TSLE2020: Landlords ignored by brokers and lenders on regulation changes – Aldermore
Speaking at The Specialist Lending Event, Aldermore head of intermediary distribution Nick Parker, said there was an opportunity for brokers to fill a void.
“Smaller portfolio landlords have demand for engagement with lenders and brokers,” he said.
“Less than one in four has been contacted by their broker or lender regarding regulatory reforms and this is too low.
“Research shows there is a real hunger from landlords to know about regulatory and market changes and how it will affect their business,” he added.
YBS adds five-year limited company buy-to-let deal
The deal is fixed at 3.25 per cent for loans at 65 per cent loan to value (LTV) and 3.45 per cent at 75 per cent LTV.
Alternatively, a base rate tracker can be applied with a set margin committed up to 25 years.
Up to £5m is available up to the maximum LTV of 75 per cent.
Mike Davies, head of business development at YBS Commercial Mortgages, said: “We are responding to customer demand with the introduction of this five-year fixed rate limited company buy-to-let product.
“These products are currently the most commonly sold in the market, estimated to account for over 60 per cent of lending volumes.
“Last year the buy-to-let market was expected to be worth £35bn, with limited company buy-to-let lending accounting for £3.5bn to £4bn of that total. The ratio of limited company to personal buy-to-let lending is expected to increase further in 2020.”
He added that the lender will be building a range of niche buy-to-let products to suit the needs of sector specific borrowers.
Mortgage borrowers benefit from two-year fixes drop
The largest rate reduction over this period was recorded in the five-year maximum 75 per cent and 80 per cent loan to value (LTV) product sector, according to information released by price tracking website Moneyfacts.co.uk, which fell by 0.07 per cent to 2.57 per cent and 0.08 per cent to 2.70 per cent respectively.
Borrowers wanting to take out a smaller loan through the lower tiers have also been benefiting from a fall in rates.
Those with just a five per cent deposit, however, have seen average two-year 95 per cent LTV rate rise by 0.03 per cent to 3.26 per cent and its five-year counterpart increase by 0.01 per cent to 3.64 per cent.
Darren Cook, finance expert at Moneyfacts, said: “With the historic two-year fixes coming to an end this month, this may perhaps explain further why lenders are focussing on the lower-LTV tiers when competing on margins.
“Not only do mortgage providers need to compete for new business, but they also need to keep an eye on retaining their existing borrowers, keeping in touch with competitors’ mortgage rates to ensure that current customers consider their existing borrower products as their first option to remortgage.”
Five-year fixed mortgages double in five years to equal two-year deals
Figures show that the number of five-year products in the current market is 1,542 compared with 796 five years ago.
Perhaps more strikingly, the data shows the rising popularity of five-year fixes with the current figure just five short of matching the number of historically more popular two-year fixed rate products, which currently stands at 1,547.
Five-year fixed deals at maximum 75 per cent loan-to-value (LTV) have seen the largest increase of 165 products, from 138 in 2014 to 303 this month.
Meanwhile those borrowers who can raise a deposit of 10 per cent have 135 additional products to choose from and are now able to select a deal from a total of 267.
Darren Cook, mortgage analytics manager at Moneyfacts, said: “Two-year fixed rate mortgage deals have historically dominated borrower market choice, however with the number of five-year fixes increasing significantly over the past five years, it is clear that borrowers now have an even choice of products available in both the two- and five-year fixed rate mortgage markets.”
He added that with fixed interest rates currently near historic lows, there is competition among mortgage providers to not only to grow their mortgage books, but to compete to make sure that their mortgage rates appear competitive to retain their existing borrowers, making sure that they do not drift away to another mortgage provider.
“Historically, borrowers seemed to have preferred the short-term commitment of a two-year fixed rate deal,” Cook continued.
“But now that product availability has significantly increased in the longer-term five-year mortgage market, borrowers may be looking beyond interest rates and more towards the stability of setting monthly mortgage repayments and hedging themselves against uncertain economic conditions in the longer term,” he added.
Barclays reduces residential rates; Foundation launches five-year BTL products – round-up
The rates, that launch on 17 September, will include reductions by as much as 0.14 per cent across selected two-, three- and five-year fixed rates as well as reductions to products within its existing customer reward range.
