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!

Gordon Brown continues to scare anyone with a brain

Can anyone remember why we thought that Gordon was a financial whiz kid?

By his own admission he wasn't any good with numbers.

He's now wondering if £175 billion is a big number.

Landlords should be very afraid over the next couple of years - do your own maths.

What is even more worrying is that when 'Mock the Week' researchers asked the Treasury spokesman to define whether the 'billion' figure was the US or UK definition, they pronounced it to be the UK definition ie a million million. Thankfully it turns out it is actually the US version ie a thousand million, which is a big relief, for everyone in the Treasury as we are 1000 times better off than they thought we were.

Even our self crowned, Stalinist, preacher boy could work that one out. Power to the dictator.

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Government posts a weak defence of the LHA

Are you one of the many landlords who are fuming about the LOCAL HOUSING ALLOWANCE bought in by this government to replace the old system of housing benefit.

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Has your tenant stopped paying rent or never paid and then done a bunk leaving you thousands of pounds short but still having to pay the mortgage.

Well the government wants to explain just how wonderful the new system of LHA is just in case you don't understand.

Now do you feel better!

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BTL Mortage Products Update

BUY TO LET PRODUCT UPDATE

Our old friend remains the leader.

Lowest 75% products:

BM Solutions
Interest rate: 4.35%
LTV: 75%
Product Detail: 1 year tracker
Arrangement Fee: 3%
Early Redemption Penalties: 3% in first year.
Our thoughts: The lowest rental cover for 75% loan to value mortgages, but watch the reversionary rate after the first year.

BM Solutions
Interest rate: 4.70%
LTV: 75%
Product Detail: 2 year tracker
Arrangement Fee: 3%
Early Redemption Penalties: 3% in first 2 years.
BM Solutions
Interest rate: 5.4%
LTV: 75%
Product Detail: 2 year fixed
Arrangement Fee: 2.5%
Early Redemption Penalties: 3% in first 2 years.
Our thoughts: The lowest 2 year fixed rate at 75%.

Offshore buy to let mortgage for expats and foreign nationals:

Bank Of Scotland International
Interest rate: from 2.99%
LTV: 70%
Product Detail: different trackers available
Arrangement Fee: between 1% and 1.5% Our thoughts: Minimum income £50,000 and, yes, the rates are better than the ones available to UK residents!

Specialist:

If you're looking for a lender that is happy with you leasing your property to a local council then give us a call. We have rates from 4.99% at 60% loan to value.

BTL MORTGAGE TIP OF THE WEEK :

Further advances -

From this week, BM Solutions will no longer will allow further advances until you have owned the property for six months. So be prepared to wait 7 months before you can get your hands on the further advance cash, as you can't actually apply until you have owned it for at least 6 months. Worth noting for future cash-flow.

HIPS are a failed Government idea that need to be scrapped

Gillian Charlesworth, RICS director of external affairs, said "It is clear that the HIP has failed to improve the consumer's experience of buying and selling homes."

Is there anything good to say about them?

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