Newsletter June 2009
Base Rate remains at 0.5%
For a third month running the Bank of England have kept Base Rate at 0.5%, which has come as no surprise and the feeling is that it will stay at this level for at least the next few months.
Our message continues to be that now is the time to act in the property market - whilst Base Rate is expected to stay low for some time, the cost of longer term funds is on the rise. If you are looking for stability during the next interest rate cycle and want to lock in for say 3 or 5 years you will need to move quickly.
We've highlighted our highly competitive 5.50%, 3 year Buy to Let fixed rate at 75% LTV but you can view the full assortment of Buy to Let fixed rate mortgages online or take a look at our residential fixed rates for your own home.
Also, a final reminder that the Mortgage Express / Bradford and Bingley ERC amnesty offer will end on June 30th. We can help you if you would still like to proceed with this so call me to secure this offer before it is withdrawn.
Lastly we are still in the What Mortgage Award running for 4 awards and would greatly appreciate your vote - vote for Mortgages for Business online. You can also keep an eye out for further news via our Buy to Let Blog and Residential Blog as well as e-mails over the coming days and weeks.
Click here for Buy to Let mortgages , Commercial mortgages , Property Development Finance and Residential mortgage products.
Lowest mortgage costs since 2004, says CML
While borrowers still need large deposits to be able to enter the market, and overall lending remains constrained, both first-time buyers and home movers are benefiting from the lowest debt servicing costs since 2004, according to the latest monthly lending survey from the Council of Mortgage Lenders.
House purchase lending accounted for 35% of all mortgage lending in March, up from 31% in February and the highest proportion since December 2007.
Remortgaging, on the other hand, still accounted for a higher number of loans in March, but the number was only 8% higher than in February and 45% lower than in March 2008. The CML expects remortgaging to remain muted, both because of attractive reversionary rates automatically cutting in for many borrowers as they come out of their existing deals, and because of reduced remortgaging opportunities for those with reduced levels of equity as a result of falling house prices.
Within house purchase lending, first-time buyers accounted for an increasing share - 40% of loans, up from 38% the previous month. This is the highest proportion since April 2005, although the absolute number of first-time buyers remains low - 12,500, up from 9,200 in February but well below the 17,800 recorded in March 2008 (not seasonally adjusted).
First-time buyers on average borrowed three times their income and 75% of the value of their property in March. Both these average measures were unchanged from February. For those with deposits large enough to enable them to buy, the combination of low interest rates and lower house prices mean that their monthly interest payment now equates to only 15.1% of their income, the lowest proportion since June 2004 (15.1%).
There were 18,900 home mover loans in the month worth £18.9 billion, up from £14.9 billion in February - an increase of 27%, but 34% down on March 2008. The average home mover loan was £115,000, compared with £135,000 in March 2008. Interest payments typically consumed 11.4% of a home mover’s income, the lowest proportion since January 2004 (11.4%).
Commenting on the latest data, CML head of research Bob Pannell said:
"Because the flow of lending is still constrained, there is a sharp dividing line in the housing and mortgage markets between those who can raise a substantial deposit and those who can't.
"For those who can, the burden of debt payments is low and mortgage interest is consuming proportionately less income than for a number of years. This is good news for now. Even so, a mortgage is a long term commitment. People borrowing now should be mindful of the years ahead when interest rates eventually rise, as they will.
"But for those without substantial deposits, entering the market is still both difficult and uncertain. While there are some signs of demand increasing, house prices remain weak and lending criteria inevitably remain inherently conservative as lenders necessarily seek to rebuild their capital position."
Click here for Buy to Let mortgages , Commercial mortgages , Property Development Finance and Residential mortgage products.
Mortgages for Business joins select Base Commercial broker panel
We are pleased to announce Mortgages for Business has been selected as one of only a small number of brokers to work with Base Commercial on its return to the UK lending market.
Base Commercial is working with a restricted panel of commercial mortgage brokers for the initial phase of its return to the market. It intends to focus on transactional activity and will deploy the resources of the initial panel brokers to vet and collate new applications on their behalf with a focus on application and credit quality prior to mortgage offer.
Rob Lankey, Director of Lending at Base Commercial said: “We asked Mortgages for Business to join the panel because of their proven knowledge, skills and professional approach to commercial lending. We believe that by working with reputable brokers like them, we can deliver a high quality service and maintain tight control over both the quality and volume of applications that we receive.”