Examples available for residential purchase and remortgage include:
- a five-year fix with a £999 product fee available for loans of £5,000 to £2m at up to 60 per cent loan to value (LTV), reduced from 1.64 per cent to 1.58 per cent;
- a five-year fix with a £999 product fee available for loans of £5,000 to £2m at up to 75 per cent LTV reduced from 1.68 per cent to 1.63 per cent;
- a five-year fix with a £999 product fee available for loans of £5,000 to £1m on a maximum 80 per cent LTV, reduced from 1.90 per cent to 1.83 per cent.
The bank will also introduce a two-year fixed residential remortage product at 1.35 per cent on a 75 per cent LTV with its switch and save £200 cashback offer. It comes with a £999 product fee with a minimum loan of £5,000 up to a maximum loan of £2m .
Foundation Home Loans
In addition to new market products, specialist lender Foundation Home Loans has launched two new five-year buy-to-let fixed-rate products as well as a series of rate cuts across other products in its range.
The two new buy-to-let products include a large loan, five-year fixed rate mortgage priced at 3.34 per cent up to 65 per cent LTV until 31 January 2025 with a maximum loan size of £1.5m.
The product comes with a 0.5 per cent product fee and a rental income calculation of 145 per cent at payrate for individuals and 125 per cent at payrate for limited companies.
This product is available as part of Foundation’s Tier 1 product range, which is available to those borrowers with a near-perfect credit record, and can be accessed by limited companies, individuals, first-time landlords, non-portfolio and portfolio landlords.
There is also a further five-year fixed-rate buy-to-let (BTL) mortgage available at 3.49 per cent up to 65 per cent LTV until 31 January 2025 with a maximum loan size of £1m. It comes with a fixed product fee of £1,995 and a rental calculation of 145 per cent at payrate for individuals and 125 per cent for limited companies.
Foundation also offers a 3.64 per cent option, available up to 75 per cent LTV with a maximum loan size of £750,000.
These two products are available as part of Foundation’s Tier 2 product range, which is available to those borrowers with less than perfect credit or are looking to finance a more specialist property type, and can be accessed by limited companies, individuals, first-time landlords, non-portfolio and portfolio landlords.
West One appoints Ferguson as BTL managing director
He was previously attached to the company on a consultancy basis to advise on its new BTL products, but has now taken on a permanent contract to head the department. His role includes responsibility for the distribution, sales management, proposition and marketing of the specialist product range.
Stephen Wasserman, managing director of West One Loans, said: “As our most recent product launch, we want to make an impact on this market, which makes the expertise of people like Andrew critical to our future success. Andrew’s experience perfectly equips him to lead this business.”
Ferguson joined West One Loans following senior roles in the BTL mortgage sector at Kent Reliance, Axis Bank – where he set up the BTL lending service – and most recently as commercial director at Foundation Home Loans.
Ferguson added: “I am excited to embark on my new role with West One Loans. It’s a chance to help grow a business in what is a competitive and dynamic market.
“We’ve already started strongly and taken on feedback from our launch partners to make enhancements to our lending criteria, so we can help even more of their clients.”
In June, West One Loans introduced a range of first charge BTL mortgage products, with Ferguson brought on board to steer the portfolio.
The standard and specialist ranges have been available through selected intermediaries Enterprise Finance and Vantage Finance, as well as Brightstar, Dynamo and Connect for Intermediaries.
Moneyfacts reveals dip in ‘riskier’ 95 per cent LTV during August
The average five-year fixed rate at this tier inched up by 0.01 per cent to 3.64 per cent over the same period.
However, the total number of products at maximum 90 per cent loan-to-value (LTV) increased by 12, from 762 products during the same period to 774. The five-year average fixed rate at 90 per cent LTV decreased by 0.05 per cent from 3 percent to 2.95 per cent over the same period.
Meanwhile, the average five-year fixed rate at 80 per cent LTV decreased by 0.10 per cent to 2.77 per cent. At 60 per cent LTV, the rate dropped by 0.05 per cent to 2.18 per cent, according to the data platform.
Darren Cook, finance expert at Moneyfacts, said: “It seems from our trend analysis that lenders have taken heed of the Prudential Regulation Authority’s (PRA) warning at the end of May this year concerning the reduction of rates on riskier higher LTV mortgages.”
He said that it was clear that most lenders were staying away from competing at the 95 per cent LTV tier, with many now focusing their attention on mortgage business at LTV tiers of 90 per cent and below.
