – to help brokers with any cases they want to discuss.”

The lender resumed physical valuations in England in May and is offering desktop valuations for the majority of buy-to-let properties in Scotland and Wales.

Danny Belton, head of lender relationships at Legal & General Mortgage Club, added: “As we start to return to a more normal market with physical valuations now available, it’s great to see lenders providing products that meet the needs of landlords who want to invest in this area of the market.

“At a time when income could be challenged, a reduction in fees is very welcome.”

By Ryan Fowler

Source: Mortgage Introducer

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Landbay unveils buy-to-let range to 75% LTV

Landbay has launched a product range with loan-to-values up to 75%.

Rates start from 3.39%, while the firm will lend both on large and small houses in multiple occupation (HMOs) of up 12 units, multi-unit freehold blocks (MUFBs) and new build properties.

Paul Brett, managing director of Intermediaries at Landbay, said: “It is good to be able to support our loyal brokers and increase our range of mortgages, particularly with a 75% LTV product which we have received a huge amount of demand for.

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“It has been our aim throughout this challenging period to be a supportive force for brokers and to be a steady presence in the market.

“And, due to our diversity of funding we have fortunately been able to continue lending throughout the whole of the last two months.

“This range will now help to give something more to our brokers and their clients, who are keen to remortgage or keep investing in the buy-to-let market.”

Landbay resumed its physical valuations last week and these are now available on all new buy-to-let applications.

BY RYAN BEMBRIDGE

Source: Property Wire

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Accord Buy To Let increases maximum remortgage LTV and relaunches purchase products

Accord Buy To Let has increased the maximum loan-to-value (LTV) for remortgage customers to 75%, and reintroduced house purchase products up to 75% LTV.

As the market start to reopen, the lender is re-entering some of the markets it was forced to withdraw from as a result of the COVID-19 outbreak.

For landlords looking to remortgage, the available range of products includes a 2-year fixed rate at 1.84% at 75% LTV, and a 5-year fixed rate at 2.16% at 75% LTV.

Both of these products include a £1,495 product fee, free standard valuation and either £250 cashback or free standard legal services.

For landlords wanting to purchase, products include a 2-year fixed rate at 1.71% at 60% LTV with £950 product fee, and a 5-year fixed rate at 1.81% at 60% LTV with £1,495 product fee.

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Both of these products include free standard valuation and £500 cashback.

Where possible, physical valuations will be carried out on all house purchase and remortgage applications.

For the time being, the intermediary lender will only be able to lend where at least one applicant owns an existing buy-to-let (BTL) property.

Jeremy Duncombe (pictured), director of intermediary distribution at Accord Mortgages, said: “Further to the residential changes announced earlier this week, we are pleased to offer landlords a broader range of options by relaunching house purchase products for Accord Buy To Let and increasing our maximum LTV for remortgages.

“This marks another positive milestone in getting our product offering back to where it was before the lockdown started.

“We have a strong appetite to lend, and we hope to continue updating our criteria and product ranges as the market allows.

“In the meantime, our residential and BTL ranges offer great choice to brokers in the current environment.”

By Jessica Bird

Source: Mortgage Introducer