Coventry BS lowers rates; CHL Mortgages cuts BTL pricing – round-up

Coventry BS lowers rates; CHL Mortgages cuts BTL pricing – round-up

This includes products for both new and existing borrowers, across two-, three- and five-year fixed options between 65% and 95% loan to value (LTV).

This includes a five-year fix at 85% LTV priced at 4.88%. This is available to first-time buyers and has a £500 cashback incentive. 

There is also a two-year fix at 75% LTV with a rate of 4.89%. This has a £999 product fee and is available to existing borrowers. 

 

CHL Mortgages cuts BTL fixed rates 

Specialist lender CHL Mortgages has reduced fixed rates across its buy-to-let (BTL) options and amended criteria. 

Its two-year fixed rates have been cut by up to 0.42% and pricing now starts at 2.87%. 

This headline rate is available with a two-year fixed standard BTL option at 55% LTV with a 7% fee. 

Options are available up to 75% LTV with a choice of fees. 

CHL Mortgages’ criteria changes include an increase to the maximum loan size at 70% LTV, which is now £2m. 

The lender has also increased the aggregate borrower exposure to £5m with no limit on the number of individual loans. 

The maximum LTV available for new-build flats has been increased to 75%, as has the limit for ex-local authority flats. 

The lender will also now accept applications for properties on the Isle of Wight. 

Products are open to individual, limited company and house in multiple occupation (HMO) or multi-freehold block (MUFB) landlords. 

Ross Turrell, commercial director at CHL Mortgages, said: “This range refresh is the latest example of how committed we are to supporting intermediaries in helping their landlord clients achieve their buy-to-let ambitions. 

“There aren’t many other deals out there at the moment where the rate starts with a ‘2’, and with the potential for the bank base rate to reduce in the coming months, our repriced two-year fixed rate products could be ideal for those who don’t want to lock in to a long-term mortgage. 

“It’s another positive demonstration of how our recent acquisition by Chetwood Financial is adding value and helping us to expand our offering to our intermediary partners.” 

Buckinghamshire BS adds adverse credit BTL product

Buckinghamshire BS adds adverse credit BTL product

The adverse credit BTL product from Buckinghamshire Building Society is available with a three-year discount of 2.4% on the lender’s standard variable BTL rate to give a 6.39% pricing. 

It is available for loans of up to £500,000 up to 75% loan to value (LTV). The product has no application fees and a product fee of £1,195. 

It is open to landlords who have missed payments on secured and unsecured loans, with defaults, county court judgements (CCJs), mortgage arrears, and payday loans. It will also consider borrowers with missed utility payments. 

The product is open to individual and limited company landlords with a maximum of three BTL properties, including regulated and consumer properties. 

Claire Askham (pictured), head of mortgage sales at Buckinghamshire Building Society, said: “Our buy-to-let non-standard credit mortgage is a new area of lending for the society, and fills an important gap in the market. Brokers are crying out for more options for their landlord clients who have experienced minor credit issues, with an insufficient level of choice on the market currently. 

“Landlords have not been immune to the cost-of-living pressures, and will benefit from the flexibility built into our new product. Buckinghamshire Building Society is determined to work closely with brokers, and ensure our proposition meets the needs of their clients.” 

The mutual recently upped the maximum LTV across its BTL lending, with a five-year fix available at 80% LTV. 

MFS releases ‘bridge fusion’ product and cuts rates

MFS releases ‘bridge fusion’ product and cuts rates

MFS’ bridge fusion product is a two-year tracker loan with an annual interest rate, and can be extended for a third year if needed. 

The company said this would allow borrowers to wait for market conditions to improve during periods of uncertainty and instability. 

The pay rates start from 3.55% plus base rate per annum, with a loan to value (LTV) of up to 75%. The maximum loan size is £20m. 

The product is available for loans against commercial, mixed use and residential properties. 

The specialist lender has also reduced rates within its core bridging range by up to 0.11%. 

The product also allows for the use of deferred interest, rolled-up interest and top slicing. These options are also available across MFS’ BTL mortgage range.

Paresh Raja, CEO of MFS, said: “Optionality has become a keen focus for MFS in recent years. We’re continuing to expand our offering across both our bridging and buy-to-let mortgage ranges, as well as reducing rates across the board, giving brokers and their clients much-needed choice as they seek the right product for their needs.

