When the autumn first arrived I thought we might be in for a less than interesting buy to let journey to the end of the year; however, there is excitement to be found if you know where to look.
Recent figures published by the Council of Mortgage Lenders show that buy to let lending in Q3 2014 totalled £7.1bn, up from £6.1bn in both the previous two quarters.
In case you haven’t yet done the maths, this means that lending for the first three quarters of 2014 totalled £19.3bn. If Q4 performs even as steadily as Qs 1 and 2, this means that BTL will hit my lending forecast of £25bn plus for the year.
Looking at the Q3 figure in more detail, £3.8bn accounted for remortgages, which means that for the third consecutive quarter, remortgages outstripped purchases.
I’m glad to say that our own internal data reveals a similar story. If you want a breakdown by property type do take a look at the results of our Complex Buy to Let Index Q3 2014 which compares vanilla BTL units, HMOs, multi-units and mixed use properties.
Analysing our data, the dominance of remortgaging is due to landlords refinancing to raise equity to both improve existing rental property and to expand their portfolios. I don’t expect this trend to change any time soon but as usual, we’ll monitor the situation and report back.
Last month, you may remember that our Keystone brand launched the Solutions Range - a suite of medium term BTL loans for landlords struggling to get a mortgage. It's proving extremely popular not least because it can be genuinely be used as a credit repair product because of its three year term – unlike bridging.
And now, our friends at Castle Trust have also entered the medium term loan area with their new Flexible Zero Mortgage for buy to let investors which offers a fixed rate of interest rather than an equity share. The product is gaining good traction and its features include:
• No monthly payments, instead a rolled up fixed rate of interest is paid at redemption or at the end of the term
• Available on a first or second charge basis for BTL
• Up to 50% LTV, subject to a combined LTV of 80%
• 1 to 5 year loan term
• ERCs only in the first two years
• Fixed rates from c. 7-10.5% for first charges
• Fixed rates from c. 7-13.5% for second charges
According to our Castle Trust BDM, all rates will be calculated on a case by case basis but will depend mainly upon LTV and term. I expect the appeal of this type of product will broaden next year especially now that landlords are beginning to understand the concept.
Everyone in the industry knows by now that on 24 November, Fleet Mortgages launches into the buy to let lending arena, although in reality, I expect lending to begin in earnest from 2nd January.
Fleet is made up of the former CHL Mortgages management team lead by Bob Young and it’s really good to see them back, particularly as they have chosen to focus on the specialist end of the market.
We are delighted to be on board their select broker panel and I wonder which of us will be first to break their processing system, which has been supplied by DPR… should I say more? Probably not.
P2P lender Landbay is now really gaining momentum in the buy to let lending arena.
We are placing an increasing number of deals with them and they are proving very popular with landlords. Currently this lender can only be accessed via Mortgages for Business and our friends over at the Buy to Let Business, so do get in touch if you have BTL borrowers looking to make a move away from the mainstream. I believe Landbay is a lender to watch in 2015.
They now use Goldsmith Williams to do their legals and they recently signed a back office deal with Paratus, which will definitely enhance their scalability going into 2015.