View more on these topics

Comment: BTL clients must fix while they can

Bob Young Fleet 2014

In the biggest shift in 25 years, BTL lenders will have to cut LTVs to comply with the regulatory changes to underwriting

It is hardly the most complicated of formulae but, in the mortgage market, a base rate cut equals an opportunity for both brokers and clients.

Pricing in the buy-to-let sector was already competitive but the Monetary Policy Committee’s announcement has been a catalyst for a number of lenders to move their own rates.

The big question now is: how much lower can buy-to-let rates go? I suspect they will not fall much further and therefore the opportunity that currently exists should be seized.

I recently suggested clients should get out and fix while they could and I see no reason to alter this view, especially when you consider how the regulatory changes to buy-to-let underwriting are likely to play out.

In the scheme of things, we must ask what those changes may achieve. Given the standard of underwriting, and that losses on buy-to-let are comparatively low, what is the real reason for these changes? Could it be that, having seen the projected increase in buy-to-let lending anticipated by lenders – which would mean more properties transferring from the owner-occupier to the private rental sector – the decision was made to act in order to pare back activity levels?

Whatever the intended aim, lenders will have to act and, in what will be the biggest shift in 25 years, they will be cutting their LTVs. For advisers and buy-to-let clients this is big news: this restriction of lending supply rarely happens. All roads currently point to buy-to-let action, so tell your clients to act now.

Bob Young is chief executive officer of Fleet Mortgages

Recommended

Limited company buy-to-let purchases reach 63%

The number of landlords choosing to structure their property deals via limited companies is on the rise, as buy-to-let mortgage data reveals these now make up 63 per cent of all purchase applications. The figure for the third quarter, from Mortgages for Business, is up from just 21 per cent before the changes to tax relief […]

FCA logo new 3 620x430

FCA to study headline mortgage offers and commercial arrangements

Headline mortgage offers and commercial arrangements between various factions in the industry are to be analysed by the Financial Conduct Authority as part of its study into competition in the sector. Speaking at Imperial College Business School on Wednesday, FCA executive director Christopher Woolard said firms may exploit the difficulties that consumers have in making […]

Home-Houses-Different-Mortgage-Rent-700.jpg

Vida Homeloans pre-launches specialist mortgage range through intermediaries

Intermediary only specialist lender Vida Homeloans is conducting a pre-launch lending pilot in the UK mortgage market. The new lender, which gained FCA approval last month, will offer a range of residential and buy-to-let mortgages through 3mc, the Buy to Let Club and RHL and is currently undertaking a ‘test and learn’ phase. It will […]

Creating opportunity out of change

By Denise Wond, marketing manager The buy-to-let market has recently been the subject of a raft of tax changes, all of which make it a less profitable and less appealing proposition for investors. In response, we’ve seen a dip in demand for BTL mortgages and that’s bad news for many advisers who will now be looking […]

UK: mid-year review and outlook

By Mark Martin, manager of the Neptune UK Mid Cap Fund, and Scott MacLennan, manager of the Neptune UK Opportunities Fund H1 2014• Equity markets continued to show strength: despite a strong rally in 2013 driven by a market-wide re-rating, equity markets continued to generate positive returns for investors. Economic activity continued to be stimulated […]