Increase in let to buy mortgages as MCD deadline looms large

A new report suggests that there was a clear uptick in the demand for let to buy mortgages in 2015, in response to the fast approaching Mortgage Credit Directive (MCD) deadline this March. Meanwhile the buy to let sector sees criteria change and new product offerings from various lenders and the Bank of England maintains Bank Rate at 0.5%

Paragon Mortgages’ latest Financial Advisers Confidence Tracking (FACT) report reveals that in Q4 2015 nearly one in eight mortgage cases dealt with by brokers were let to buy.

The term ‘let to buy’ includes loans where a customer has no other rental properties, and is looking to remortgage a property they have previously lived in.

As a result of the regulatory developments driven by MCD many of these let to buy mortgages will now be regulated because they are captured under the regulatory definition for Consumer Buy to Let.

Paragons’ FACT report found that 12% of mortgage cases were let to buy in Q4 2015, up from 10.6% in Q3 2015.

The data also revealed that for a substantial minority (10%) of mortgage advisors, let to buy accounted for more than 30% of business in Q4 2015.

Despite this trend however, 60% of respondents thought the implementation of the MCD in March would have no impact on levels of let to buy business. 25% of respondents thought it would lead to less, as compared to 11% who said it would lead to more.

On the buy to let front, Aldermore has refreshed its product offering and has launched a 3.99% five-year buy to let fixed rate mortgage, available up to 80% loan to value (LTV).

The mortgage is available to landlords and limited companies and can be used on purchases and remortgages of single residential units.

The mortgage offer carries a 2.5% completion fee.

At the same time, Fleet Mortgages has announced the first of a series of criteria changes that it plans to roll out over the coming months.

The revisions relate to its new build, recent conversions and houses of multiple occupation criteria.

The lender will now offer loans up to 70 % LTV, and up to 60% LTV for converted properties. HMO properties with more than one kitchen will also now be accepted.

New lender, New Street Mortgages launches in the buy to let sector today.

Part of The Northview Group and sister company to Kensington Mortgages, New Street Mortgages says it will use intelligent data-driven credit profiling to offer the market faster and more consistent decision-making and claims some customers will be able to secure mortgages in just five days due to this new style of profiling.

Lastly, the Bank of England has announced that it will maintain Bank Rate at 0.5%.

The Monetary Policy Committee (MPC) voted unanimously to keep the base rate unchanged and it has been reported that instead of a rate rise later this year, markets are increasingly pessimistic and are now pricing in a higher probability of a rate cut than a rise.


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