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More change on the way for buy to let – Ying Tan’s Market Monitor

by: Ying Tan, managing director, Buy to Let Club
  • 28/07/2016
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More change on the way for buy to let – Ying Tan’s Market Monitor
Ying Tan, managing director of the Buy to Let Club, reviews July's lending criteria changes and product launches in the buy-to-let sector.

Plenty of change in the market this month and, I would imagine, plenty more to come.

As I write this the Monetary Policy Committee has decided against a rate cut, instead holding Bank of England base rate at 0.5%. However, Bank of England governor Mark Carney has made it clear a cut is on the cards so one would expect we’ll see one soon.

Before we see how lenders react to that however, let’s deal with this month’s changes.

Barclays announced an overhaul of its fixed-rate range including capping the maximum loan size for buy-to-let products at 75% loan-to-value (LTV) at £500,000, pretty much in line with the market average at that LTV.

Coventry Building Society shook up its product range by closing a number of products including its 2.39% fixed to 31.10.18 (up to 65% LTV), and its 2.59% Flexx For Term (up to 75% LTV) and launched a number of new deals. The new products include a rate of 2.29% fixed to 31.10.18 up to 65% and a +2.35% BBR Flexx Tracker to 31.10.18 up to 75% LTV.

The building society is also the latest lender to adjust its rental coverage requirements in light of market changes, increasing its rental calculation from 125% to 140% of the monthly mortgage interest payment. This will be calculated using the reference rate or product pay rate, whichever is higher.

There was some good news from Metro Bank which announced its five-year fixed rates are being lowered by up to 0.20% with 75% LTV products starting at 3.29%. Furthermore, gifted deposits are now accepted and the bank will now allow joint borrower, sole proprietor.

Pepper launched a number of new buy-to-let deals. Clients with a clean credit rating over the last two years can access rates of 3.67% to 70% LTV, 3.87% to 75% LTV and 4.27% to 80% LTV, while clients with a ‘blip’ on the credit rating are able to get rates of 4.67% to 70% LTV; 4.87% to 75% LTV and 5.27% to 80% LTV. Any blips must not have occurred in the last 18 months, however.

And Hinckley & Rugby introduced new completion fee charging structures on its 75% LTV range. These include 1.5% for applications which are self-supporting (135% at pay rate plus 2%) and 2.5% for applications which require personal income to support a rental income shortfall. These fees can be added, providing that the LTV does not exceed 75% as a result.

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