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Low deposit mortgage deals at six-month high

The mortgage market has shown signs of recovery as the number of 90% loan to value (LTV) products reached a six-month high while overall choice has improved.

The number of low deposit mortgages almost doubled from 72 to 160, according to a Moneyfacts report.

However, those who require a 90% LTV mortgage still have fewer options than those with more money to put down. Borrowers who qualify for an 85% LTV mortgage have 439 products to choose from and 75% LTV borrowers have 629.

In total, there are currently 2,893 residential mortgages on the market, the most recorded since April 2020 when there were 3,192 mortgages available. This is up slightly from the 2,782 on the market last month.

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Rates on the up

The average rate for a two-year fixed mortgage across all LTVs rose for the sixth month in a row by 0.03% to 2.52%, the highest average rate since January 2019.

The average two-year fixed rate is also 0.08% higher year-on-year and a 0.53% rise on the record low seen in July. The record low rate coincided with a period when there were just 70 high LTV products on the market, where higher rates are typically seen.

The average rate for a five-year fixed deal across all tiers also increased in January from 2.69% to 2.71%. However, this was lower than the average rate of 2.74% during the same month last year.

As well as returning to the market to serve borrowers with a smaller deposit, lenders also appear to be treating those in need of a 90% LTV more favourably by reducing borrowing costs.

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The average rate for a two-year fixed mortgage at this tier dropped from 3.79% to 3.65% over the month while a five-year fix fell from 3.92% to 3.79%.

Eleanor Williams, spokesperson at Moneyfacts, said: “Following the sharp drop off in availability in 2020, it is positive to see we are beginning 2021 with the total number of mortgage deals rising for the third consecutive month.

“Not only is the increase in product choice a positive for borrowers, but it seems that a measure of competition may have started to return to some sectors as well.”

She added: “This improvement in options for mortgage borrowers has occurred at a time when high levels of borrower demand have been fuelled by those hoping to benefit from the stamp duty holiday and by those who re-evaluated what they want from a home and were part of the unleashed demand that arose after the first lockdown in 2020.”

Written by: Shekina Tuahene

Source: Your Money

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Mortgage approvals reach to highest level since 2007

The number of mortgage approvals in November 2020 increased to the highest level since August 2007, according to the Bank of England Money & Credit data.

The number of mortgage approvals reached 105,000 in November, with net mortgage borrowing also increasing to £5.7bn.

In addition, effective interest rates on new mortgage borrowing ticked up to 1.83%.

Household deposits increased by £17.6bn in November, however there were significant withdrawals from national savings and investment accounts according to the data.

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Bank borrowing by small and medium-sized businesses was noted at £1.8bn, while net borrowing by large businesses was £0.2bn.

Tomer Aboody, director of property lender MT Finance, said: “The Bank of England figures provide further confirmation of the prevailing strength and confidence in the housing market, with the highest mortgage approval levels and further borrowings in over a decade.

“Households are looking to maximise space in their current homes by extending, converting lofts and refurbishing, as more time is spent at home.

“With mortgage rates so low, taking advantage of existing equity in homes has enabled people to borrow more for living expenses as they also deal with concerns over future employment and income, with so many industries affected by the pandemic.

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“Household deposits have increased with people saving, due to not being able to go away, out for dinners or even shopping.

“Consumers are being frugal with their spending and considering the threat of a possible recession on the horizon.

“How the government will look to tackle any forthcoming concerns with the Budget, the end of furlough and stamp duty relief will be interesting, since this new wave of the virus has come as a surprise and therefore further potential assistance is desperately needed.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “Not surprisingly, the mortgage market improved considerably at the end of the year but we shouldn’t look too closely at these figures because they reflect a period of particular improvement in market activity of the previous few months.

“Moves have slowed since although many are still trying hard to take advantage of the stamp duty holiday, which will be ending very soon.

“The likelihood of further lockdown restrictions will bring short-term pain to the market which hopefully won’t be reflected in reduced values.

“Certainly the greater availability of a vaccine, on the other hand, will provide some optimism.”

By Jake Carter

Source: Mortgage Introducer

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Bank of England: Loan values rise by 2.9% annually in Q3

Despite a decreasing share of high loan-to-value (LTV) borrowing, mortgage lending remained strong in Q3 with the outstanding value of residential loans up 2.9% compared to a year earlier.

The Bank of England’s (BoE) latest quarterly mortgage lending data revealed there were £1,527.3 billion of mortgages outstanding at the end of Q3.

Meanwhile the value of new mortgage commitments – which is lending which has been agreed to be advanced in coming months – went up by 6.8% when compared to the same quarter in 2019. It reached £78.9 billion, according to the BoE, which is the highest level since 2007.