“This includes a blend of tracker and fixed terms, as well as the term length. The new bridge fusion product is a perfect example of our desire to keep evolving, and the timing makes complete sense.” 

He added: “As banks are slowing down with their lending activities in a year, with potentially over £50bn of commercial refinances required, we are reducing our bridging rates and launching new products in order to ramp up. 

“The general election will create more uncertainty over the coming weeks and months. We all knew it was coming, but few expected the vote to come in early July – and although it was formed before Rishi Sunak’s surprise announcement, our bridge fusion product is designed to help borrowers navigate such twists and turns in the market with greater confidence.” 

Buy-to-let purchases in Southern England drop to record low – Paragon

Buy-to-let purchases in Southern England drop to record low – Paragon

According to an analysis of UK Finance data by BTL lender Paragon, this was due to the stamp duty surcharge on additional properties, which was introduced in 2016. 

This was a fall from a 39% share of BTL purchases in the South East, Greater London and the South West in 2022, and down from a high of 52% in 2015 – the year before the tax was brought in. 

Since 2015, the share of BTL purchases in South England has steadily fallen year-on-year. This was excluding 2020 and 2021, when the stamp duty holiday was in place. 

Looking at each region independently, the share of BTL-mortgaged purchases in Greater London fell from 19% in 2015 to 12% in 2023. Purchases in the South East declined by 24% to 17% over the same period, while in the South West, this reduced by 9% to 6%. 

Most of the other recorded regions saw a growth in BTL-mortgaged purchases over that time period, such as the North West, where there was a jump from 9% to 14%, and Yorkshire and the Humber, where this rose from 6% to 10%. 

East Anglia was the only region not in the South of England to see a decline in BTL purchases from 2015 to 2023, but this was only a small drop from 4% to 3%. Paragon said this was due to the East of England having higher-than-average house prices. 

 

Disproportionate impact on certain markets

Richard Rowntree (pictured), managing director of mortgages at Paragon, said: “The introduction of the stamp duty surcharge disproportionately impacted those markets with above-average house prices in the South of England. For example, compared to 2015, the number of homes purchased with a buy-to-let mortgage was 70% lower last year, and a greater number of buy-to-let homes were purchased in the North West than in London during three of the past five years. 

“Over the long term, it’s clear that we will need more rental homes and a vibrant private rented sector across the UK. With the population forecast to increase by 9.9% – or by 6.6 million people – by 2036, demand for rental property is only going to be stronger. That is particularly true of areas in the South of the country – particularly London, where the transient population means that a strong supply of rental homes [is] vital.” 

He added: “We are seeing the private rental sector utilised by a broader range of people than ever before, and those who want or need to rent a home should expect to be able to choose from a range of fairly priced, decent-quality rental homes. Unless supply is boosted to meet forecast growth in demand, rents will only grow higher in markets with extreme supply/demand imbalances.” 

Give us BTL product innovation not more of the same deals, say brokers

Give us BTL product innovation not more of the same deals, say brokers

A slight uptick in BTL product availability seen this month was a welcome sight, with deal numbers rising month-on-month in April from 2,844 to 2,883 following a fall of 276 BTL deals between January and February, according to Moneyfacts.

But brokers say that, despite the rise in deal numbers, a lack of innovation means the dire situation for landlords struggling to refinance or expand their portfolios remains the same.

Ash Jensen, director of Make My Mortgage, said: “Looking at the recent product releases, there’s nothing there that will be game-changing for many people. I wouldn’t class them as new products, they’re just changing rates with different fees, there’s nothing beneficial there.

“I think it’s more for publicity if anything to keep themselves in the forefront of your mind. The fees are so high. Some of the deals have a 1.5% or 2% fee. If you’re buying in London and need to borrow £300,000, those fees add up. The rates and fees are even higher for limited company buy-to-let. Yes there are tax benefits from owning properties through a company, but these deals are really restricting the market.”

 

Different combinations

Different fee and rate combinations make up the bulk of new deals coming to the market, say brokers. To secure a lower rate needed to pass the income coverage ratio (ICR), or to maximise your borrowing when capital-raising, some landlords need to pay a high fee, which can range from 1.5% of the mortgage to 7%. Some lenders will then allow landlords to add the fee to the loan without it affecting the stress test. Landlords searching for a low or fixed fee must accept a higher mortgage rate, which could scupper their chances of meeting the ICR requirements.

Adding more fee variations, which boosts deal numbers, is not improving the product landscape, say brokers, particularly for landlords with properties worth £250,000 or more.

