UK buy to let mortgage lending rocketed in last 1/4 of 2014

Lending for buy-to-let soared by 26% during the last three months of 2014, far outstripping the growth in lending to first-time buyers, according to figures from the Council of Mortgage Lenders.

Banks and building societies handed loans worth £7.7bn to landlords in the fourth quarter of 2014, up 32% on the same period a year earlier. Meanwhile lending to first-time buyers was £11.6bn, down 2% on the previous quarter but up 5% over the year.

The number of loans for buy-to-let across the whole of 2014 totalled 197,700, up 23% compared to 2013. Mortgages awarded to first-time buyers also increased during 2014, but at a slower pace. First-time buyers in 2014 took out 311,500 loans, up 15% on 2013, boosted by the government’s Help-to-buy scheme.

Total lending for house purchase rose 1.5% month-on-month in December, although it was down by 5.1% year-on-year.

The figures will add to the growing controversy over the decline in home ownership in the UK and the scale of tax breaks given to landlords. Figures from campaign group Generation Rent suggest landlords could be gaining as much as £26.7bn a year from the taxpayer, equal to £1,011 each for the country’s 26.4m households.

Separate data from the Office for National Statistics on the property market during 2014 also confirm the slowdown in price increases in the latter part of the year. It said house prices rose 0.7% month-on-month in December after rising just 0.2% month-on-month in November and 0.1% in October. The year-on-year increase in house prices moderated to a nine-month low of 9.8% in December from 9.9% in November and 12.1% in September (the highest rate since July 2007).

The London market is coming off the boil, with the annual rate of increase in prices in the capital falling back to an 11-month low of 13.3% in December from a peak of 20.1% in May 2014. However, annual house price inflation outside London moved up in December to 8.5%

The average UK house price in December 2014 was £272,000, up £1,000 from November 2014 but below the peak of £274,000 in August.

Shelter’s chief executive, Campbell Robb, said: “Another rise in house prices is yet another blow to the millions of people across the country with barely a hope of getting on the housing ladder, no matter how hard they work or save.

“When young people have to save for more than a decade before they can scrape together a deposit, and their only choice in the meantime is to remain stuck in their childhood bedrooms or paying out dead money to landlords, there is a serious problem. The only way to solve this problem once and for all is for politicians to finally commit to building the genuinely affordable homes we desperately need.”

Source: www.landlordexpert.co.uk

More people are now mortgage-free than have loans

More people now own their home outright than have a mortgage, it emerged last night.

A third of households in England – some 7.4million families – now own their home mortgage-free, compared to 6.9million who have a loan.

This is the first time debt-free households have overtaken those with mortgages since records began in 1981.


Some 7.4million buyers in England now own their home outright compared to 6.9million who are paying off a mortgage, the first time debt-free households have topped those with loans

But home ownerships overall have plummeted to the lowest level in 30 years and campaigners warn soaring house prices have put owning a home out of reach for many.

In 2013-14, some 33 per cent of households owned their home mortgage-free while 31 per cent were paying off a loan, according to the English Housing Survey.

It is a dramatic change from 2000, when 28 per cent owned outright and 42 per cent had a mortgage.

The change is partly due to record low interest rates that have allowed many to pay off their mortgages quicker than expected.

An ageing population has also contributed, as baby boomers who bought when property was cheaper now find themselves debt-free in retirement.

But the drop in the number of people with mortgages is also driven by soaring house prices, which have made home ownership too expensive for many, forcing them to rent for longer.

The survey revealed that just 63 per cent of households now own their homes, with or without a mortgage – the lowest rate since 1985.

This is the 11th year in a row home ownership has declined. The younger generation has been hardest hit, with just a third of those aged 25 to 34 having a mortgage, compared to more than half ten years ago.

The growing cost of owning a home has also been reflected in Bank of England figures on debt. At the end of 2014, UK households owed £1.26trillion in outstanding mortgage debt – more than double the £550billion owed in 2000.

Campaigners said the English Housing Survey figures revealed a disturbing generation gap was opening up, with fewer young Britons able to obtain a mortgage.

Campbell Robb, chief executive of the charity Shelter, said: ‘These figures confirm what millions of people across the country are already feeling: a home of their own has become a distant dream, no matter how hard they work or save.