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The value of gross mortgage advances during the quarter was down 14.7% on Q3 2019 at £62.5 billion.

What’s more the proportion of mortgages advanced during the quarter with LTVs of 90% or more were 3.5% which is 2.4 percentage points lower than a year ago.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “This is no real surprise with many lenders pulling back from this market, and it is only just starting to recover, which is good news for first-time buyers in particular.”

Commenting on the rest of the data he added: “The Bank of England figures show a strong lending market, as we have seen on the ground, with new commitments for the coming months some 6.8% higher than a year earlier.

“There is plenty of business in the pipeline which is working its way through as buyers try to take advantage of the stamp duty holiday. As long as they use good advisers – a mortgage broker and a switched-on solicitor – this should be possible, despite some scaremongering that they are already too late.”

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A ‘precarious’ market

But Karen Noye, mortgage expert at Quilter, thought today’s data painted a ‘precarious’ picture of the housing market at the moment.

“The market is clearly burning bright thanks to the fuel poured on it as a result of stamp duty cut but whether the fire can keep blazing is yet to be seen,” she said.

“The continued increase in house prices is likely to be unsustainable and if the stamp duty holiday is dropped in March and significant economic headwinds as a result of the pandemic start to bite, we may see a very different picture with borrowing and lending being significantly curtailed.”

Noye thought the fact the value of new commitments had increased by as much as 6.8% was ‘worrying’ and ‘should ring alarm bells’.

“While it would be foolish to draw comparisons between the mortgage market now and the one back when the financial crash hit in 2008, we are dealing with unchartered waters and it is worth proceeding with caution,” she said.

By Kate Saines

Source: Mortgage Finance Gazette

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Mortgage approvals at 13-year high

UK lenders approved 97,532 mortgages in October, the most since September 2007, the Bank of England’s Money and Credit data shows.

The housing market has gotten busier, as there were 92,091 given the green light in September, compared to 85,704 in August.

Before the pandemic the were 73,384 mortgages approved in February, before the amount fell as low at 9,335 in May.

Nitesh Patel, strategic economist for Yorkshire Building Society, said: “The housing market continues to defy economic logic, despite challenging economic conditions caused by the global Covid-19 pandemic and uncertainty over the UK’s trading deal with the EU.

“Pent-up demand from the lockdown has been driven by buyers looking for bigger homes that accommodate home working and more garden space, as well as the Stamp Duty cut may have drawn in opportunistic buyers who were previously discouraged by high transaction costs.

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“There is good reason to believe that homeowners with large amounts of equity in their homes are the most active, with first-time buyers making up a smaller proportion of approvals.

“These are temporary factors, particularly the Stamp Duty cut which, as it currently stands, ends on 31 March next year. With the economy set to remain weak and unemployment likely to rise when the job support scheme comes to an end, we should see housing activity start to decline in the second quarter of 2021.”

But Richard Pike, sales and marketing director at Phoebus Software, said: “It is not only the stamp duty saving that is driving the market, there is also the number of people looking to escape city life since the lockdown. And, as the ‘working from home’ culture continues this is likely to endure past the limitations imposed by Covid-19.

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“The problem then will be the age-old one of supply and demand. Despite the government’s promises, we are, according to the ONS last week, way behind our target for new housebuilding in the last year. With the knock-on effect of the pandemic, this is something that isn’t going to be fixed quickly. So, the mass exodus from our cities that has been predicted, could turn into a trickle come the spring.”

Tomer Aboody, director of property lender MT Finance, said: “This is an opportunity for many would-be buyers who in the past couldn’t afford or preferred not to buy, to go and purchase, locking themselves into a longer-term mortgage rate at an affordable level, and with a low enough deposit so that it doesn’t impact their savings too much. This, coupled with the stamp duty break, has fuelled the market and helped push up property prices.

“Unlike 2007, we should be confident in the banking sector, which is highly liquid, as well as confident in the market. We may be living with a pandemic but hopefully this will be under control before long, allowing us to carry on with our lives before too much damage is done to the economy.”

BY RYAN BEMBRIDGE

Source: Property Wire

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Low deposit mortgage deals double as lenders return to market

Mortgage borrowers with a 10% deposit now have almost double the choice of deals compared to September, as lenders have started trickling back into the market, analysis reveals.

There are 80 mortgage products available to borrowers today with a deposit or equity of 10% required, according to Moneyfacts.

At the start of September, there were only 44 deals available on the same basis.

In the past week alone, the number has jumped from 65 to 80, the data revealed.