Gaurav Shukla, senior mortgage broker and owner of Home Me Mortgages, said: “We’re just seeing more of the same from lenders where they launch a lower rate with a high percentage fee to help landlords bypass certain situations. But we’re not seeing the launch of better products, and the lower rates aren’t appealing because of the high fee attached to it.”

Shukla said a lot of his clients were sticking with the fixed-fee option rather than going for a percentage-based fee, typically around 3%, because they have high-value mortgages.

“They don’t want to add more than £10,000 in fees to their loan,” he said. “They would prefer to borrow less now and refinance again in a couple of years when everyone hopes rates will have come down.”

 

‘We’re lucky we have a rate switch market’

Opting for a rate switch with the same lender or sitting on their lender’s standard variable rate (SVR) until rates fall are the only two options available to some landlords who have mortgage balances too high to meet ICR requirements in a higher rate environment.

“We’re lucky we have a rate switch market,” said Damian Youell, mortgage broker and director of NeedingAdvice.co.uk. “There wasn’t one three or four years ago.”

While the market waits for the Bank of England to decrease rates, brokers say lenders should play around with their criteria, such as scrapping minimum income requirements, instead of playing around with rate and fee combinations.

Youell said landlords need lenders to change their affordability calculations, particularly for higher-value properties. “They are restricted by the rent versus the mortgage balance. The calculations don’t stack up in many cases.”

With a lack of product innovation coming through to the market, Youell says he’s looking to more specialist lenders such as Aldermore for his clients who want to expand their portfolios. While the lender may offer higher rates, Youell says they take a more flexible approach to their underwriting.

Howard Levy, director of property finance at SPF Private Clients, says having higher fee options combined with lower rates does help landlords pass stress tests, but he wants to see more innovation, such as the return of five-year fixed rates with three-year penalties.

He also wants to see lenders introduce more leniency to their stress tests, rather than using one standard stress test. “They should consider, based on the rents being collected, whether you’re making a profit across your portfolio. It needs to be cleverer than it is; it’s currently very linear.” Allowing landlords to use surplus rents on one property to pull over to another that needs a boost to pass the ICR was another example of innovation Levy would like to see.

 

If you are interested in learning more about the BTL sector, then register for The Buy to Let Forum, which takes place between 24 April and 2 May in Bolton, Birmingham, Cardiff and Reading.

Crystal Specialist Finance sees record-breaking Q1

Crystal Specialist Finance sees record-breaking Q1

The majority of loans processed by the distributor were for bridging finance at 35% followed by buy-to-let at 26% and commercial deals at 24%.

Application numbers rose by 4% to 1,074 on a like-for-like basis in the first quarter of 2024 despite the tough economic conditions.

The number of these applications has almost doubled from 579 in 2020 to 1,074 over the past five years.

The finance distributor predicts it is on course to surpass £1.2bn worth of loan applications this year.

 

Closer broker working relationships

Crystal says its strong growth partly results from repeat business, with the average number of deals per broker rising to 4.45 in the first three months of 2024 compared to 2.9 over the same period in 2023.

Jo Breeden (pictured), managing director of Crystal Specialist Finance, said: “This is an outstanding start to 2024 and we’re actively targeting growth at every opportunity.

“Our continued success is testament to the excellent Crystal team and their desire to always deliver an outstanding customer outcome.

“Our desire to educate intermediaries – both mainstream and specialist – on the myriad financial solutions for literally every customer requirement has also played a hugely significant part in the numbers and will continue to remain front-and-centre of our market proposition.”

Top 10 buy-to-let hotspots revealed – Paragon Bank

Top 10 buy-to-let hotspots revealed – Paragon Bank

The M14 postcode ranked number one of the top 10 buy-to-let (BTL) hotspots to invest in during 2023, according to Paragon Bank’s lending data.

Covering Manchester’s Fallowfield, Rusholme, Old Moat, and Ladybarn districts, and locations between the University of Manchester and Manchester Metropolitan University, landlords were attracted to the area by the high student population.

Birmingham’s B29 postcode, covering the Selly Oak, Bournville, Edgbaston, Kings Heath, Northfield and Stirchley districts, came second. The area is also home to a large student population, especially Selly Oak, the location of Birmingham University.

Close by in neighbouring Edgbaston is the Queen Elizabeth Hospital, a notable local employer as one of the UK’s largest single-site hospitals.

