Buy to let market update: October 2023
Welcome to ‘Buy to Let Market’, a column aimed at providing you with recent criteria and product updates within the Buy to Let lending markets. The information within this article is correct as at 02/10/2023.
Buy to Let Market Update
The Mortgage Works – has reduced Buy to Let rates by up to 0.50 per cent across a selected range of its new business products. Product variations include five-year fixed rates, now down to 4.99 per cent with a 3 per cent lender fee at 55 per cent Loan to Value. 5.04 per cent with a 3 per cent lender fee at 65 per cent LTV, and 5.59 per cent with a £1495 lender fee, available up to 75 per cent LTV.
The lender has also reduced selected rates in its Let to Buy and large portfolio range by up to 0.40 per cent and its HMO range and Limited Company range by up to 0.40 per cent for new business customers. The lender has increased their background portfolio stress rate from 4.5 per cent to 5.25 per cent.
BM Solutions – has reduced Buy to Let and Let to Buy rates. Examples of changes include its fee-free two-year fixed rate at 50 per cent LTV reduced by 0.91 per cent to 6.14 per cent. At 65 per cent LTV, reduced by 0.91 per cent to 6.34 per cent and at 75 per cent LTV reduced to 6.74 per cent. The lender has amended the stress rates for various scenarios, this has reduced to pay rate plus margin for five-year fixed, like for like remortgages. Reduced to pay rate plus margin for five-year fixed, 65 per cent LTV or less and increased for all two-year fixed rates.
The lender has also launched a top slicing solution. Top slicing enables customers who have a shortfall in their required lending, to use a proportion of their earned income when the rental income for the BTL property is not sufficient to hit the standard rental cover ratio.
Virgin Money – has launched new intermediary exclusive products, alongside rate reductions on existing deals. On Buy to Let portfolio deals, a number of fixed rates for remortgage and purchase are available with a 3 per cent lender fee. These include a two-year fixed rate available up to 60 per cent LTV at 5.17 per cent and a five-year fixed rate available up to 75 per cent LTV at 5.57 per cent.
The lender has also improved its stress rate calculations for both portfolio and non-portfolio landlords, the lender has also lowered its interest cover ratio (ICR) to 125 per cent for basic rate taxpayers. For remortgaging with no additional borrowing, stress rates will now be calculated at the higher of 5 per cent or pay rate +1 per cent. For purchase or remortgage with additional borrowing, fixed rates below five years or variable rate mortgages will now be calculated at 5.5 per cent or pay rate +2 per cent. Five-year plus fixed rates will be calculated at 4.5 per cent or pay rate +1 per cent.
Santander for Intermediaries – has reduced all Buy to Let fixed rates by between 0.26 per cent and 0.35 per cent. On its Buy to Let products, the standard affordability stress rate has risen from 7.59 per cent to 8.52 per cent while the five-year fixed affordability rate has increased from 6.09 per cent to 7.02 per cent. Its pound-for-pound Buy to Let remortgage affordability rate has also gone up from 6.09 per cent to 7.02 per cent.
At the same time, the lender has lowered the interest coverage ratio (ICR) for higher tax band borrowers to 140 per cent, down from 145 per cent.
Accord Mortgages – has cut rates in its Buy to Let range by up to 0.51 per cent. The lender’s two-year fixed remortgage at 75 per cent LTV has fallen from 7.24 per cent to 6.73 per cent. It has no product fee, free standard valuation, and remortgage legal service. The two-year fixed rate at 80 per cent LTV for purchase has gone down from 6.73 per cent to 6.71 per cent. It is subject to a £995 product fee, free standard valuation, and £250 cashback. Its five-year fixed rate at 60 per cent LTV for remortgage has reduced from 5.79 per cent to 5.54 per cent. There is a choice of £250 cashback or remortgage legal services and free standard valuation.
Leeds Building Society – has reduced their Limited Company Buy to Let fixed rates by up to 0.30 per cent.
NatWest Intermediary Solutions – has reduced Buy to Let purchase rates by up to 0.31 per cent and remortgage rates by up to 0.21 per cent across selected two and five-year deals. The lender has also reduced the stress rate on its Buy to Let mortgages.