‘The shortage of affordable homes is leaving young adults with no choice but to remain stuck in their childhood bedrooms, or face decades paying out dead money to landlords. This can’t go on.’

David Orr, of the National Housing Federation, said: ‘The fact that the number of people owning with a mortgage is falling is a clear sign that it’s becoming more and more difficult to get a foot on the housing ladder.

‘Priced out of the housing market, young people are stuck in a cycle of private renting at an ever escalating cost that drains them of any spare money they could have saved for a deposit.

‘As house prices continue to rise we’re in danger of winding back the clock on home ownership, with only the privileged few having any hope of affording it.’

Estate agents Savills warned that the levels of home ownership will continue to slide due to higher interest rates, greater mortgage regulation and an acute housing shortage.

House building across England remains at its lowest peacetime level since the 1920s, pushing up property prices further.

The Government has tried to increase home ownership through its Help to Buy scheme, which offers people lower deposits.

Housing minister Brandon Lewis said: ‘Thanks to Government-backed schemes, nearly 192,000 people have bought or reserved a new home, and thanks to our efforts to keep interest rates at their record low we’ve helped keep mortgages more affordable.’

Source: www.dailymail.co.uk

Confidence in property market reaches three year high in UK

 









Confidence in the UK property market has reached a three year high, according to new research from Clydesdale and Yorkshire Banks.
 
Almost a quarter of people plan to change their current property either by extending or carrying out home improvements, the research found. A further 14% said they want to sell their house in the coming year.

Finances are also high on the agenda with 11% planning to either pay off their mortgage, make overpayments or re-mortgage in the coming 12 months.

The results, which show a consistently improving picture in the three years since homeowners were first asked about confidence levels, were revealed in the latest Annual Housebuyers Survey by the Banks.

The survey supports the latest findings from the Council of Mortgage Lenders which reported that 2014 lending levels were the highest since 2007.

Among those surveyed by the Banks in 2013, 62% of people said they planned to simply stay in their current home. The figure dropped to 58% a year later and dipped by a further 17% to 41% in 2015.

Of those planning a move in the next 12 months, Londoners are most likely to move with 22% putting up a For Sale sign. Within that group, some 8% of Londoners plan to move up the property ladder, a further 8% have aspirations to relocate and 6% hope to downsize. In contrast only 10% in Scotland and 8% of those in Yorkshire plan to move in 2015.

The optimism can also be seen with 44% expecting the value of their home to increase, while 54% think it will remain the same. Men are more optimistic about an increase with half of those surveyed anticipating an increase in value compared to 38% of women. Of those who believe the value of their home will increase the main reason is the increase in property prices in their local area, as well as an upturn in demand.

Confidence is at its highest in London where 64% believe their property will increase in value in 2015 in sharp contrast to Wales where just less than a quarter, 24%, share a similar view.

‘We have seen optimism returning to the property market over the last few years and this seems to be growing with more people planning house changes whether it is to move, make home improvements, pay off their mortgage or even help a family member to get onto the property ladder,’ said Steve Fletcher, head of Clydesdale and Yorkshire Banks Retail Network.

‘Whatever the circumstances Clydesdale and Yorkshire Banks have a range of products to suit different needs and budgets and to help make the UK's property aspirations for 2015 a reality,’ he added.

Source: www.propertywire.com

Signs of a strong house market recovery in the UK regions

 






The outlook for the UK housing market in 2015 is positive, despite some challenges, with signs of a strong recovery in the regions, according to the latest quarterly analysis report.


National estate agent Strutt & Parker is forecasting UK house price growth of 5% in 2015 overall and 9% in the Greater London area. But prime central London is expected to stagnate at 0%.

According to Stephanie McMahon, head of research at Strutt & Parker, there is still an imbalance between London and the rest of the UK but there are signs of strong recovery in the regions as buyers outside the capital look for affordability.

‘The holding off of interest rate rises, now not expected before autumn 2015 at the earliest, is a big positive. This combined with continued wage growth and low inflation, should give the national market the momentum it needs. We should see a flurry of activity up until the autumn as buyers take advantage of the low interest rate environment,’ she explained.

As part of the report, Strutt & Parker with its retained economic advisors Volterra, also analysed the behavioural profiles of its buyers who purchased country homes in the £2 million plus market outside of London throughout 2014.

It was clear that the majority, 79%, were buying a large country home for their primary residence while for 13% it was a second home and 8% were buying as an investment.


