Recent BTL activity is laying the groundwork for a strong Q3 – Armstrong

June has seen lenders push forward with new and improved criteria, along with some welcome rate reductions. With eyes now turning to a strong finish to the year, the moves being made in Q3 could prove pivotal. 

In last month’s article, I highlighted the high levels of broker engagement, and this momentum appears to be matched by lenders as well. With all sides focused on finding the right solutions for customers, the mortgage industry is showing real strength and alignment. 

On that optimistic note, let’s dive into some of the key changes we’ve seen in recent weeks. 

BTL product refreshes 

Landbay has made a number of recent improvements to its proposition to support both brokers and their customers.

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The launch of automated valuation products has allowed for improved speed of service. The minimum sqm on multi-unit freehold blocks (MUFBs) has been removed, along with the necessity for split utilities to allow for consideration of a larger variety of properties. Lower-rate taxpayers will be assessed at 125% and Landbay will not gross up costs and make assumptions of what they may be in the future, allowing for stretched affordability.

The lender will also consider market rent if it is higher than the actual rent being achieved. If the amount being achieved covers the new mortgage, then this allows for extra borrowing capacity.

Leek Building Society expanded its limited company buy-to-let (BTL) proposition in order to support brokers working in this space. The range includes competitive fixed rate and discounted rate products up to 75% loan to value (LTV) designed to meet the needs of a diverse landlord market. A five-year fixed rate for new customers is available priced at 5.12% with a £995 product fee. Leek has introduced enhancements to streamline the application process, including direct access to experienced underwriters, no credit scoring and an enhanced broker portal. 

Pepper Money launched house in multiple occupation (HMO) mortgages as part of its BTL range in recognition of the continued growth in HMO properties as landlords look to diversify their portfolios. Rates start at 5.19% and allow HMO houses of up to six bedrooms, including new-build houses (with a suitable warranty in place). No minimum income or proof of income is required, and income from the property will be assessed by a RICS surveyor, focusing on receivable income. 

Foundation Home Loans added five limited-edition products designed for larger loan sizes. These include a five-year fixed priced at 5.19% in its F1 range for landlord borrowers with an almost clean credit history, which features a flat fee of £4,995, 75% LTV and a minimum loan of £200,000. A five-year fixed at 4.99% is also available in the F1 range with a flat fee of £7,995 up to 75% LTV with a minimum loan size of £300,000. 

Fleet Mortgages responded to the growing appeal of short-term fixed rates by introducing zero-fee and fixed-fee two-year product options designed to offer greater flexibility. The new zero-fee products are available up to 75% LTV across the standard, limited company and HMO/MUFB ranges and start from 5.69%. The fixed £1,999 fee products are available up to 75% LTV in the standard and limited company ranges and start from 5.19%. The new product launch is also accompanied by a rate reduction of 10bps on selected two-year fixed products. 

ModaMortgages has launched eight limited-edition 75% LTV single dwelling and HMO products. Two-year fixed rates start from 3.24% and five-year fixed rates from 4.69%, with two different fee options of 3% or 5.5%.

Available to both individual landlords and limited companies, ModaMortgages is offering free valuations and no application fees across its entire range. The limited-edition products offer rates up to 25 basis points (bps) cheaper than the lender’s core products and could help borrowers struggling with affordability. 

Hodge has made further improvements to holiday let rates this month. The specialist lender has reduced its two-year fixed rate holiday let products by 0.2% for new business, with rates now starting at 5.55%, and by 0.15% for retention products, where rates now start at 5.69%. These latest changes follow a series of recent rate reductions and criteria enhancements made by Hodge as the lender continues to evolve its products. 

Zephyr Homeloans has simplified its range by removing the different Energy Performance Certificate (EPC) A-C and D-E categories, meaning that all properties with an EPC rating of A-E will get the same rate. This change comes alongside rate reductions of at least 15bps on its five-year products and a minimum of 10bps on its two-year fixed rates. 

Specialist residential 

Buckinghamshire Building Society launched two-year fixed mortgage products for Credit Restore applicants, available for both purchase and remortgage. The new products are available up to 75% LTV with a maximum loan size of £750,000 and are designed for those who may need a higher LTV to consolidate debt or improve their financial position. The 75% LTV rate is priced at 6.69% and is fixed for two years with a product fee of £999. 

Darlington Building Society has expanded the criteria on its professionals range to include more key worker professions that may have variable income streams and consider 100% of allowances and overtime for affordability calculations (subject to a six-month track record). The range is available up to 95% LTV, with no minimum income criteria, no minimum time in the UK and no credit scoring.

In addition, the mutual has enhanced criteria on expat applications, and it will no longer be a requirement that applicants have a minimum of 12 months in their current role.