More than 1,300 BTL mortgage products withdrawn due to coronavirus

16 Apr 2020

There has been a sharp decline in the number of buy-to-let mortgage products available due to the coronavirus crisis.

Moneyfacts UK Mortgage Trends Treasury Report data, not yet published, reveals that the Covid-19 pandemic has impacted the choice and cost of deals in the buy-to-let market over the past month. 

There has been an overall fall of 1,304 buy-to-let products in the market compared to the start of March 2020, restricting choice for perspective landlords who were preparing to invest in this sector. 

Product choice for borrowers at 80% loan-to-value has plummeted on both two- and five-year fixed deals by 122 and 134 products respectively, so there are less than 40 deals combined today in these sectors and average interest rates have subsequently risen as well.

Average interest rates on fixed buy-to-let mortgages have risen for borrowers who have a 40% deposit, rates on both two- and five-year fixed rate buy-to-let products at 60% loan-to-value rose by 0.35% and 0.31% respectively since last month, bad news for those looking to invest or refinance at this loan-to-value.

Buy-to-let market analysis
Product numbersMar-20TodayDifference
BTL product count (fixed and variable)2,8971593-1,304
Two-year fixed rate BTL all LTV’s914507-407
Two-year fixed rate BTL at 60% LTV’s1241295
Two-year fixed rate BTL at 80% LTV’s14119-122
Five-year fixed rate BTL all LTV’s1,000556-444
Five-year fixed rate BTL at 60% LTV’s1331396
Five-year fixed rate BTL at 80% LTV’s15016-134
Average ratesMar-20TodayDifference
Two-year fixed rate BTL all LTV’s2.77%2.58%-0.19%
Two-year fixed rate BTL at 60% LTV1.89%2.24%0.35%
Two-year fixed rate BTL at 80% LTV3.56%3.76%0.20%
Five-year fixed rate BTL all LTV’s3.24%2.98%-0.26%
Five-year fixed rate BTL at 60% LTV2.31%2.62%0.31%
Five-year fixed rate BTL at 80% LTV3.98%4.19%0.21%
Source: Moneyfacts Treasury Reports

Rachel Springall, finance expert at Moneyfacts, said: “It is clear as day to see how the virus pandemic and isolation rules have led to a huge shake-up in the choice and cost of buy-to-let mortgages. This couldn’t come at a worse time, as from this new tax year, mortgage interest tax relief has been completely phased out for buy-to-let landlords – which allowed them to deduct mortgage expenses from rental income to reduce a tax bill.

“The fall in choice and rise in interest rates will be a blow to landlords who are considering investing, however the market has moved in this way to protect providers’ existing books. Even if some believe the property market to be ripe to invest in, prospective borrowers who don’t have a decent deposit could well be discouraged.”

Springall added: “Existing customers could well be looking to cut down their monthly loan payments or indeed are concerned about rental payments. Thankfully, lenders will allow borrowers to defer their mortgage repayments for three months as of last month, but landlords must act now and check online to see how tenants falling onto universal credit or local housing allowance could impact their rental cover ratio. As interest rates rise, landlords would be wise to move quickly to remortgage.

“Tenants must ensure they continue to pay their rent, but if they struggle, they would be wise to seek help from a debt advice charity and keep communicating with their landlord. This is hugely important should tenants lose their job and fall onto state benefits and can no longer afford to live in the property, but it is worth remembering that landlords must give three months’ notice to tenants until the end of September 2020.

“The optimism seen at the start of this year for a prosperous buy-to-let market in 2020 could well have waned in light of the virus, and as margins grow tighter, it’s vital landlords consult a financial adviser and keep in regular contact with their tenants to get through these uncertain times.”

Link to original article

2018 saw a notable increase in the number of older buy to let investors

9 May 2019

Last year saw a significant increase in the proportion of people aged between 65 and 75, who applied for a buy to let mortgage, through specialist buy to let broker Commercial Trust.

Comparing buy to let mortgage applications by age demographics, just two brackets increased their proportion of overall applications during 2018.

25-34-year olds recorded a tiny increase of 0.03%, but the stand-out group was for those aged 65-75 years, who increased the proportion of buy to let applications by 5.43%, compared to 2017 data.

Commercial Trust reported a 4% increase in the proportion of buy to let purchases and remortgages from the over 55s, from 2017 to 2018. Last year, this age group represented 39% of this buy to let activity, having accounted for 35% in 2017.

The numbers were even more marked when considering purchase-only applications; in 2017, over 55s were responsible for 21.7% of this business at Commercial Trust. That figure rose to 29.7% in 2018, an 8% increase year-on-year.

The biggest overall proportion of purchases and remortgages came from the age group 45 to 54, at 27% of all business.

A changing market

The trend for more, older buy to let mortgage applicants, has been recognised by a number of lenders, who in recent times have increased the maximum age at which an applicant can apply for a buy to let mortgage, or the maximum age permitted at the end of the mortgage term.

Santander recently increased their maximum age at the end of the mortgage term criteria from 75 to 85 years old, and the maximum mortgage term on its buy-to-let range from 25 years to 40 years.

Some lenders offer buy to let mortgages with no maximum age at application, while a number of the more established lenders have a maximum starting age of 80 years old.

Precise are happy for those borrowers meeting criteria, to finish the mortgage at 110 years old, while The Mortgage Works sets no maximum age at term end, for experienced landlords.

Reflecting on the data, Andrew Turner, chief executive at Commercial Trust, said:

“Our look at the age demographics for 2018 buy to let mortgage activity, suggests that increasing numbers of older people are recognising the potential of buy to let investments.

“Our data indicates that many people, reaching retirement, are choosing to invest in bricks and mortar and the rental market, as a means to fund their retirement years.

“Investing in property has the potential to deliver attractive rental yields and achieve capital growth, despite industry changes. I fully expect that the returns fair better than many other forms of investment.”

Link to Commercial Trust Limited

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