Atom Bank, TSB and Platform are among the players to have added 90% Loan to Value (LTV) mortgages to the market this week.

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And Nationwide today announced it would expand lending at this level beyond first-time buyers.

The market for high LTV lending (low deposit) collapsed as the pandemic struck earlier this year, leaving many borrowers who could not scrape together bigger deposits with no option but to delay transactions.

In recent months, some lenders returned to 90% LTV lending for short stints of just a couple of days or, in some cases, only hours in an effort to manage volumes.

As more lenders filter back into the space, the pressure appears to be easing.

However, lending at 95% LTV remains very limited with still only eight products currently on the market.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

Eleanor Williams, spokesperson at Moneyfacts, said: “It is really encouraging that we are beginning to see more lenders relaunch products in the 90 per cent LTV bracket, especially for those borrowers with lower levels of deposit or equity who may have felt they had little to no options to move forwards with of late.

“We have seen a few lenders put their toe into the water of high LTV lending with short-term, limited edition products which were only on offer for a day or so, therefore seeing further providers enter this arena could be demonstrating that mortgage providers are managing their operational demands and are keen to cater to these borrowers.

“Those who are keen to take advantage of one of these 90 per cent LTV deals could do well to secure the support and guidance of a qualified, independent adviser who will be aware of the most up to date products available and be on hand to help borrowers navigate the mortgage maze.”

Written by: Lana Clements

Source: Your Money

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Mortgage payment holidays extended until July next year

Mortgage lenders have extended mortgage payment holidays until 31st July 2021 for those whose finances have been affected by the pandemic.

People have until 31st March 2021 to apply, while they need to do so before 31st January to get a six-month deferral.

Those who have already taken a six month payment holiday are ineligible, and will need to contact their lender for “tailored support” instead.

Eric Leenders, managing director of personal finance at UK Finance, said: “Lenders are continuing to provide unprecedented levels of support to help customers through the Covid-19 crisis, with over 2.6 million mortgage payment deferrals already granted.

“As the impact of the pandemic continues to be felt across the country, the banking and finance industry stands ready to deliver ongoing assistance to those in need.

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“While it will always be in the long-term interest of customers who are able to do so to resume making payments, all lenders will be providing tailored support for anyone who is still struggling.

“There are a range of different ways to get in touch, including through online chat, social media and mobile and banking apps.

“As you will appreciate, phone lines are very busy at this time and we would encourage only those customers who are facing an immediate issue with their finances to call their provider in the first instance.”

Lenders will not enforce repossessions, or attempt to get a warrant for possession before 31 January 2021.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

Robin Fieth, chief executive of the Building Societies Association (BSA), said: “Whilst the best advice is always to pay your mortgage if you are able to, anyone who is struggling to do this could benefit from the extension to the mortgage payment deferral scheme or other tailored support that is available from lenders.

“It’s important that customers discuss their situation with their lender as soon as they become concerned, and before they miss a mortgage payment. Lenders will do everything in their power to help borrowers in financial difficulty at this challenging time – keeping people in their homes is the objective.

“The FCA has been in listening mode throughout the pandemic and their final guidance includes industry suggestions, specifically the ability to top up to six months even if a borrower has had two shorter deferral periods already and not excluding borrowers who have missed a payment after a deferral period from the scheme.”

BY RYAN BEMBRIDGE

Source: Property Wire

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Mortgage searches on the rise as second lockdown began

Twenty7Tec has released figures on the state of the mortgage market one week after the second UK lockdown began.

The findings showed that weekly mortgage search volumes are currently at 87.79% of the year’s highest figure, up 6.8% on the week before.

Weekly buy-to-let (BTL) mortgage search volumes are at 92.09% of the year’s high, up 8.0% on last week.

Weekly residential mortgage search volumes are at 87.56% of the year’s high, up 6.8% on last week.

In regard to ESIS documents, weekly mortgage ESIS documentation figures are currently at 91.42% of the year’s highest figure, up 7.5% on the week before.

Weekly BTL mortgage ESIS documentation figures are currently at 89.75% of the year’s highest figure, up 7.8% on the week before.

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Weekly residential mortgage ESIS documentation figures are currently at 90.13% of the year’s highest figure, up 7.4% on the week before.

James Tucker, chief executive of Twenty7Tec, said: “Each time we go into a lockdown, regional or national, there is a drop-off in the volume of mortgage searches that takes place, and also a drop-off in the number of ESIS documents prepared.

“The dip in volumes actually happens in the few days before the lockdown begins as customers focus on dealing with the practical elements of a lockdown.

“Then, immediately as the lockdown starts, mortgage search volumes begin to rise again.