The firm believes that this could be linked to the increasingly high cost of buying and moving, meaning that people are choosing to buy one large house rather than two smaller ones or numerous buy to let investment properties.

‘The beginning of 2015 has seen a significant increase in new applicants registered with us looking for prime properties in excess of £2 million. We are witnessing at least double the amount of potential purchasers enquiring about properties we are currently offering or are now bringing to the market,’ said James Mackenzie, Strutt & Parker’s head of Country Department.

‘However, our viewing levels are not higher, which would indicate that there are a significant number of people who are beginning to look at moving but are waiting to see what the market has in store for this year,’ he added.

The report shows that 2014 saw a significant increase in the number of transactions compared to 2013 especially in the regions outside of Greater London, as well as in Scotland, both of which recorded 7.8% and 11.6% growth respectively. In Scotland, 93,972 homes were sold in 2014, worth a total of £15.4 billion.

In Greater London, 110,417 homes were sold in 2014, worth a total of £57.8 billion. ‘Given the pending election, we are pleasantly surprised at the levels of activity, most specifically in those areas closest to London, in the sub £2 million market,’ said Guy Robinson, head of Regional Residential Agency at Strutt & Parker.

Source: www.propertywire.com

Derbyshire town named as a UK property 'hot spot' as house sales boom

Alfreton's good road links and surrounding countryside are making it increasingly popular with home buyers.


A DERBYSHIRE town has been identified as a property "hot spot" after recording the second-highest number of house sales anywhere in England and Wales last year.

According to the latest Lloyds Bank property sales report, published today, Alfreton saw one of the highest increases in transactions in the first 10 months of 2014.

The report said that, compared to the same period in 2013, house sales grew by 53%. This was second only to Daventry, in Northamptonshire, where sales increased by 56%.

The Lloyds report tracks home sales movements across England and Wales. It is based on Land Registry data and covers 400 postal towns and London boroughs.

The report said: "Four towns recorded a 50% or more increase in sales between 2013 and 2014, with the biggest rises in Daventry (56%) and Alfreton (53%).

"Both towns are in the East Midlands, with the region accounting for four of the ten towns recording the largest sales rises."

Overall, Lloyds found that property sales across England and Wales were 21% higher in 2014 compared to the previous year – the highest since 2007, before the recession hit. All the regions saw rises, with the East Midlands leading the way with 26%, followed by the West Midlands at 25%.

Andy Hulme, mortgages director at Lloyds Bank, said: "The recovery in the housing market continued in 2014, with sales rising further in almost all areas of the country.

"Low interest rates, improvements in the UK economy and Government schemes such as Help to Buy, all appear to have contributed to the rise in home sales. Despite these improvements, sales both nationally and regionally are still significantly below their pre-recession levels."

Residential property expert Chris Brown, a director at Derby-based Sowter and Brown, said: "I have for some time thought that Alfreton is seriously underrated as a place to live.

"It is definitely a place on the up. Viewed by an outsider, the road communications are excellent, the town itself is more than adequate and the surrounding countryside is great for walking, with good stone-built Derbyshire pubs.

"Local schooling is good and employment is solid. In the Alfreton area you can buy a less expensive house offering larger accommodation at an affordable price – and that is why it's the place where more sales are going through."

Yesterday, Graham Penny Auctions held its first sale of the year at the iPro Stadium – with a number of Alfreton properties among the lots.

Director John Fearnehough said: "One property in the Alfreton area had a starting price of £65,000 and made £92,000. Another listed at £68,000 went for £94,000.

"There was a lot of interest in both and although they made good money, in comparison to other areas, they still represent good value. I think that is why Alfreton is proving so popular."

Source: www.derbytelegraph.co.uk

Will pension freedoms spark buy-to-let boom?

Brokers say improving market conditions, regulatory shifts and new pension freedoms have combined to make the buy-to-let sector the most attractive lending proposition in 2015.

A string of new entrants have either already joined the UK buy-to-let market in recent months or are planning to do so in the coming months. State Bank of India, which rejoined the sector last year after an 18-month absence, started to distribute through the broker channel last month and fellow Indian-based lender Axis Bank is rumoured to be weeks away from its own launch.

