Marketing No Comments

Buy-to-let mortgage competition soars to pre-crisis levels

The number of buy-to-let mortgages on the market is at its highest level since October 2007 but rates have also increased, data from has revealed.

According to statistics released today, there are currently 2,396 buy-to-let products on the market, a figure which as soared in the past month alone by 143.

It comes despite regulatory changes, which have dampened enthusiasm from many would-be buy-to-let investors and disheartened those already in the market.

It is also the highest level of product availability since before the financial crisis, when the total number of products stood at 3,305.

Average rates

Yet, despite this rise in numbers and competition within the market, rates have not fallen. In fact, according to Moneyfacts’ data, over the past 12 months the average two-year buy-to-let fixed-rate mortgage has increased by 0.17% from 2.88% in June 2018 to 3.05% this month.

The average five-year buy-to-let fixed rate, meanwhile, has increased by 0.11% and now stands at 3.54% compared to 3.43%, which was the typical rate in June last year.

Although the rates are going upwards, they are still nowhere near the average of 6.36% for a two-year fixed rate and 6.39% for the five year version that the buy-to-let market experienced in October 2017.

Choice for investors

Moneyfacts said the fact the availability of products had increased by 21% in the past year indicated providers were keen to offer buy-to-let investors plenty of choice within the sector.

Darren Cook, finance expert at Moneyfacts, said: “The buy-to-let market has experienced a number of regulatory changes of recent years, however it seems product competition within this specialised mortgage area is continuing to grow.”

Cook said the largest concentration of product choice was at the maximum 75% loan-to-value (LTV) tier, where there were 352 two-year fixed-rate products – which is 44% of the market – and 374 five-year mortgages, which is 48% of this market.

The average fixed rates at the 75% LTV tier, for both the two and five year sectors, were at 3.05% and 3.55% respectively, according to Moneyfacts. These rates equalled, or nearly equalled, the average rates for both terms across all tiers.

Cook added: “The increase in the BTL average rates contrasts with the downward trajectory of their residential mortgage counterparts, where product competition seems to have instead resulted in rates falling.

“This disparity in trends is likely to be attributed to the different approach lenders take to risk between these two sectors, and that economic uncertainty may be having a more adverse influence on the BTL mortgage market than it is having on the residential mortgage market.”

(Source: Moneyfacts Treasury Reports)  

All available BTL products Two-year fixed rate BTL mortgage Five-year fixed rate BTL mortgage
  Product numbers Product numbers Average rate Product numbers Average rate
Oct-07 3,305 409 6.36% 181 6.39%
Jun-18 1,929 678 2.88% 637 3.43%
May-19 2,253 739 3.02% 730 3.53%
Jun-19 2,396 802 3.05% 785 3.54%

By Kate Saines

Source: Mortgage Finance Gazette

Marketing No Comments

First-time buyers shore up UK housing market

The residential mortgage market has had a strong start to the year, as the number of first-time buyers entering the market increased by 4.6 per cent.

The latest data from UK Finance, published today (March 14), said 25,100 new first-time buyers completed in January 2019, an increase of almost 5 per cent when compared with the same month in 2018.

The number of homeowner mortgages completed in the month rose to 25,300, a 2.3 per cent year-on-year increase.

Gareth Lewis, commercial director at specialist lender MT Finance, said: “There was always a worry that the lending market would be depressed at the beginning of the year as we edged ever close to the March deadline for Brexit, with this preventing people from buying and selling.

“But these figures are actually very positive and show that people have come out and continued to
buy, so sentiment is pretty good.

“First-time buyer numbers remain strong and encouragingly, loan-to-values have been consistent so it is not as if they are over-stretching themselves.

“With the average LTV around 85 per cent, sensible lending is being done rather than chasing volume.”

New homeowner remortgages, however, fell by 2.7 per cent when compared with January 2018, with 47,400 completed during the first month of this year.

Remortgaging in the buy-to-let sector also fell by 4.2 per cent when compared with the year before.

Kevin Roberts, director at Legal & General Mortgage Club, said: “While the current political landscape is forcing some homeowners to ‘improve, not move’, increased competition within the mortgage market continues to help thousands of buyers with their property plans and ambitions.

“With mortgage rates having halved in the last decade, and a growing number of lenders offering 95 per cent LTVs, first-time buyers stand in a particularly strong position.

“For any would-be borrowers, looking to make the most of the competitive rates and flexibility the mortgage market has to offer, speaking to a mortgage adviser is a wise first move.

“Not only can these professionals provide access to thousands of mortgage products, but their extensive knowledge of the market means they know which lenders will best cater to a borrower’s unique circumstances.”

Meanwhile, new buy-to-let home purchase mortgages completed in January were 1.8 per cent down on the same month a year earlier.

According to UK Finance, the rate of decline this year is less than experienced in January 2018, when buy-to-let home purchases plummeted 5.1 per cent year-on-year.

Matt Andrews, managing director of mortgages at Masthaven, said: “More could still be done for the buy-to-let market to encourage greater purchase activity.

“The slight softening in remortgaging figures for this sector suggests landlords remain committed to the market, greater product innovations, alongside a range of housing tenure that meets consumer needs, would certainly be welcomed so the sector can reach its full potential.”

Jenny Turton is a freelance journalist

Source: FT Adviser