“We’ve seen it again and again this year on a UK-wide, home nation and regional level before and just after we enter lockdown.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

“Any drop is then is consistently mirrored by a spike of mortgage search volumes within a day or two of the lockdown beginning.

“There was a definite blip in activity last week as people mentally prepared for lockdown 2.0.

“For context, last week’s drops were less than we’d expect in a bank holiday week.

“In lockdown 2.0, we are still seeing search volumes higher than we did in pre-lockdown Spring.

“That feels like a world away now, but was, at the time, incredibly busy for all our clients.

“BTL currently forms 19.11% of all searches in the past week and 20.87% of all documents prepared against in the past week.

“BTL searches volumes have been relatively steady all year and those searches are converted into ESIS documents more often than residential searches.”

By Jessica Nangle

Source: Mortgage Introducer

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Mortgage approvals hit 13-year high as UK housing market booms

Mortgage approvals last month reached their highest number since September 2007 amid pent-up demand in the housing market, the latest figures from the Bank of England show.

The number of mortgage approvals for house purchases increased to a 13-year high of 91,500 in September from 85,500 in August.

The September approval figures were 24% higher than approvals in February, before the coronavirus pandemic.

Households borrowed heavily to purchase property in September, with net mortgage borrowing at £4.8bn, up from £3bn in August.

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It is the latest evidence that the recovery of the housing market post-lockdown is continuing, with the average asking price of homes coming on to the market in Britain now at a record high, supported in part by the existing stamp duty holiday.

Craig McKinlay, new business director at Kensington Mortgages, commented: “The temporary reform of stamp duty and pent up demand has provided a boost for the property market. Despite there being less product choice available, September is traditionally a busy month of activity for the market, and mortgage approvals have shot up to their highest rate since September 2007.”

But McKinlay says that these results do not reflect the fact that many first-time buyers and self-employed borrowers are being left behind “in this mini-market boom – unable to take advantage of the stamp duty holiday”.

He added: “Mortgage lenders need to be as flexible as possible to accommodate these individuals and use manual underwriting approaches to assess an individual’s affordability on a case by case basis.”

With payment holidays and the government’s furlough scheme coming to an end, lenders will be faced with another priority – supporting borrowers who continue to face financial hardship beyond October, according to Steve Seal, managing director at Bluestone Mortgages.

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He said: “While additional support will be crucial for many households, the harsh reality is that this will impact people’s credit scores and, as a result, they may not be eligible for mainstream lending later on.

“Therefore, it is likely that many borrowers will need extra support in the future when it comes to securing financing, and the specialist market will be essential for providing these individuals with the lifeline they need.

“This is why it is important that specialist lenders work closely with brokers to prepare for the long-term implications of Covid-19, so they can meet the heightened demand from consumers expected over the coming years with efficiency.”

By MARC DA SILVA

Source: Property Industry Eye

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UK mortgage approvals at highest levels since 2007 says Bank of England

THE number of mortgage approvals made to home buyers in Britain and Northern Ireland jumped to its highest levels since 2007 in August, the Bank of England said.

Some 84,700 approvals for house purchase were recorded, marking the highest number since October 2007, according to the Bank’s money and credit report.

The Bank said the jump only partially offsets weakness seen between March and June.

In total, there have been 418,000 approvals in 2020, compared with 524,000 in the same period in 2019.

The housing market was effectively closed for business earlier on this year, when social distancing measures due to Covid-19 made the process of home buying and selling very difficult.

The subsequent easing of measures, combined with a stamp duty holiday announced in July, have boosted the market.

Propertymark reported this week that about one in eight homes sold in August went for more than the original asking price – marking the highest proportion in nearly five years.

Looking to the months ahead, some experts have predicted the prospect of rising unemployment and a dwindling number of low deposit mortgages as lenders shy away from “riskier” lending will dampen the market.

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Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said a recent increase in mortgage rates, particularly for low deposit loans, “will make purchases unaffordable for many first-time buyers”.

He continued: “The outlook for a further drop in employment also will weigh on the housing market, though with home ownership having narrowed to a wealthier segment of the population over the last decade, job losses won’t have as devastating an impact on the market as they did in 2008.”

The report also showed that interest rates on overdrafts jumped in August.

The “effective” rate – the actual interest rate paid – on interest-charging overdrafts rose by 4.2 percentage points to 19 per cent in August.

This is the highest rate since similar records started in 2016 and compares to a rate of 10.32 per cent in March 2020, before new rules on overdraft pricing came into effect.

Under the new Financial Conduct Authority (FCA) rules, overdraft providers have to charge one single rate of interest rather than adding on other charges.