New specialist buy-to-let lender Foundation Home Loans is also close to launching into the market and Council of Mortgage Lenders data shows it is a market in the midst of a resurgence. Since 2009, the market has grown each year up to 2013, when a total of £20.7bn was advanced to landlords.

MMR slowdown

Tighter regulations placed on residential lending by the Mortgage Market Review have squeezed lenders’ margins, forcing them to consider other sources of revenue such as buy-to-let.

The new regulations were blamed for a dip in mortgage approvals over the summer, while British Bankers’ Association figures published in December showed year-on-year lending by the UK’s six largest lenders fell 12 per cent to £10bn.

Mortgages for Business managing director David Whittaker says: “Lenders who are struggling to match their ambitions with the state of the residential market will be looking to the buy-to-let space to make up for a lull in volumes.”

He adds that greater margins in buy-to-let lending will make it a more attractive market to new entrants.

“Any new lender at the moment will also be focused on buy-to-let quite simply because the returns are greater,” he says.

“If you look at the treatment of buy-to-let loans on a lender’s balance sheet, it is the same risk capital as residential loans but pays a higher percentage and bigger fees, without the regulatory overtones.”

TBMC managing director Andy Young says: “If lenders have been hit in terms of what they can do in the residential side of the market, they will naturally look to buy-to-let, which has really come on in recent years.

”Arrears are down, margins are good and there is an appetite to lend, so anyone new looking to lend in the UK would probably see landlords as their best bet.”

A boom from the pensions reforms?

The pension freedoms announced in Chancellor George Osborne’s Budget last year are another potential gift for the buy-to-let market. Following the announcement that anyone aged 55 or over would be able to access their entire pension pot from April 2015, experts forecast a boom in buy-to-let investment.

Buy to Let Club managing director Ying Tan believes the changes are likely to provide a boost for the market but says pension holders may not have the required risk appetite for investing in property.

He says: “The pension freedoms set to come in will help of course, but I wonder if most pension pots are big enough to buy a property and whether people who have saved into a pension have the kind of risk appetite to take on an investment property.”

However, a Bank of Ireland study in November found that 29 per cent of retirees nationwide were planning to use their pension to buy property.

John Charcol senior technical manager Ray Boulger says: “There is a definite logic to savers using their pensions windfall to invest in property. House prices will continue to rise despite the efforts to boost supply, and I think those who are smart enough to save a decent amount over their careers will also see the sense in property investment to gain better yields.”

A cleaner market?

The buy-to-let market has largely “cleaned” itself in the years following the crisis, says Tan, making it a better proposition for lenders. The credit scoring process, in particular, has improved, leading to falling arrears in the buy-to-let market. CML data shows the percentage of buy-to-let loans in three months or more arrears has fallen from 2.31 in 2008 to 0.92 per cent as of 2013.

Tan says: “I’ve been in the market through good and bad times and right now buy-to-let is as strong and as clean as it has ever been, so it makes perfect sense to see lenders joining the market now.

“If margins are best in buy-to-let and arrears levels are low, why wouldn’t you want to get into that market? Often you think if margins are higher than its riskier but if both margins and arrears are favourable, it’s a great time to enter.”

Source: www.moneymarketing.co.uk

UK buy to let sector surging ahead, it is claimed

 
 The UK’s buy to let sector surged ahead of other areas of the housing market in January, according to the latest research from Connells Survey and Valuation.
While most of the housing market began the year with a subdued outlook, buy to let bucked this trend and was the strongest performing sector with 37% growth in activity since the previous month, and on an annual basis the smallest dip of just 4%.


It means that the sector has bounced back from a disappointing performance in December 2014 when it recorded one of the biggest monthly falls, according to John Bagshaw, corporate services director of Connells Survey & Valuation.

He believes that as landlords are now ‘spoilt for choice’ with a record number of mortgage products to choose from, they are beginning to invest more. Low mortgage rates have also continued, posing even more attractive deals for potential landlords or those expanding portfolios.

The first time buyer sector of the housing market was the only other sector which saw a monthly increase in valuations activity. On a month on month basis, activity for first time buyers increased by 3% though on an annual basis it saw one of the biggest falls of 28% compared to January 2014.

‘First time buyer activity increased on a monthly basis despite a stark contrast in performance with January 2014 when this sector had dominated the housing market. This was largely due to the flurry of activity as customers rushed to secure deals before the Funding for Lending Scheme (FLS) stopped mortgage funding at the end of January 2014. At the time the policy had boosted the housing market, particularly first time buyers by lowering mortgage rates,’ said Bagshaw.

