BTL lenders concentrate on affordability in October – Armstrong

October has brought a welcome wave of product and criteria updates from lenders, many of which reflect a continued focus on affordability – an area that remains front and centre amid ongoing economic pressures.

While uncertainty still lingers – particularly with the upcoming Budget on the horizon – there’s a growing sense of cautious optimism as lenders adapt and evolve their offerings to meet market needs.

Let’s take our usual look at some of the key announcements from the last few weeks.

Foundation Home Loans has announced updates to its BTL range, including the launch of new Select Fixed Fee products and a new Green product for short-term lets. The launch features a F1 Select five-year fixed rate product priced at 5.49% with a fixed £4,995 fee up to 75% loan to value (LTV) and minimum loan size of £300,000. The short-term let offering is a F2 Green Energy Performance Certificate (EPC) A-C five-year fixed product at 6.09%. This comes with a 1.25% fee and £500 cashback up to 75% LTV.

Landbay has launched new premier like-for-like remortgage products providing value and greater affordability for special purpose vehicle (SPV) landlords with up to 15 properties. Landlords can access a two-year fixed rate at 4.39% up to 75% LTV with a 2% fee and a stress rate of 4.5%. A product transfer variant is available priced at 4.44%. The competitive stress testing is a direct response by Landbay to the affordability challenges faced by many landlords. The products offer a minimum loan size of £30,000 and a maximum of £2m.

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Another lender focusing on affordability is Accord, which has announced an improvement to its BTL rental income calculation by reducing interest coverage ratio (ICR) rates. For purchase or remortgage with capital raising where the product term is five years or more, the ICR rate is now the higher of 4.75% or product rate +0.5% (previously product rate +1%). For straight switch remortgages with a product term of fewer than five years, the ICR rate is now the higher of 4.75% or product rate +0.7%, and for product terms of five years or more, the ICR rate is the higher of 4.75% or product rate +0.35%.

Other BTL product changes

Aldermore has introduced new limited-edition BTL products this month. For landlords with single residential investment properties, there is a five-year fixed at 5.34% up to 75% LTV with zero fees. The multi-property five-year fixed product is priced at 5.29% up to 75% LTV with zero fees. For houses in multiple occupation (HMOs), Aldermore has launched a five-year fixed with a 5% fee priced at 4.64% up to 75% LTV that comes with a free valuation.

Paragon is another lender offering new limited-edition BTL products. The lender’s new two-year fixed rates include a 3.34% option for single self-contained (SSC) properties and 3.54% for HMOs and multi-unit blocks (MUBs). There is also an option for SSC properties with an EPC rated A-C at 3.29%. The products are available up to 75% LTV and come with free mortgage valuation and £500 cashback.

Vida has expanded its BTL range with consumer BTL products designed for accidental and non-professional landlords entering the regulated BTL market. This comes on top of Holiday Let and Move On propositions that have also been announced by the lender this month. Holiday Buy to Let products are available to both first-time and experienced landlords looking to invest in UK holiday destinations. The Move On proposition is aimed at applicants letting their property in order to buy, rent, move abroad or live with family and is available across Vida’s entire BTL range.

Zephyr has announced that it can now lend on large HMOs up to 12 bedrooms and multi-unit freehold blocks (MUFBs) up to 12 units. Rates start at 3.09% for a two-year fixed and 4.94% for a five-year fixed (both up to 65% LTV with a 7% product fee). Zephyr is also offering a lifetime tracker option with no early repayment charges (ERCs). The maximum loan size is £1.5m, dependent on selected LTVs.

And finally, LendInvest has reduced all its two-year fixed BTL products by 10 basis points (bps), with the cuts applying to new business, product transfers and bridge-to-let financing. Rates now start from 3.14% for a Tier 1 standard property two-year fixed up to 75% LTV with a 7% product fee. In addition, large HMOs with 7-15 rooms and MUFBs have been reduced by 10bps and the maximum loan increased from £1m to £1.5m at 75% LTV.