BTL lending Increasing, Rents Rising, Rates Falling..

HAMISH_MCTAVISH

Two lenders are expected to enter the landlord mortgage market within weeks and others are starting to offer more attractive products.

Letting agents also report that rents are rising - up by 0.6% to an average of £663 per month in April, 2.2% higher than a year ago, according to LSL Property Services this week.

Since the financial crisis took hold, Britain's buy-to-let brigade has found it difficult to borrow more than 75% of a property's value, but this week saw the return of 80% mortgage deals. This coincides with Nationwide reporting a 10% rise in annual house prices.

However the return to buy-to-let lending will dismay many people, such as those who support campaign group PricedOut, which blames "property speculators" for driving up prices and worsening the prospects for first-time buyers.

At the height of the property boom it seemed half the nation was turning to bricks and mortar as an alternative to investing in a pension. But then came the credit crunch and buy-to-let lending collapsed in 2008 and 2009 as a shortage of funding led to a mass exodus of lenders.

As a result, mortgages became much more difficult to obtain.

Things seem to be changing.

During the past two or three months, a number of buy-to-let lenders have been lowering rates and loosening restrictions.

Last month Nottingham building society lifted its maximum loan-to-value (LTV) from 70% to 75%, upped its maximum loan from £200,000 to £250,000 and relaxed its rental proviso. The Mortgage Works (a division of Nationwide) this week launched a range of buy-to-let deals at 80% LTV, though many of the fees are hefty – up to 3% of the loan.

"Prior to that, the maximum had been 75%, except for the exclusive deal we have at 80% – a three-year fix at 6.49% with a fixed fee of £995," says David Hollingworth at mortgage broker London & Country. "It has to be a sign of lenders' growing confidence."

One of the sector's biggest players is Paragon, which at the market's height accounted for one in 10 buy-to-let home loans issued in the UK. Paragon has been closed to new business for more than two years, but there is speculation it will next week announce plans to start lending again, perhaps in June or July.

Meanwhile, a new name in British banking, Aldermore, is expected to take the wraps off its buy-to-let deals this month. Steve Olejnik at specialist broker Mortgages for Business, says: "Aldermore Mortgages will initially look at vanilla buy-to-let transactions (no new-build or complex residential investment) and will limit applications to one property per applicant.

With an aggressive lending target between now and year-end, I would expect criteria to relax once systems and service have bedded in."

http://www.guardian.co.uk/money/2010/may/15/buy-to-let-mortgage-recovery

The return of Paragon would be absolutely huge news, as it is 100% reliant upon the wholesale funding model.

If Paragon have indeed raised funds to re-enter the market, others will too and BTL will be booming again far sooner than expected.

LisbonLaura

It's just one moral obscenity after another, isn't it Hamish?

DaddyBear

Another article based on opinion and speculation. It's a lovely day outside Hamish, why not get out and buy another house...... The Market is about to boom.

Jonbvn

LisbonLaura wrote: »

It's just one moral obscenity after another, isn't it Hamish?

What have morals go to do with this???

LisbonLaura

Jonbvn wrote: »

What have morals go to do with this???

With BTL? - None whatsoever.

brit1234

It has been one of the biggest casualties of the credit crunch, but buy-to-let lenders are predicting a comeback, despite the surprise rise in capital gains tax (CGT) by the new coalition government.
CGT on non-business assets such as buy-to-let is expected to jump from 18% to 40% when chancellor George Osborne unveils his emergency budget. Some landlord groups are predicting a "fire sale" of properties, but lenders are confident that, in the medium term, sales of buy-to-let mortgages will recover strongly.

Typical Hamish excluding the first few paragraphs.

As for Paragon they went bank rupt in the previous one. In this one they were very close too it anfd likely to still go that way. Remember they do not hold public savings so the govornment has no need to buy their dodgy mortgage book off them. There clients are only being held together by 0.5% interest rates which will be going up. On top of that buy to let has the greatest risk of repossesions than any other.

Paragon is toast, if you think it is such a good company Hamish buy some shares in it. You know when a company is dodgy and in a bad way when they constantly fill the media with property proaganda.trying to talk the market up.

Cleaver

brit1234 wrote: »

You know when a company is dodgy and in a bad way when they constantly fill the media with property proaganda.trying to talk the market up.

I completely agree. It is annoying when individuals or companies induldge in property propaganda and continually only present one side of an argument, constantly espouse their opinion as fact and never, for one moment, consider the other side of the coin or other factors / arguments and use them to evolve and shape their view.

Glad you've spotted someone that indulges in this type of practice Brit. I'm sure you'd never fall in to that trap.

PasturesNew

I was looking yesterday to see if I could find/afford a 1-bed place in my county (that's a 50-70 mile radius) ... and I couldn't. Choosing my preferred town (bit of a run down, small town, no great employers), I had to select to 20 miles radius on RM before I found anything less than 50% of my income.... and 20 miles radius worked out at 30 miles by road.

Rents are way too unaffordable. Of course, I could go and get one anyway, then claim for WTC/LHA/CB etc etc due to a low income .... but that thought sickens me, so I'll stay 'technically homeless' thanks.

On the other hand, I'd buy a house if I could get a job and knew where I needed a house to be. Not many jobs about for that purpose. Looking for "a proper job, equating to a reason to put down roots", not "just a job/any job".... I can do "just a job/any job" anywhere, but can't buy a house just because it's close to a random job... has to be "a proper job" that I expect to have for the long-term.

Jonbvn

LisbonLaura wrote: »

With BTL? - None whatsoever.

So your original post was a throwaway comment?

LisbonLaura

Jonbvn wrote: »

So your original post was a throwaway comment?

No, you just haven't read my response correctly

Generali

Rents are rising in nominal terms and falling in real terms. Nominal rents are up 0.4% on the year according to the NSO.