The mortgage market has been anything but usual, as the lull we’d expect to see in August has simply not materialised.
We’ve seen good volumes of activity throughout the month for brokers and lenders alike, largely driven by the base rate reduction seen at the start of the month.
At a local level, I have seen an influx of properties being put up for sale in my neighbourhood and surrounding areas, giving the purchase market a much-needed boost. I’ve been asked if this is because landlords are selling up, but my feeling is no.
I’m not seeing anything to suggest a mass landlord exodus, but I do believe that some savvy landlords are looking hard at their portfolios and taking this opportunity to get rid of any underperforming properties or those that need additional work to bring them up to standard.
Let’s visit some of the changes that lenders have been making in the last few weeks.
Rate cuts and BTL launches
Landbay has brought back its automated valuation model (AVM) products to help save clients time, valuation fees and solicitor fees. These are available up to 75% loan to value (LTV), an increase on the previous 70% LTV.
Its two-year fixed AVMs are available for both portfolio and non-portfolio landlords, while the five-year fixed products are only available for non-portfolio applicants. AVM rates start at 3.74% for a standard two-year fix up to 70% LTV with a 6% product fee. For all AVM products, the maximum property value is £750,000, maximum six storeys in block and the lease must be greater than 85 years at completion. Houses in multiple occupation (HMOs) and multi-unit freehold blocks (MUFBs) are excluded, along with builds, self-builds and developed properties.
Fleet Mortgages announced a 35 basis point (bps) rate reduction to its 75% LTV, five-year fixed HMO product with a 3% fee, resulting in an initial rate of 5.54%. The lender also introduced a two-year fixed HMO product that is available up to 75% LTV with a fixed fee of £1,999, and it is priced at 6.49%.
Rental calculations for standard-rate taxpayers and limited company applicants on HMO and MUFB products have been adjusted and are increasing from 125% and initial rate to 130% and initial rate.
Paragon has launched some brand two- and five-year fixes in its buy-to-let (BTL) switch and further advance ranges. Following rate reductions across the board, switch products now start from 4.85% and further advance products from 5.89%. The 4.85% switch rate is for a two-year fixed product up to 75% LTV with a fee of 3%.
A zero-fee option is also available, priced at 6.35%. The five-year fixed rates start at 5.29% up to 75% LTV with a 3% fee.
BTL summer specials
Buy to Let by Foundation reduced its core BTL range by up to 30bps. Included in this are its F1 two- and five-year fixed EPC Saver products, which saw reductions of 10bps. Rates now start from 5.84% up to 75% LTV, including a free EPC Plus report and £1,000 cashback. F1 and F2 five-year fixed fee-assisted remortgage-only products have been reduced by up to 25bps and also start from 5.84%. They are available with a £1,295 fee and £500 cashback. The lender also launched a limited-edition Green EPC A-C product this month.
Priced at 5.39%, this five-year fixed product is available up to 75% LTV with a £4,495 fee and a minimum loan size of £200,000.
Kent Reliance reduced all its BTL fixed rates up to 20bps, including limited editions. Rates are available from 4.09% for a two-year fixed with a 5% product fee and from 4.49% for a five-year fixed with a 7% product fee. Both options are available up to 70% LTV.
The range features no maximum loan size, HMOs and MUFBs with up to 20 beds/units considered, along with limited company special purchase vehicle (SPV) and more complex structures.
Kensington Mortgages continued its summer specials with the introduction of a one-year fixed rate for BTL and residential borrowing to suit clients seeking greater flexibility through a shorter-term commitment.
The BTL (including limited company) products differ slightly, with one priced at 4.49% up to 75% LTV and the other at 4.94% up to 80% LTV. Both have a 2% fee. Self-employed clients can also benefit, with just one year’s trading history required.
Family Building Society introduced two specials. The first is a five-year fixed rate priced at 4.89% for either purchase or remortgage. Available up to 60% LTV, it features £500 cashback for remortgage applications and a maximum loan size of £600,000.
For limited company applications, Family is offering a five-year fixed product priced at 4.99% with a 1% product fee, £500 cashback for remortgage applications and a minimum loan size of £600,000. Neither product is available for MUFBs.
Product policy adjustments
Hampshire Trust Bank (HTB) has made changes this month to make it easier and more straightforward for clients to refinance their BTL properties. For pound-for-pound refinances, HTB will now apply the same serviceability criteria on a two-year fixed rate at pay rate without any loading.
Borrowers can expect uniform interest coverage ratio (ICR) calculations for both two- and five-year fixed terms, allowing for greater flexibility. Fees can also be added to the loan, ensuring the existing term lender is fully redeemed without additional upfront costs.
Finally, in an affordability update, Skipton has released useful information about how it approaches its stress testing.
It will work off market rent if backed up by valuation checks, using the higher of the declared rental figure and the valuation rental figure. This approach is more accommodating for landlords who are letting their property below market rent in order to hang on to a valuable long-standing tenant. It will also work off a higher current rental figure if it fits its stress test, even if the market rental figure has been down-valued.
All that’s needed is three months’ bank statements to show the higher rent being achieved.
