Keystone forecasts continued improvements in buy-to-let arrears

by: Edward Murray
  • 25/07/2016
  • 0
Keystone forecasts continued improvements in buy-to-let arrears
Keystone Property Finance is bullish about the buy-to-let market despite the uncertainty created by Brexit, forecasting that buy-to-let mortgage arrears will fall below 7,000 cases by the end of the year.

“The referendum result was unexpected, the precise impact is unknown, and it is still rather early to tell what will happen,” said David Whittaker (pictured), managing director of Keystone Property Finance. “But we have seen no let-up in demand for buy-to-let mortgages and we don’t expect to see any change in the downward trend in buy-to-let arrears as a result.”

Figures from the Council of Mortgage Lenders showed 9,300 cases of buy-to-let mortgage arrears as of Q1, down from 10,300 the previous quarter and 11,300 in quarter one 2015.

Keystone’s projections estimate that, in quarter two, 8,500 buy-to-let mortgages were more than three months in arrears across the UK. It expects this to drop to 6,600 by Q4 2016.

Whittaker added: “There are many landlords out there who still need finance, particularly professionals who are in the process of remortgaging to secure a solid five-year fixed rate or selling their personally-owned portfolios to their limited companies. We have ensured Keystone has the funding lines in place to provide landlords with the solutions they need and in the four weeks since the vote we have forged ahead with our lending.”

In response to CP11/16, the Prudential Regulations Authority’s consultation paper which proposed stricter underwriting standards for buy to let, Keystone has introduced separate stress tests for individual and limited company borrowers applying for products in the Classic Range.

For individuals the new formula of 145% at pay rate or notional rate of 5.25%, whichever is higher, will be applied to term trackers and three-year fixed rates. For borrowers choosing a five-year fixed rate, the pay rate will be used.

Stress tests for limited companies are to remain at 125% of pay rate or a notional rate of 5.25%, whichever is higher, for term trackers and 3 year fixed rates. Where limited company borrowers take out a five-year fixed rate, the pay rate will be used.

 

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