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OSB sees landlord confidence recover as residential business slips

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  • 23/08/2018
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OSB sees landlord confidence recover as residential business slips
Landlord confidence is showing modest signs of recovery as professional landlords adjust to the new tax regime, according to One Savings Bank (OSB).

 

In its half-year results the lender, which includes Kent Reliance and Interbay, said it had seen demand for buy-to-let remortgaging increase to supplement the industry-wide drop in landlord purchases.

It noted that demand for five-year fixed rate deals in the sector continued to grow and it remained a very competitive market.

“The core buy-to-let segment is demonstrating robust demand from professional and incorporated landlords with high levels of refinancing partially offsetting lower purchase activity and reduced demand from amateur landlords,” the lender said.

 

Remortgaging and limited company

Under its Kent Reliance brand, remortgages represented around 58% of new originations.

Professional or multi-property landlords accounted for 79% of buy-to-let completions by value during the first half of 2018 and limited company purchase applications rose to 71% of total purchase applications, up from 69% in 2017.

Five-year fixed rate products continued to rise in popularity totalling 59% of completions, up from 43% at the end of 2017.

However, the value of its residential lending slipped 16%, although OSB said it was seeing good levels of applications from its new range of products launched towards the end of the second quarter.

And it is investing in technology with plans to launch a new mortgage origination platform in early 2019.

 

Profits and ICR up

Overall pre-tax profits at the lender were up 17% to £91.8m in the first six months of 2018 compared to £78.4m in the same period last year.

The weighted average loan to value LTV of the mortgage book remained at 65% with an average LTV of 69% on new origination in the first half.

Meanwhile the average interest coverage ratio (ICR) increased in the period to 192% from 185% at the end of 2017.

Group CEO Andy Golding said: “While regulatory and tax changes in the buy-to-let market have dampened industry-wide demand for new purchase mortgages, this has been partially offset by an increase in demand for remortgages.

“We focus on the professional buy-to-let market where trends remain positive. Demand for five-year fixed rate products has risen noticeably across the market with competition continuing to increase, however we continue to see good opportunities for growth and our InterBay Commercial business continues to flourish.

“Given the growth already achieved this year and considering the current pipeline and application levels for the third quarter to date, we now expect to deliver net loan book growth of high-teens in 2018, while maintaining an appropriate margin for the risks we are underwriting,” he added.

 

 

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