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    #31
    I am not an apologist for this government rather the reverse on occasions however the Consumer BtL facility is as a result of the European Credit Directive which has been foisted on the UK authorities and the revised underwriting assessments are strictly as a result of the mindless and anonymous bearocrats from Strasbourg so on this occasion please don't blame the UK authorities.

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      #32
      Anything that helps prevent borrowing for speculation purposes is welcome in my opinion.

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        #33
        The problem with mortgages arose when banks started lending more than could be secured against a property to people who couldn't pay the loan and then hedging the risk by lying about it.
        The purpose of the regulation is to prevent institutionally greedy bankers offering loans to greedy punters who can't afford them.

        It might be a little OTT, but, left unregulated, the banks almost broke the world economy.
        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

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          #34
          An Excellent Article Taking Issue with the Bank of England

          Please do take time to read this article by John Heron , he is not known for making public admonishments of authority but on this occasion I believe he has articulated the position so far as it affect lenders and borrowers.

          The Bank of England has been running a none too subtle campaign for some time now calling for greater regulatory control over buy-to-let lending. The Bank has pursued this through repeated messages in its Financial Stability Reports, through its proposals to HM Treasury for powers of direction and various speeches and statements to the press. They have clearly briefed the Chancellor on the apparent dangers posed by buy-to-let lending and one suspects this has influenced the Chancellor’s tax grab from landlords.

          The essence of the argument being put forward is that buy-to-let lending is increasingly a potential source of instability in financial markets because of the rapid growth seen in recent years. They say this instability arises from two key areas: credit risk and landlord behaviour in a downturn. Much data has been presented by the Bank of England to support their case, but generally the level of evidence is thin, reflecting the fact this remains a poorly measured and poorly understood sector.

          I therefore welcome Martin Taylor’s statement before the Treasury Select Committee last week in recognition of the fact that the Bank of England does not have enough data about the buy-to-let market at present.
          Whilst data on buy-to-let lending may be thin on the ground the facts that we do have are these: There has been rapid growth in buy-to-let since the financial crisis, but lending levels for 2015 will still be materially lower than they were in 2007. In 2014 there were fewer buy-to-let transactions than there were 10 years earlier. Furthermore, on the basis of the latest data we have, the proportion of properties funded by a buy-to-let mortgage in the Private Rented Sector (PRS) has not increased since the financial crisis.

          In 2007, 29.5% of properties in the PRS had a buy-to-let mortgage, by 2013 (the latest date for which we have numbers) this percentage had reduced to 28.2%. Buy-to-let represents around 17% of all mortgage balances and, on the basis of the latest PRA data, 15% of the flow of mortgages in Q3 2015. I will come back to this later on. So growth, yes, but from a low base and in line with the growth in the PRS which in turn is being driven by a long-term shift in tenures. There is no evidence to suggest that growth is out of control or unsustainable.

          On credit quality there is very clear evidence that standards have improved sharply since the financial crisis. Average loan to values (LTVs) have fallen from a peak of over 70% in 2008 to less than 64% in 2015 and appear to be continuing on a downward curve. Furthermore, typical maximum LTVs at 75% are much lower than they were pre-crisis when 85% was the norm. On affordability, average income coverage ratios have improved from 163% in 2010 to 189% in 2015 and again we have seen further tightening of lender affordability criteria over the last year.

          The killer fact of course is that arrears levels in the buy-to-let market are extraordinarily low; 0.61% of buy-to-let mortgages are three months or more in arrears compared to 1.27% in the owner-occupied sector, buy-to-let arrears are at less than half the level seen in the owner-occupied market. In contrast, the data presented in the HM Treasury Consultation relating to credit performance, which suggested poor credit performance in buy-to-let, was not actually buy-to-let specific data and referred to all non-regulated mortgages including second charge personal loans.