‘Since then however, a series of policies have been introduced that have restricted lending criteria which have affected first time buyers more than other sectors and consequently had a major impact on demand. However, this month on month growth is encouraging and indicates that as the sector stabilises and adjusts to the new regulatory landscape, it should continue improving in the coming months,’ he explained.

By contrast, activity for those already on the property ladder has been subdued. On a monthly basis activity dipped by 4%, though compared with January last year, valuations activity fell by a steeper 23%.

Similarly, remortgaging saw one of the biggest falls in activity both on a monthly and annual basis. Since December, recent activity fell by 25%, while compared with January 2014 it decreased by 28%.

‘The current economic outlook indicates that low inflation and therefore the low Bank rate will continue for some time. As a result it appears that this is giving rise to optimism as more borrowers anticipate that lenders will be able to lower their mortgage rates even further. They are now waiting before securing a deal,’ said Bagshaw.

‘However, it is worth noting that current mortgage rates might not get any cheaper as the deflation in the Eurozone may affect swap rates soon. As many households look for ways to cut monthly costs, taking advantage of these rates now is a good idea,’ he pointed out.

Overall, the total activity in January saw a 4% fall since December 2014 while on an annual basis activity was down 23% but Bagshaw explained that the expected post-holiday pickup in activity failed to materialise with the market making a very restrained start to the year.

‘Mediocre comparisons are due in part to the exceptional performance seen in January 2014 as a result of a healthy pipeline at the end of the third quarter of 2013. In contrast, the transaction market slowed dramatically towards the end of last year. However, this slow start is not a cause for alarm as January is typically a slower month with lower volumes of activity,’ he concluded.

Source: www.propertywire.com

Buy-to-let 'even more attractive' as mortgage rates hit record lows

Lenders are slashing buy-to-let rates and relaxing lending terms as the 'mortgage rate war' spreads from mainstream to buy-to-let 

The sudden plunge in mainstream mortgage rates - which has seen a number of lenders offer 10-year fixed rate loans at less than 3pc, and sparked a widespread "rate war" - is spreading to buy-to-let.

Specialist landlord broker Mortgages for Business said there were now more than 800 buy-to-let loans available, a number that has grown by more than 100 in three months.

As in the owner-occupier market, borrowers with bigger deposits fare best, but borrowing costs are falling for almost all categories of landlord.

A 40pc deposit and good credit history could garner a landlord a market-leading five-year deal at 4.2pc.

The best two-year landlord loans charge around 3.5pc.

These are substantially lower than even six months ago. Brokers point out that with rents remaining stable or rising, these new, lower-rate mortgage deals offer landlords the opportunity to boost returns.

Moneyfacts, the rates analyst, said the average of all fixed rate loans currently available was now just 3.82pc, which it claims is the lowest it has ever recorded. Variable-rate buy-to-let loans average 3.6pc (see graph, below).

It is also becoming easier to obtain loans with smaller deposits, and lenders are looking more kindly on landlords wanting to refurbish properties or what want to buy properties to let to multiple tenants as HMOs or "houses of multiple occupation".

Sylvia Waycot of Moneyfacts said: “When you consider dire savings rates, it is hardly surprising that buy-to-let is proving popular with investors, and this is likely to increase once new pension rules come into force in April.

"Having had several years of the bank door being firmly shut to only the richest of borrowers, doors appear to not only be open but actively entice you in off the street with offers of fantastic rates.”

Lenders do still apply strict lending limits based around the number of properties a landlord owns, the level of rent they generate and in some cases landlords' other sources of income.

Mark Harris of mortgage broker SPF Private Clients said: "With lenders aggressively competing for business, there are more buy-to-let mortgages available with increasingly relaxed criteria and lower rates - all providing a further boost to an already-popular sector.

"The best rates remain available to those with the biggest deposits, while landlords are increasingly opting for fixed-rate mortgages to provide more certainty and help with budgeting.

"While it is easier to get into buy-to-let now then it was five years ago, it is still harder than it was before the downturn. Lenders have learnt their lesson and are being more cautious."

