BTL Mortgage News and Comments from our Resident Broker

Interest Rate News - It seems almost trivial pointing out that interest rates were kept on hold last Thursday. What's more incredible is that the base rate should have been reduced to 0.5% and kept at this level for the sixth consecutive month; it really brings home how fragile our economy still is. There have even been calls for the rates to be cut to zero by some economists (that would really be good news for those of us on low base rate trackers). However, whilst rates are still low it is difficult to see how the market can gain the momentum it will need to sustain a recovery. Like many things, it is a balance, and we can we can only hope our friends between the Bank of England and the treasury (and their soon-to-be replacements) can tread the fine line without stifling the recovery.

Lender pledges new lending - recent data from the FSA reveal lenders have pledged a total on £38bn for new loans during Q2, which is £10bn more than was promised by lenders at the same time last year. Although that seems difficult to qualify, as in 'what does that mean to me?', we have already seen it working. Lenders like BM Solutions and Halifax have started to reduce their rates, and that is a direct response to them wanting greater market share.

When there is more appetite for lending, the process is normally the following:

Firstly they reduce rates; if that doesn't raise enough new business, then they start to relax credit scoring, if that doesn't work, then they'll look to relax criteria.

Purchases not remortgages* - the desire for new lending in the current buy to let mortgage market is almost certainly geared towards purchases at the moment. There are a number reasons I believe this is the case.
· Political - Those lenders that are part-owned by the government are almost certainly being encouraged to kick-start the housing market with purchase products.
· Financial - The current pricing of buy to let products are mainly too high for anyone to consider switching from their low rate tracker.

*Although remember there are still some good reasons to remortgage. Capital raising, unencumbered properties and of course some lenders still have a high SVR, so you can save a great deal of money by switching, or see breaking news above!