Buy to Let Market Update: June 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 07/06/2023.
Buy to Let Market Update: -
BM Solutions – has improved and simplified its stress rates, removing the minimum £55k incomes stress test qualification, improving 5-year fixed rate minimum stress rates and improving like-for-like remortgage minimum stress rates. On like-for-like remortgages, BM Solutions reduced the stress rate on 2-year fixed rates to 5.50% or pay rate +1%, and on 5-year fixed rates to 5% or pay rate +1%.
For purchases, or where a remortgage includes capital raising, BM Solutions reduced the stress rate on 5-year fixed rates above 65% Loan to Value (LTV) to 5.50% or pay rate +1%. On applications where the LTV is less than 65%, this was reduced to 5% or pay rate +1%.
Accord Mortgages – has re-introduced 80% Loan to Value buy to let mortgages. The lender has also lowered the interest coverage ratio (ICR) rates on its Buy to Let mortgages. For landlords remortgaging on a like-for-like basis, the ICR is now 6%, down from 6.5% or the product rate plus 1%, whichever is higher. This applies to products with fixed terms of 5 years or less. For longer product terms, the ICR is now 5.5% down from 6.5%, or the product rate plus 1%, whichever is higher.
For purchase or remortgage with capital raising, the ICR has dropped from 7.5% to 6.5%, or the product rate plus 2%, whichever is higher. This applies to fixed terms of 5 years or less. For products with initial terms of longer than 5 years, the ICR will reduce from 6.5% to 5.5% or the product rate plus 1%, whichever is higher.
The ICR for basic rate taxpayers will remain at 125%, and for higher rate taxpayers will continue to be 145%.
Paragon Bank – has introduced a selection of 2- and 5-year fixed rates to their portfolio and non-portfolio ranges. With a variety of fee options available, all of the products benefit from a free mortgage valuation.
The Mortgage Works – has launched a new range of Buy to Let fixed rate products. 2-year fixed rates up to 65% LTV start from 4.49% for purchases and remortgages and have a 3% lender fee. 5-year fixed rates up to 55% LTV start from 4.94% for purchases and remortgages and have a 3% lender fee. The lender has returned to lending at 80% LTV on its Buy to Let, Let to Buy and Limited Company range of mortgages. 2-year fixed rates at 80% LTV will be available from 5.74% and 5-year fixes start from 5.94%, both with a 2% fee. All rates are available for purchase and remortgage with other rate/fee combinations also available. Limited company fixed rates start from 6.39% with a 2% product fee, available for purchase, remortgage and further advances.
The range of 80% LTV products will be available where a property has an EPC rating of C or above.
The lender has also simplified its affordability criteria, which it says will improve the position for the majority of applications received. For trackers, variable rates and fixes at 2 years or below, the stress rate will be the higher of pay rate +2% or 5.50%. For like-for-like remortgages and fixed rates at 5 years or over, the stress rate is the higher of pay rate or 4.50%.
For Buy to Let and Let to Buy, the Interest Cover Ratio (ICR) will be 130% at the lower tax rate and 165% at the higher tax rate. The ICR for HMOs and limited company HMOs is 175% and the ICR for limited company Buy to Let is 130%.
The lender has also reduced the background portfolio stress rate from 5.5% to 4.5%.
Santander for Intermediaries – has reduced its Buy to Let affordability rates, with its standard affordability rate decreasing to 7.59% from 8.25%. Its 5-year fixed affordability rate has decreased to 6.09% from 7.25%. Its pound-for-pound remortgage affordability rate has gone down to 6.09% from 7.75%.
Landbay – has launched a new range of 2- and 5-year fixed rate products. They have also launched a 5-year fixed rate range with a 3-year early repayment period, up to 75% LTV with rates starting from 5.59%.
Fleet Mortgages – has launched a new range of 2- and 5-year fixed rate mortgages in its three core ranges – standard, limited company and HMO/MUB. The specialist Buy-to-Let lender’s 2-year fixed-rate mortgage, available up to 75% LTV is priced at 5.69% for standard and limited company borrowers, and 5.79% for HMO/MUB borrowers. 2-year fixes come with a 2% fee.
5-year fixes are available at three different LTV options:65% LTV – standard and limited company products are priced at 5.69% and the HMO/MUB product is priced at 5.83%. With a 2% fee. For 70% LTV – products come with cheaper rates but a higher 5% fee; standard and limited company products are priced at 5.19% and the HMO/MUB product is priced at 5.29%. For 75% LTV standard and limited company products have a 5.79% rate and the HMO/MUB product is priced at 5.93%. A 2% fee is applied.
The new range of fixes also includes Green 5-year fixed rate options – for those purchasing or remortgaging a property with an EPC level of C and above – available at 75% LTV. For standard and limited company borrowers, the Green 5-year fix is priced at 5.69% and for HMO/MUB borrowers the price is 5.83%. All Green products come with a 2% fee.
All standard and limited company products come with a free valuation, for loans up to £500,000, after which the valuation is available at a discounted price.
Vida Homeloans – has launched a 2-year fixed limited edition mortgage as part of its new Buy to Let range. The limited-edition product is available at 75% LTV and has a rate of 5.19%. The lender completion fee is 3%. The lender will accept first-time landlords and limited company applications.
Aldermore Bank – has launched new Buy to Let options for new borrowers available at 75% LTV, either with a £1,999 fee, 1.5% fee or no fee. There are 2 and 5-year fixes, with rates beginning at 5.98% for a discounted product either for individual or limited company landlords.
The products also offer a free valuation.
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.
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.