          And finally, are landlords a source of instability? Do they buy aggressively in a boom market and sell equally aggressively in a downturn thus amplifying the effects of the cycle? It is impossible to say how landlords will behave in the future but we know how they have behaved in the past. If you track the stock of properties in the PRS against GDP, and against house prices over the last 15 years, you can see no link whatsoever between landlord behaviour and the economic cycle. The PRS has continued to grow regardless, driven by sustained increases in rental demand. All the indications are that landlords buy and retain property for the long-term because there is strong demand through the cycle; they do not sell an asset that produces a strong revenue stream into weak markets.

          Before the Treasury Select Committee last week, Martin Taylor confirmed to MPs that buy-to-let lending was 18% of the stock and 50% of the flow of new mortgages in answer to a question from the MP Chris Philp. 18% is in the ballpark for the stock but as the PRA’s own numbers indicate, buy-to-let represents only 15% of new mortgage originations. As Martin Taylor said: “We note that it (buy-to-let) has different characteristics from owner-occupied (lending). We do not understand its characteristics quite so well, because it has not been going so long. We do not have the historical data”. In the absence of better data surely there is a case for the exercise of caution when taking action in a market that provides one out of every five homes in the UK.

          The growth we have seen in buy-to-let lending in reality reflects the changes we have seen in housing tenures over the last 30 years. The scale of lending is not out of line with the scale of the PRS and, if demand continues to grow as most housing analysts expect, it is important for the housing market more generally that private sector landlords are willing and able to respond by expanding the supply of properties to the sector. Again, therefore, I welcome the more cautious tone in some of the comments made last week, recognising that in the absence of good data, with the government having already made some significant changes in policy towards the sector, there is a real risk that the layering of measures will be detrimental to those that rely on the sector for a home.

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            #35
            I agree with most of this entirely....When the boom times hit and properties become very expensive many landlords will actually stop buying since the long term numbers don't add up, yes there will be a few jumping on the band wagon but many will stop.

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              #36
              Today I received a marketing note from a relative newcomer to the mortgage market but they have introduced two additional categories for people who with just two properties and two years experience can apply for mortgages on HMO's upto 80% and with no minimum supportable income; sorry but such actions create an uneasy feeling that for some lenders they clearly haven't learned what occurred before the credit crunch kicked in. I think they are struggling to hit targets planned for 2016 and want to relax criteria in order to reverse current low volumes.

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                #37
                Here is an alternative to conventional Buy to Let Funding

                Thought the following might be of interest to some or at least investigate further.

                Unlike conventional mortgages and refinances, Al Rayan Bank's Sharia compliant Home Purchase Plans (HPP) and our rent & acquisition Buy to Let Purchase Plans (BTLPP) do not involve interest charges and are based on joint ownership.

                Your monthly payment increases your share in the property and includes a payment for the use of the share that the Bank owns. At the end of the finance term you will own the property outright.

                On our rent only BTLPP each payment only covers the rent that Al Rayan Bank charges on its share of the property. However, you won't acquire any of our share of the property. Instead you will need to put in place plans to acquire Al Rayan Bank's share at the end of the finance term. Al Rayan Bank provides competitive rental rates, with finance for your property generated from ethical activities considered lawful under Sharia. Our administration fees are low and there are no early settlement penalties, giving you flexibility with your finances.

                So whether you are seeking property finance in line with your faith or simply want a more principled way of buying or refinancing, Al Rayan Bank's property finance has the answer.

                For more information on any of our products or services, please ring our Customer Services team on 0808 231 6520, or complete our online form and we'll get back to you.

                This lender deals with the general public as well as through Intermediaries.

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                  #38
                  A slight variation but worth reading for those with children seeking to gaina foothold on the property ladder

                  I am detailing a briefing note on the Bath Building Society's pragmatic approach to house purchase for first time buyers. I appreciate that this is slightly off topic but imho I feel worth reading just in case.