Before the coronavirus pandemic, many providers announced new rates which were around double what many people with an authorised overdraft had previously been on.

The FCA has introduced guidance for firms to help overdraft customers who have been facing temporary financial difficulties due to the coronavirus pandemic. As part of this, borrowers have been offered a temporary £500 interest-free overdraft buffer.

The report also said typical rates on new personal loans increased a little in August, to 4.71 per cent.

The typical cost of credit card borrowing was broadly unchanged at 17.95 per cent in August.

Households’ deposits increased by £5.2 billion in August. That was lower than the increase of £6.5 billion in July and below the average of £17.2 billion between March and June.

The returns savers were getting tumbled further in August. The effective interest rate on new deposits fell to a new low of 0.5 per cent, the Bank said.

Mr Tombs said the Bank’s report seems to reflect households returning to spending most of their income, following a period of “enforced” saving during the full lockdown in the second quarter of 2020.

He added: “High unemployment, however, likely will prompt households to maintain a large savings buffer over the next year, ensuring that spending does not exceed households’ diminished incomes over the coming quarters.”

Alistair McQueen, head of savings and retirement at Aviva, said: “A large proportion of households are likely to shift to precautionary saving in anticipation of further economic turmoil caused by the reintroduction of stricter local lockdown measures. This will dent consumer spending, which will curb the UK’s economic recovery.”

Source: The Irish News

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Mortgage approvals reach 13-year high

Mortgage approvals for house purchase increased to 84,700, the highest since October 2007, according to the latest Money and Credit statistics from the Bank of England.

Net mortgage borrowing was £3.1bn in August which stayed consistent with the total recorded in July (£2.9bn), whilst effective mortgage interest rates were broadly unchanged.

The Bank of England suggests that these latest figures signal signs of recovery in August, despite mortgage borrowing being troughed at £0.5bn in April and still being slightly below the average of £4.2bn in the six months to February 2020.

The increase on the month reflected slightly higher gross borrowing of £18.8bn, although it is still below the pre-COVID level in February of £23.7bn.

In total, there has been 418,000 approvals in 2020, compared with 524,000 in the same period in 2019.

Gareth Lewis, commercial director of property lender MT Finance, said:

“The impressive pick up in mortgage approvals is what you would expect – if we go all the way back to Brexit, there has long been pent-up demand and people waiting to move, COVID then hit and people were still waiting.
“Now, there are so many ‘for sale’, as well as ‘sold’ signs, illustrating that there is confidence and a willingness to invest in property.
“Consumer credit has bounced back and stabilised, which is encouraging as it shows people are not over-stretching themselves by increasing debt and getting into financial difficulty. People are maintaining a grasp of reality.”

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Approvals for remortgage are little changed compared to July at 33,400, which is a 36% decrease from figures recorded back in February.

New mortgage rates were 1.72%, a decrease of one basis point on the month, whilst the interest rate on the stock of mortgage loans fell one basis point to 2.14% in August.

Dave Harris, chief executive at more2life, reacted to the data: “Although today’s findings show overall lending in the mortgage market still falls short of pre-crisis levels, there are positive signs of growth.

“Month-on-month increases to new mortgage approvals suggest that buyers have been taking advantage of the products on offer to help manage borrowing during the coronavirus crisis – and lenders and advisers have played a crucial part in this.

“At the same time, the equity release market has also been working hard to support older borrowers, with product innovation high on the agenda.

“The Equity Release Council recently found that product options in this market have increased by 29% year-on-year, further helping to ensure older borrowers benefit from greater choice and flexibility at a time when they arguably need it most.

“Seeking professional, specialist advice is crucial for older homeowners ensure they are aware of solutions like equity release which could help them develop a long-term financial plan.”

David Whittaker, chief executive at Keystone Property Finance,  added: “There were no signs of the traditional summer slump this August, with the mortgage market experiencing a ‘mini boom’ and showing positive signs of recovery following an extremely challenging period.

“Within the buy-to-let market, falling rates, pent-up demand and the Stamp Duty holiday have no doubt acted as an incentive for landlords and investors to take this opportunity to diversify their property portfolios.

“However, whilst today’s figures give us reason to be cautiously optimistic about the market, a raft of regulatory changes coming into force this year means buy-to-let investors must continue to seek the advice of brokers who can help them navigate this complex landscape.

“As we start to emerge from the crisis and the UK returns to some form of normality, we’re committed to working closely with our broker partners to ensure the market can meet the unique needs of each buy-to-let landlord.”

By Jessica Nangle

Source: Mortgage Introducer