World stock markets are continuing to nosedive as fear of inflation and worries about rising US interest rates return to batter investor confidence.This pattern would normally be interpreted across the board as a bad thing. But the dark cloud of inflation that is threatening to rain on the equity investor parade could have a silver lining for advisers working in the mortgage industry. When the technology bubble burst in 2000, thousands of investors withdrew their cash from stock markets and piled it into buy-to-let investments. In times of uncertainty people look towards tangible investments and there is little that is more tangible than bricks and mortar. Even taking the stark statistics at face value, we see that over the past 10 years house prices have risen more than share prices – 182% compared with 57% for the FTSE, according to Halifax. After a while in the doldrums the buy-to-let market has shown recent signs of picking up momentum. Upbeat landlords are once again looking to purchase property, secure in the knowledge that there is tenant demand for the right properties at the right prices. Demand is the key. And the demand for lets is being driven by migrant workers, a severe shortage of social housing and the fact that property prices have risen so rapidly that prospective first-time buyers are considering renting instead. Rental rates have stabilised after easing slightly last month and now stand at the same level they were six months ago. This has sparked a resurgence of buy-to-let activity since last autumn, particularly among larger scale and professional investors. Of course, it’s true that this is not a national phenomenon and demand differs according to how many prospective tenants a catchment area holds. But investors worried about the turn in the world’s stock markets and the effect that inflation will have on their savings will be able to sniff out good returns if they do their homework and identify buy-to-let hotspots. For example, the East Midlands has the highest rental yields at 6.84% with Greater London offering the lowest yields at 5.78%. Yields have been squeezed over the past few years as house prices have risen faster than rents. They are still not back to the dizzy heights of a few years ago but in today’s market yields are not the only factor being considered by investors. Investors are now more concerned with portfolio balance, security and planning. Being able to rely on a regular rental income at a certain rate makes it easier for investors to plan their next moves. Investors need to find a safe port in a storm and now that the clouds are gathering over the equity markets it looks increasingly likely that property will offer that safe haven. So with investors looking for a safe resting place for their money, brokers could be in for a busy period on the buy-to-let front.
Brokers have been warned that advising borrowers to pay arrangement fees upfront could put them at risk of hefty charges if they change their minds before completion. The problem was highlighted by a broker whose client opted to pay a 599 arrangement fee upfront for a fixed rate product from Abbey. But before this completed, […]
Solent Mortgage Services has launched a secured loan service in partnership with Prestige Finance, the specialist sub prime second charge lender.Under the scheme, intermediaries will not only have access to SMSs existing secured loans department but can now deal directly with Prestige through SMSs extranet, The Porthole. Intermediaries requiring a sub-prime secured loan can opt […]
The regulator’s rules on inducements are not prescriptive but it should crack down on examples of poor practice before World Cup overspend kicks in, says Simon Burgess
Advantage has launched e:lect, its direct to lender website which gives brokers access to its recently launched product range funded by Morgan Stanley. The e:lect website will sit alongside e:valuate, the branded mortgage packager offering. Peter Bass, sales director at Advantage, says: “The vast majority of brokers like to deal direct with lenders and e:lect […]
As we approach the two-year milestone of auto-enrolment, employers have had the opportunity to truly assess the capabilities of their chosen support. They are also now realising that getting to the staging date was the easy part, and that support is required for almost every aspect of the day to day running of their scheme. With the three-year re-enrolment window coinciding for many with the total removal of commission and Active Member Discounts from pension-related products and services, as well as the introduction of the pension charge cap in April 2015, many employers will have no choice but to review their support options. But, what is involved in transitioning your auto-enrolment scheme away from your current support options? This guide from Johnson Fleming aims to outline some of these key areas and provide information and discussion points on what you need to consider.
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