“In fact, the gap between the average rate at the 95 per cent and 90 per cent LTV tiers for a five-year fixed deal is widening. The difference between the two averages stands at 0.69 per cent for September, up from 0.64 per cent at the start of June, following the PRA warning.
“This could mean that those borrowers with a smaller 5 per cent deposit may benefit from waiting to save until they accumulate a 10 per cent deposit in order to secure a more favourable rate and have a greater choice of products – with double the number of mortgages on offer at 90 per cent LTV compared to 95 per cent LTV.
“Although some providers have increased their appetite for mortgage lending most are competing on rate to retain existing borrowers and lower wholesale funding costs could be a sign that we may see rate competition intensify across all fixed rate mortgage LTV tiers, apart from the 95 per cent LTV tier,” Cook added.
In June this year, Moneyfacts revealed that the number of buy-to-let (BTL) products had hit its highest level since the financial crash.
The total number of available BTL products had risen by 21 per cent to 2,396 in June, from 1,929 during the same month last year.
Julian Harris adds Zephyr to lender panel
The move means Zephyr’s range of buy-to-let mortgages for individual, small portfolio, large portfolio and specialist investors will be available to Julian Harris’ members.
Zephyr, which is administered by Computershare Loan Services and backed by institutional investors, was launched in December and completed it’s first case in January.
In February Paul Fryers, senior manager at Computershare Loan Services, told Specialist Lending Solutions that the lender was under no illusion that it was entering a very competitive market.
On the tie-up with Julian Harris, Fryers said: “We aim to provide support to the market, offering proactive guidance and mortgage solutions to help you meet the needs of your clients.”
Helen Harris, director of Julian Harris Adviser Networks, (pictured) added: “We are delighted with the latest addition of Zephyr Homeloans to our extensive panel of lenders and to be considered a key partner for expanding their proposition.”
Hodge opens portfolio buy-to-let to whole of broker market
The lender’s proposition offers one loan to manage an entire residential property portfolio with a minimum loan size of £250,000 and maximum loan term of 25 years.
It is available to UK registered limited companies and limited liability partnership (LLP) structures and comes with an initial five-year fixed rate from 4.2 per cent.
Once the five-year term is over, the loan switches to the Hodge Standard Variable Rate as with residential mortgages.
Hodge said it had deliberately created the product for acquisitive landlords seeking to grow their established portfolio, trade assets, or utilise their portfolio equity to support new purchases.
It added that after launching in May through limited distribution, the level of interest and volume of queries had been such that it decided to extend to whole of market
Appetite from landlords
Matt Burton, managing director of mortgages at Hodge, said the decision to make the product available through intermediary networks was in response to the incredible number of enquiries received since 8 May.
“With such appetite from landlords, and due to our commitment in supporting advisers, we’re delighted to be offering this product to whole of market and taking great strides towards extending our product offering,” he said.
Legal & General Mortgage Club head of lender relationships Danny Belton said: “Hodge has shown before it’s not afraid to enter into new markets and done so with a good degree of success.
“This new buy-to-let offering looks to be no exception. It’s a proposition that offers much-needed criteria to certain areas of this market and will add value to landlords and advisers alike.”
Platform on course to end restrictions for tenants on benefits and cuts rates
These changes include two-year fixed rates from 1.79% as well as three- and five-year fixed rates from 2.09%.
They also include two-year tracker rates from 1.74%.
All terms are available up to 75 per cent loan to value (LTV) and with a range of fee paying or fee-free options.
Platform will also complete changes announced at the start of April to no longer apply letting conditions that restricted landlords from letting to tenants in receipt of housing benefit.
The final changes are taking place on May 19 2019. The change to remove the restrictive letting condition will be replicated across all lending brands of The Co-operative Bank.
The announcement follows the high-profile campaign which built after Mortgage Solutions exclusively revealed the plight of landlord Helena McAleer.
Neil Wyatt, head of intermediary distribution at the Co-operative (pictured), said: “We are making changes to the interest rates offered on our BTL mortgages as we look to grow the share we have of this market.
“This comes at a time when we are also completing the changes we announced from the start of April 2019 to no longer reference conditions that restrict landlords from letting to tenants in receipt of housing benefit.
“We have not considered the restrictive terms since the beginning of April 2019, but the final changes to remove this wording take place on 19 May 2019. We are glad to have been able to remove this terminology from our lending processes and documents to the benefit or our landlords and prospective tenants.”