Source: www.telegraph.co.uk

Buy-to-let investor numbers up 8% last year

The total number of buy-to-let investors in the UK has risen 8 per cent in the last year to 1.63m last year, according to lettings agent Ludlow Thompson.

The net income of these investors reached £13.1bn in 2012 to 2013, again 8 per cent more than the £12.1bn net income in 2011 to 2012.

Record low interest rates on bank deposits and government bonds mean the sector is continuing to attract new money, according to the agent, which suggested that 5 to 6 per cent yields on investment properties remain achievable in some parts of London.

Capital growth for residential property was more than 7 per cent in 2014 and 16 per cent for property in London, compared with the FTSE 100 increasing by only 0.7 per cent in a year.

Stephen Ludlow, chairman at Ludlow Thompson, commented that recent regulatory changes to the mortgage market are making it harder for potential first-time buyers to acquire mortgages – meaning they stay in the rental market for longer.

The firm stated that the popularity of buy-to-let will continue to increase this year, with the reforms to stamp duty announced in the Autumn Statement benefiting investors.

Under the new rules, there will be no tax payable for houses worth less than £125,000, 2 per cent on the portion of any value above this and up to £250,000, 5 per cent on the next portion up to £925,000, 10 per cent up to £1.5m, and 12 per cent thereafter.

“Also, pension changes announced last year, should allow potential investors to use these funds for a property purchase, offering far greater yields than pension funds,” added Mr Ludlow.

At the end of last month buy-to-let specialist Paragon posted an operating profit of £30.9m for the last quarter - a 14.9 per cent increase from the end of 2013 - driven by buy-to-let completions of £222.1m, an increase of 58.4 per cent compared with the same period in the last financial year.

Source: www.ftadviser.com

New high property investors branch out into regions

London continued its three-year reign as the most active market in the world for property in 2014

British landmarks, office blocks and shopping centres attracted a record £65bn of investment in 2014, driven by a 70pc rise in the regions.

Overseas investors including high-net worth individuals and sovereign wealth funds have been attracted by the low interest rate environment to plough money into property at a record rate, research from the real estate group JLL found.

London continued its three-year reign as the most active market in the world for property, with domestic and overseas investors spending £27.5bn.

However, it was the new-found popularity of areas such as the South West, the West Midlands and the South East that took UK property investment to a 16pc rise on 2013 levels. Investors sunk £28bn into the regions.

“Overseas buyers stop off in London first before going on to New York,” said Chris Ireland, at JLL. “They then go on to either buy in other European cities or they turn to the UK regions which offer good value.”

Source: www.telegraph.co.uk

UK house prices jump unexpectedly in January - Halifax

(Reuters) - British house prices jumped unexpectedly last month, recording their biggest rise since May 2014, but mortgage lender Halifax said it still expected the overall pace of house price rises to slow this year.

Halifax said that house prices rose 2.0 percent in January from the month before, up from a 1.1 percent increase in December and far outstripping the 0.1 percent average increase forecast in a Reuters poll. ECONGB

Prices in the three months to January were 8.5 percent higher than a year earlier, compared with a 7.8 percent annual increase in the three months to December.

The figures released on Thursday contrast with most other recent housing market data, such as last month's survey by the Royal Institution of Chartered Surveyors, which pointed to the slowest price growth since May 2013.

Britain's housing market has slowed since the middle of last year due to tighter regulation of mortgage lending and buyers' concerns that prices were increasing far faster than wages, though Bank of England data showed mortgage approvals picked up in December for the first time since June.

"These improvements may indicate that the recent declines in mortgage rates, the reform of stamp duty and the first increases in real earnings for several years are providing a modest boost to the market," Halifax housing economist Martin Ellis said.

However, he added that January was also a month when house prices could be particularly volatile due to low volumes, and stuck with a forecast for house price growth to slow over 2015 as a whole.

Howard Archer, chief UK economist at consultants IHS Global Insight, also said he did not think the Halifax data pointed to a significant pick-up in the housing market.

"We have little doubt that the spike in house prices in January reported by the Halifax is an outlier," he said. "Nevertheless we do suspect that the weakness in housing market activity may be bottoming out and we see activity picking up to a limited extent in 2015."

Source: uk.reuters.com

UK landlords can choose from record number of buy to let mortgages

Record number of buy to let mortgages are now available in the UK with landlords able to choose from 817 different products, up 16% quarter on quarter, the latest index shows.