Mortgages for Business MD, David Whittaker said: “Base’s return to the market is hard evidence of ‘green roots’ supporting ‘green shoots’ and we are delighted to be playing a part in it. Base Commercial had developed very robust lending systems before their wholesale funding dried-up in July 2008. It’s a credit to both those systems and their management team that they are the first lender to return to the market.”
“We hope our reputation as a specialist brokerage - which has been recognised with industry awards from both What Mortgage and Business Moneyfacts in the last year - will give brokers confidence in dealing with Base through us. Brokers will want to know that our systems will enhance their ability to process commercial mortgages and we are still the only NACFB brokerage to have been awarded the Fellowship kitemark for its professional approach to all aspects of the mortgage process.”
don't forget you can keep up to date with the latest Buy to Let mortgages via our specialist pages and also the number of available products via our Buy to Let product index in our Landlord Information Zone.
Click here for Buy to Let mortgages , Commercial mortgages , Property Development Finance and Residential mortgage products.
Buy to Let activity in the first quarter of 2009
New Buy to Let lending fell for the sixth consecutive quarter in the first three months of 2009, reflecting the continuation of extremely challenging funding conditions as well as general housing market weakness, according to the Council of Mortgage Lenders. Buy to lending accounted for 6% of all gross mortgage lending in the first quarter, down from 12% a year earlier.
There were 22,400 new Buy to Let mortgages advanced in the first quarter, down from 38,000 in the fourth quarter of 2008 and 72,400 in the first quarter of last year. The total number of outstanding Buy to Let mortgages was 1,155,200 at the first quarter, slightly down from 1,157,000 at the end of 2008.
By value, Buy to Let gross advances totalled £2.1 billion in the first quarter, down from £4.0 billion in the fourth quarter and £9.5 billion in the first quarter of last year.
3.09% of Buy to Let loans were in arrears of three months or more at the end of the first quarter, up from 2.31% at the end of 2008 and 0.92% at the end of the first quarter last year. But this proportion will have been significantly inflated because of the large reduction in many borrowers' monthly payments (as the same given sum of arrears represents a higher number of months payments when rates fall). This effect is even more marked on interest-only mortgages, and most Buy to Let mortgages are taken out on an interest-only basis. There is early evidence to suggest that the number of Buy to Let loans in arrears may in fact have fallen in the first quarter when expressed instead as a proportion of the total mortgage balance - 2.49% of Buy to Let loans had arrears equivalent to more than 1.5% of the mortgage, down from 2.85% in the fourth quarter, although some caution is needed as the sample of reporting lenders changed and the CML has only been collecting data on the percentage of balance basis for less than a year.
It is also important to recognise that there are differences between the Buy to Let market and the owner-occupied mortgage market when looking at repossessions. In the Buy to Let market it is common to appoint a "receiver of rent" as an alternative to repossession - the receiver can collect rent from tenants living in the property and pass it on to the lender, which allows the tenant to continue to live in the property while also ensuring that the cashflow to the lender continues.
In the first quarter of 2009, 1,700 Buy to Let repossessions took place (0.15% of all Buy to Let mortgages), up from 1,300 in the fourth quarter (0.11%) and 900 (0.08%) in the first quarter of last year. This compares with 12,800 (0.12%) across the market as a whole, including Buy to Let. In addition, there were 2,400 cases where a receiver of rent was newly appointed on Buy to Let mortgages more than three months in arrears (0.2% of all Buy to Let mortgages), up from 1,800 (0.16%) in the fourth quarter of 2008, and 100 (0.01%) in the first quarter of 2008.
Commenting on the latest quarterly Buy to Let survey, CML director general Michael Coogan said:
"It is not surprising that Buy to Let lending continued to fall in the first quarter. Many Buy to Let lenders relied on wholesale markets rather than retail savings to fund their lending. Some have therefore had no access to the measures to support capital and new lending that have been available to deposit-takers. This, along with general housing market weakness, has influenced the decline in Buy to Let lending.
"However, in the wake of the Rugg review and the government's recent commitments to strengthen the private rented sector, Buy to Let will continue to fulfil an important role. We urge the government to consider whether other ways to help non-deposit takers to increase their contribution to the new lending market can be achieved, and we would expect this to have a beneficial impact on Buy to Let."
Click here for Buy to Let mortgages , Commercial mortgages , Property Development Finance and Residential mortgage products.