Portfolio landlords investing in this postcode area can expect to earn an average yield of 6.9%.

 

‘Proximity to universities or large employers’ is a trend

Although properties in the sought-after Birmingham postcode are the most expensive on Paragon’s list, the average purchase price of £573,116 is skewed by the presence of large, period properties in affluent Bourneville, the model village that was founded by the Quaker Cadbury family for employees at its Cadbury’s chocolate factory.

The third-most popular BTL hotspot was DH1 in Durham, where properties can deliver yields of up to 7.3%. Continuing the theme of thriving student markets, the University of Durham’s Palatine Centre is located in Framwellgate Moor, contributing to the postcode’s popularity among students.

The analysis also found that terraced houses were the most popular investment property type in all of the top locations, except for CW2 in Crewe, where multi-unit freehold blocks (MUFBs) of flats were preferred by landlords.

Richard Rowntree, managing director at Paragon Bank, said: “Our data shows that portfolio landlords have a strategy of targeting major towns and cities across England and Wales, from Brighton and Hove on the South coast, up through the Midlands and Wales and on to Newcastle. Something that links many of these diverse areas is their proximity to universities or large employers, such as the NHS or manufacturing and distribution hubs. This helps to illustrate the crucial role that the private rental sector plays in supporting further education provision and the workforce, both vital facets of the UK economy.”

 

Postcode Avg property value (£) Weighted rental yield
M14 – Manchester 367,461 7.5%
B29 – Birmingham 573,116 6.9%
DH1 – Durham 401,891 7.3%
NG7 – Nottingham 343,700 7.7%
CF24 – Cardiff 406,620 7.6%
NE2 – Newcastle-upon-Tyne 524,208 6.5%
ST4 – Stoke-on-Trent 130,990 9.1%
LE11 – Leicester 275,561 7.4%
CW2 – Crewe 154,961 8.7%
BN2 – Brighton & Hove 489,662 6.3%

 

If you are interested in learning more about the BTL sector, then register for The Buy to Let Forum, which takes place between 24 April and 2 May in Bolton, Birmingham, Cardiff and Reading.

Build to rent reaches highest PRS market share

Build to rent reaches highest PRS market share

According to research from Foxtons, which looked at build-to-rent completions since 2018, and compared to the total private rented stock (PRS), this is the largest proportion of market share since 2018.

It describes a property development purpose-built to be rented rather than selling to individual homeowners. It is usually owned by institutional homeowners or property management companies.

The research reveals that build-to-rent completions came to 31,409 in 2018, making up 0.6 per cent of the five-and-a-half million privately rented homes in the lettings sector.

The sector has grown consistently every year since then and now sits at 100,372 as of 2023. This is 1.8 per cent of all UK PRS stock. The report said that this represents a 69 per cent increase in such completions since 2013.

Foxtons added that the scheme has made up one per cent or more of the UK PRS since 2020, figures show.

The growth in London is also impressive, increasing from 1.8 per cent of London PRS in 2018 – equal to 18,160 completions – to 4.2 per cent of London’s PRS in 2023. This equates to around 46,747 completions.

From a regional perspective, which excludes London, there has also been impressive growth, rising from 0.3 per cent of PRS in 2018 to 1.2 per cent now.

 

Build-to-rent demand will grow

Sarah Tonkinson, Foxtons Institutional PRS and build-to-rent managing director, said that there had been “phenomenal growth” in the build-to-rent sector in recent years, especially in London.

“However, it’s fair to say that the sector still remains in its relative infancy, and so the potential for further growth is vast. With a move towards longer-term renting until later in life, tenants expect more both with respect to the quality of rental accommodation available, and the security and certainty that long tenancy agreements provide them.

“With the build-to-rent sector offering this, and more, we only anticipate demand to increase and for stock levels to follow suit in order to satisfy the evolving needs of renters,” she added.

Buy-to-let fixed rates fall to lowest level in two years – Moneyfacts

Buy-to-let fixed rates fall to lowest level in two years – Moneyfacts

According to figures from Moneyfacts, the average two-year fixed rate across all loan to value (LTV) tiers is 5.49 per cent, with the average five-year fixed rate standing at 4.87 per cent.

The report noted that this is down from a peak six months ago of 6.88 per cent for an average two-year fixed rate and 6.72 per cent for an average five-year fixed rate. These were the highest in Moneyfacts electronic records, which go back to 2011.