Lower LTV fixed rate mortgages are now cheaper than equivalent tracker products, even before rates rise, according to the latest Buy to Let Mortgage Costs Index from Mortgages for Business.

Mortgage charges have fallen further for lower LTVs while landlords at higher LTVs pay extra fees. However, the cheapest mortgage rates and lowest fees have been reserved for low loan to value ratios.

‘This unprecedented pick up reflects the huge increase in demand as well as the wider importance of the buy to let industry,’ said David Whittaker, managing director at Mortgages for Business.

‘Looking at total lending in 2014 the trend is clear. For a second consecutive year the value of the buy to let market grew by almost a quarter. We anticipate further growth in 2015 but at a slower rate as the market takes an inevitable breather after such a huge sustained spurt,’ he added.

The research suggests that fixed rate mortgages are proving to be better value than their respective tracker counterparts, particularly for lower loan to value borrowers. Low LTV mortgages now outperform their tracker equivalents at two, three and five year periods.

Likewise, at medium LTVs, the costs for a two year fixed rate is 4.4% compared with 4.7% for the tracker equivalent, while for three year products the costs are the same and only 0.3% higher than the tracker products for five years.

Even for fixed rate high LTV mortgages, the current cost of borrowing is only marginally higher than tracker products. To fix for five years at a high LTV is just 0.4% more than the corresponding tracker.

Only one in a hundred landlords now opts for a one year initial mortgage term. More widely, the popularity of short term mortgages continues to wane as 52% opted for a two year deal, down from 57% six months ago despite the very attractive two year rates on offer.

By contrast longer term mortgages are growing in popularity, with the proportion choosing five year mortgages rising from 15% in the second quarter to 18% in the fourth quarter.

‘It’s astounding that fixed rate mortgages are already better value than their respective tracker counterparts. Again the real advantage is for the ‘safest’ landlords with the lowest LTV loans. But even though tracker products are a little bit cheaper at higher LTVs, in these cases too it soon won’t be enough to compensate for the likely increase in cost of trackers when rates inevitably rise,’ said Whittaker.

‘If customers are paying only a few percentage points above the negligible Bank base rate, then if this jumps it could mean a huge proportional increase in future costs. Capital markets are still reeling from tumbling inflation and a dovish outlook from the Bank of England that no one would have predicted six months ago,’ he explained.

‘This is only just starting to have its full impact on the mortgage market and the finances of landlords. Yet it’s already clear that landlords haven’t completely abandoned caution and are beginning to look at longer fixes and planning for higher rates within the next couple of years,’ he added.

The research also shows that the effect of product charges on the cost of borrowing has improved for low and medium LTV mortgages. At the lowest LTVs, the effect of charges have now fallen to 0.39% from 0.62% in the first quarter of 2013. Medium LTV borrowers have also benefited with effective charges dropping to 0.53% in the fourth quarter of 2014 from 0.70% at the beginning of 2013.

Overall, the effect of charges levied on mortgage products across all LTVs has dropped further from 0.54% in the third quarter to 0.52% at the end of 2014. However by contrast, charges for high LTVs have risen from 0.84% in the third quarter of 2014 to 0.88% in the fourth quarter.

‘These trends indicate that lenders prefer the safest borrowers who now have a vast array of competitive products to choose from. However, with rates bound to rise soon these kind of pricings won’t last for ever and we would advise borrowers to take advantage of the fixed rate deals on offer in 2015,’ Whittaker concluded.

Source: www.propertywire.com

UK Buy-to-Let Occupancy Rates Highest Ever in Q4 2014

The UK’s buy-to-let property investors enjoyed a very strong year last year in terms of average occupancy rates with an average of 2.6 weeks without a tenant over the year reached in the fourth quarter.

The quarterly survey, conducted by buy-to-let mortgage specialists Paragon Mortgages for the past 13 years, indicated continued strength in the rental market last year.

UK buy-to-let tenancy has always been strong, with an average of 2.6 to 3 weeks of vacancy per 12 months recorded since Paragon began its survey in 2002.

Even during the economic crises vacancy levels peaked at 3.5 weeks per year on average. Nonetheless, a result close to the record low of 2.5 weeks of average vacancy set in 2002 will be well received news by property investors across the length and breadth of the UK.

Source: www.invezz.com