                  Our Rent a Room Mortgages allow an individual applicant to borrow more by renting out a room and using the rent towards the mortgage payment. What if you find your ideal home, but your income isn’t quite enough to get the mortgage you need? Well, if the property has a spare bedroom, our Rent a Room Mortgage might be just the answer. If you rent out a spare bedroom, we will take into account the rental when deciding whether we can offer you the mortgage you need. Our Rent a Room Mortgages are available on the same rates and terms as our Standard Residential Mortgages and our 95% Parent Assisted Mortgages. This example explains how it works: An applicant earns £26,000pa and wants to buy a two bedroom property for £200,000. They have a 20% deposit, so need a loan of £160,000. They have approached a few lenders, but they are unwilling to lend this amount based on the £26,000pa income. The applicant has a friend who is looking for somewhere to live, and is interested in renting the second bedroom; they do not want to buy a property together as they do not want the long-term commitment. The friend is happy to pay £400 per month to rent the spare bedroom. The applicant speaks with one of our Advisers who calculates that, with a Rent a Room mortgage, the rent would cover about £58,500 of the loan, leaving just £101,500 to be covered by the other income. Some important notes •The example above is based on a single person with no children and no other debt, and assumes a 25 year repayment mortgage. The actual figures will depend on your individual circumstances. •Rental income from only one tenant will be taken into account and the expected rental will be based on an independent assessment. •Minimum income of £20,000pa (excluding the rental income), employed or self-employed. •Up to 50% of the loan amount can be covered by the rental income from letting a room in the property.

                  The balance of the loan must be covered by income. •The amount being covered by the rent must be no more than 4 x the borrower’s income. •The property must be fit for purpose – for example, it must have at least two bedrooms and be suitable for occupancy immediately on completion of the mortgage. • There needs to be a formal agreement with the tenant. •We recommend that the borrower take tax advice. •Maximum Loan to Value is up to 85% or up to 95% with collateral.

                  Comment


                    #39
                    Capital Home Loans to Return

                    It has been announced in the Trade Press today that CHL will come back into the Buy to Let market this Summer.

                    CHL Mortgages has announced its return to the mortgage market this summer.
                    The former buy-to-let lender, which stopped new lending in 2008, will rebrand as CHL for Intermediaries to demonstrate its focus on brokers.
                    A statement on its website read: “CHL mortgages (sic) is coming back to the market.
                    “Re-branded as ‘CHL for Intermediaries’ to reflect our allegiance to and support of the intermediary market, we are currently creating a proposition and environment for a mid-year market launch.
                    “Our emerging intermediary teams will be ready to bring our Buy to Let products and services to our Intermediary partners, to enhance your client choices and to ensure that we work with you to build partnerships that will be based on a principal where we help you build your businesses so that you can help us build ours.”

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                      #40
                      Summer last year I was reading and hearing many predictions if a 'real soon now' rise in mortgage rates.
                      e.g. http://www.bbc.co.uk/news/business-33786528
                      Come Feb 2016 and I was in the process of restructuring some BTL borrowing. In passing the lender said their headline rate had dropped slightly, I was offered that deal so the monthly outgoing on the same loan has now fallen.
                      Personally I think that the banks are embarrassingly awash with cash to lend and if they don't lend it out, negative real base rates become a possibility in the UK just as has already happened in the Eurozone.

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                        #41
                        Bring on the negative rates I say, I want to see minus 10% I really would be laughing, the banks would be paying me a fortune!

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                          #42
                          An interesting comment , only time will tell how things will develop but it is clear that more clients are now asking for the best tracker rates rather than fixed.

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                            #43
                            Depends how long you are fixing for.....I bet 20 years rates are at record lows on libor, might be worth a look

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                              #44
                              If I read your message correct a 20 year tracker linked to Libor will be exactly the same given that the premium is linked to 3month Libor for whatever is the reversionary rate after the initial incentive rare expires . With the exception of TMW with their LifeTime rate most lenders restrict the incentive to 5 years with the remaining terms say 15/20 years reverting to either the SVR or Libor unless by good fortune you get it linked to BoE base.

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                                #45
                                No not 20 year trackers, 20 years fixed rates. Most main lenders do them although not in BTL mortgages. They are at historic lows and if the market changed it could be a very shrewd move, the risk is that rates remain low for some time and you have fixed higher

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