The stress test for two-year fixed mortgages has reduced from 8.6 per cent to 8.15 per cent, while for five-year fixes this has reduced from 7 per cent to 6.78 per cent. On like-for-like remortgages, the stress rate is now 7.55 per cent, down from 8.21 per cent.
Paragon Bank – has launched new limited-edition products. The new products are available on their portfolio & non-portfolio range, including a 5-year fixed rate which has a rate of 4.69 per cent. The products have a variety of lender fee options, from 7 per cent to zero lender fee options. All products have the benefit of a free valuation.
Precise Mortgages – has simplified the minimum ICR (Interest Cover Ratio) for personal ownership applications and improved how it assesses Buy to Let affordability on short-term fixed rates and variable rate trackers.
The minimum ICR for higher rate and additional rate taxpayers will now be 140 per cent where previously it was 145 per cent for higher rate and 160 per cent for additional rate. The stress rate for short-term fixed rates and variable rate trackers will now be assessed at pay rate plus 1.55 per cent (minimum 5.50 per cent). The lender has also relaunched its Refurbishment Buy to Let product. The product combines short-term finance with the security of a long-term exit. The proposition provides a choice of exit, depending on the type of refurbishment work being carried out, helping landlords maximise rental yields and optimise capital value.
The Mortgage Lender (TML) - has released two new Buy to Let products, including a standard and house in multiple occupation (HMO) and multi-unit block (MUB) deal, and lowered rates for selected deals. The new products include a standard two-year fixed rate priced at 4.69 per cent, with a 5 per cent lender fee. Its HMO and MUB version comes to 6.19 per cent and 3 per cent lender fee.
The lender has cut rates on 4 of its standard five-year fixed standard and standard HMO products. Its 75 per cent LTV deals have reduced by up to 0.15 per cent, with lender fees ranging from two to five per cent and a flat fee of £2,495.
Foundation Homeloans (FHL) – has launched a semi exclusive F2 Extra range through selected brokers and packagers, including 3mc/NRLA Mortgages. It includes extra-large HMOs, semi-commercial property and holiday lets, and properties requiring large loans up to £5 million.
Aldermore Bank – has launched two new limited-edition products. A five-year fixed rate for individual and company landlords with single residential investment properties at 5.09 per cent at 75 per cent LTV is available. The other deal includes a five-year fixed rate for individual and company landlords with multiple properties at 5.09 per cent at 75 per cent LTV. Both options have a 7 per cent lender fee.
Fleet Mortgages – has reduced rates across all five-year fixed rate products by 0.20 per cent.
Quantum Mortgages – has launched a 100 per cent interest cover ratio product to help landlords trapped as “mortgage prisoners” and are unable to remortgage due to high rental income margins. The loan is available on its single-unit and multi-unit ranges, up to 70 per cent LTV, which allows borrowers with a two-year clean repayment history to refinance, even where the properties rental income does not meet the usual 125 per cent income coverage requirements. Where there is no additional borrowing, other than refinance costs, the minimum interest cover ratio requirements will be reduced to 100 per cent. The 100 per cent interest cover ratio calculation product, carries rates that start at 5.99 per cent, with a refund on the valuation fee.
For further information on Buy to Let mortgages both for individuals and limited companies please contact NRLA Mortgages on 0161 341 0581 or visit the NRLA website https://www.nrla.org.uk/services/mortgages.
Please note lenders have different minimum criteria requirements and not all landlords and property types will qualify for a specific product. The product rates are correct at the time of writing the article and are subject to change.
This is an advertisement only and in no way should be viewed as a personal recommendation or advice. Before a recommendation of the suitability of the product can be given, we will direct you to 3mc (UK) Limited who can provide independent mortgage advice. As part of this they will ask questions so that they can fully understand your circumstances before giving advice.
NRLA Mortgages is a trading name of LPTE Limited which is an Introducer Appointed Representative of 3mc (UK) Limited who is Authorised and Regulated by the Financial Conduct Authority and is entered on the FS Register under reference 302992.
Please note: 3mc can advise/arrange Business Buy to Let (BBTL) and Consumer Buy to Lets (CBTL). Of the two, only Consumer Buy to Lets are regulated by the FCA.
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