Looking at specific LTV tiers, some of the largest decreases were at 60 per cent LTV. The average two-year fixed rate at 60 per cent LTV fell by 1.42 per cent to 5.22 per cent, with the average five-year fixed rate contracting by 1.31 per cent to 4.87 per cent.

Going up to 75 per cent LTV, the average two-year fixed rate decreased by 1.36 per cent to 5.51 per cent and the average five-year fixed rate went down by 1.25 per cent to 5.51 per cent.

The average two-year fixed rate at 80 per cent LTV has reduced by 1.24 per cent to 6.3 per cent and the average five-year fixed rate has fallen by 1.09 per cent to 6.2 per cent.

 

Total buy-to-let products fall by nearly 300 since start of 2024

Regarding overall buy-to-let product availability, since the start of the year there has been a contraction of products from 3,114 in January to 2,838 in February.

This is still above 2,585 reported in August last year, when buy-to-let pricing was at its peak, and higher than February 2023 figure of 2,246.

Looking at two-year fixed rates, product availability overall has increased slightly from 968 in January to 972 in February. This is also up from 676 in August and 539 in February last year.

On the five-year fixed rate side, there were 1,215 deals in February, a fall of 109 products on the prior month. It is up, however, on August figure of 1,107 and a recovery from 865 in February last year.

Weeks ahead will be crucial for buy-to-let pricing

Rachel Springall, finance expert at Moneyfactscompare.co.uk, said that landlords worried about interest rates would be pleased to see that buy-to-let pricing has fallen to its lowest point since September 2022.

“These rates sat at a record-high just six months ago, so this is positive news for borrowers who have been patiently waiting for fixed rates to come down. However, it is possible fixed rates will edge up slightly in the coming weeks due to volatile swap rates, so those looking to refinance may wish to secure a deal quickly to not be left disappointed,” she noted.

Springall said that a “notable area of volatility in the market” was around product choice, with the overall count falling month-on-month, but it was up 250 deals compared to six months ago.

“The ebb and flow of deals makes it essential for prospective borrowers to seek advice to navigate the options available to them. Deeper analysis of product choice shows five-year fixed offers have waned month-on-month, but two-year fixed offers are resilient.

“It will be interesting to see how lenders adjust their ranges in the weeks to come. There are more two and five-year fixed mortgages now than there were six months ago,” she said.

Springall pointed to strong rental growth of 8.3 per cent in Great Britain, which was the lowest for 13 months, but is expected to rebound ahead of inflation for the rest of the year.

“Still, there will be existing landlords concerned about the ongoing profitability of a buy-to-let portfolio as their margins have been impacted by a cull in mortgage rate tax relief, tax changes for CGT and holiday lets, plus new EPC requirements. Any investor would be wise to seek advice before they commit, and providers will need to work hard to encourage borrowers to refinance and attract new business,” she added.

Landbay introduces fee-free buy-to-let products

Landbay introduces fee-free buy-to-let products

There is a standard option with a rate of 5.69 per cent, which is available at 75 per cent loan to value (LTV). This has a maximum loan size of £1.5m. 

The second product is included in Landbay’s recently launched range of deals that make use of automated valuation models (AVMs). This also has a rate of 5.69 per cent and is available at 70 per cent LTV. 

The maximum property value allowed for the latter product is £750,000. 

Both options have no product fee and a minimum loan size of £65,000. 

Rob Stanton (pictured), sales and distribution director at Landbay, said: “We pride ourselves on our ability to respond quickly to opportunities to expand and enhance our product range. It’s all part of our commitment to our broker partners to provide a product range that is broad and diverse enough to meet the requirements of their landlord clients across the country. While the rate may not be suitable for every client, it will certainly work for those with no appetite for fees or those borrowers with higher-yielding properties.

“As affordability continues to improve, we’re thrilled to offer landlords two superb zero-fee options, including our latest addition to the AVM product range. This range has been met with outstanding feedback from our intermediary partners, further enhancing our commitment to providing valuable solutions in the property market.” 

The lender recently introduced its AVM range, with rates starting from 4.29 per cent. This offering was launched to speed up the time to offer, and Landbay said that, in some cases, it could issue an offer within 24 hours from the decision in principle being submitted. 

Last month, Landbay was named as one of the BTL lenders with the highest broker satisfaction, according to the Mortgage Lender Benchmark from Smart Money People, which covered the second half of 2023.