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  • boletus
    replied
    Originally posted by loanarranger View Post
    Libor linked Mortgages changes
    Loans that are presently linked to 3 month Libor will shortly be abolished with lenders applying a new rate which is akin to a Standard Variable rate.
    Can they do that? Surely if borrowers signed up for a LIBOR tracker, the lender can't just alter the terms onto a SVR of their choosing.

    Mortgage Express, amongst others, tried and failed with their BofE base rate tracker mortgages.

    Is this only for new lending?

    Whilst I am sure that lenders will not take advantage of this change
    You have greater faith in them than I have. Post credit crunch, a number of lenders behaved despicably trying to weasel out of contracts.

    Leave a comment:


  • loanarranger
    replied
    Lenders criteria may get tougher in 2019
    At a conference with lenders yesterday it was revealed that the Financial Conduct Authority was expressing reservations on the methodology of data being remitted by lenders and its potential impact on lending and the market as a whole both for Regulated& Non Regulated Mortgages. Coming on the back of expressions of concern by the BoE there seems to be a probability that the manner in which loans were assessed might prompt a realignment of current underwriting, Whilst this is speculative at this moment in time certainly it was clear that certain new lenders were presently accepting mortgage applications where credit worthiness was questionable indicate that lessons may have not been learnt from the Wild West Lending pre credit crunch days.
    I will update on this as lenders make their own pronouncements in the coming months particularly where it might impact on Buy to Let.

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  • loanarranger
    replied
    Libor linked Mortgages changes
    Loans that are presently linked to 3 month Libor will shortly be abolished with lenders applying a new rate which is akin to a Standard Variable rate. The downside to this is that it removes the transparency of knowing that at the quarterly review date the 3 month rate is applied with possible round up to one or two decimal points plus the stated premium as per the mortgage offer. Whilst I am sure that lenders will not take advantage of this change I would urge any borrower to keep and eye on the effective rate to ensure that they are not paying slightly more than would have otherwise have been the case under the present arrangement.

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  • loanarranger
    replied
    News from BM Solutions

    BM Solutions has announced a series of cuts and removals to and of its various fees.

    The changes include the removal of the £295 mortgage account fee across the brand’s buy-to-let remortgage and purchase products, and the introduction of a new flat fee of £300 for Level 1 standard valuations, which applies to all purchase mortgage applications.

    Revaluation fees for additional borrowing are also now set at £300, and in addition, the £100 administration fee for Level 1 standard valuations and Level 2 homebuyers report valuations has been cut entirely.

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  • loanarranger
    replied
    Is this the beginning of a more pragmatic approach by lenders.
    Today a lender has announced that provided the BtL property was purchased pre Jan 2017 and the remortgage is on a £ for £ basis they will apply a lower rental stress calculation of 125% @5.5% with a proveable minimum income of £20000.
    On the face of it some might say "Well" but for a number of borrowers they might experience difficulty in seeking a lower rate than they are currently paying simply because they have 4 or more properties or are higher tax payers and are subject to the normal stress calculation of 145%@5.5% or slightly lower if capital raising or purchasing another property.

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  • loanarranger
    replied
    Barclays Bank clarifies its position regarding Ground Rents taking account of the issues which have been identified in recent months .

    Escalating ground rents

    Escalating ground rents are acceptable provided the amounts and terms are clearly stated and they comply with the following requirements:


    RPI linked Ground rents:
    • Ground rent is indexed to RPI no more frequently than every 5 years.
    • Ground rent up to 0.1% of the current market value is acceptable
    • We may accept ground rent up to 0.2% of the current market value subject to review

    Doubling ground rents:
    • Should not double more frequently than every 20 years
    • Should not continue to double after 125 years
    • Ground rent up to 0.1% of the current market value is acceptable
    • We may accept Ground rent up to 0.2% of the current market value subject to review

    Ground rent rises linked to the property value


    These are not acceptable to Barclays

    Leave a comment:


  • loanarranger
    replied
    A very interesting report has today been published and compiled by the Centre for Economics and Business Research

    Buy-to-let market faces tough three years and 360,000 lost mortgages – Shawbrook


    A continued dampening of the sector over the next three years is expected before the market stabilises in 2021 and returns to growth in the following two years, according to the UK buy-to-let report produced by Shawbrook Bank and compiled by the Centre for Economics and Business Research (CEBR).

    The report compares this projection with a scenario in which the government’s various policy interventions – mortgage interest tax relief, stamp duty land tax and a tightening of PRA underwriting standards – were not introduced.

    The number of buy-to-let (BTL) mortgage approvals for purchases dropped in 2016 by 13%, followed by an even steeper fall of 27% in 2017 as the sector adjusts to new regulation.

    Shawbrook’s report anticipates this trend will continue until 2021, but will be less severe than the market has experienced in recent years with strong demand in the private rental sector and a core of professional landlords countering the effects.

    Return to growth

    From 2021, moderate growth in the BTL market is anticipated for the years leading up to 2023.

    In comparison under the no-reform scenario, Shawbrook Bank would have expected the share of BTL mortgages to have stayed higher for longer, averaging at around 13% of the whole mortgage market between 2018 and 2023, compared to 7% under the new scenario analysis.

    Furthermore, the analysis estimates that 360,000 more BTL mortgages would have been issued if the changes to the tax system and underwriting process had not occurred.

    Managing director for commercial mortgages Karen Bennett said: “While the series of government and regulatory changes have had a significant impact on the sector, we have seen the impact felt more heavily among the amateur landlord community which has presented growth opportunities for professional investors.

    “Recent political turbulence has had an amplifying effect on investor confidence but positively, the market remains buoyant for those with a long-term strategy who draw upon specialist advice to fully understand the impact of these policy shifts.

    “Regulatory change that supports the public interest is not something to be afraid of, and we predict that this high performing asset class will remain a fundamental strength over the long-term provided lenders continue to adapt and change alongside it.”

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  • loanarranger
    replied
    Many Forum readers will know that TMW has now agreed to accept Limited Co BtL applications , one important part of their criteria is that via such vehicles the loan rental assessment is calculated at 125% irrespective of the Directors personal tax rate , this is an important element since for many Higher Tax payers the imposition of a higher rental stress calculation impedes on the ability to raise adequate levels of funding on a personal level. Having said that before anyone makes such a decision consulting with a good tax adviser is essential.

    Leave a comment:


  • loanarranger
    replied
    Misleading Marketing

    Please allow me to get the following issue off of my chest.

    I have noticed amongst my inbox emails , flyers from various sources purporting to have semi exclusive Buy to Let products from lenders of which they are one of a very small number (normally quoted as 5) who have access to these products. Please accept that in the vast majority of instances your own brokerage will be able to access these same products so please don't be fooled into believing that such brokerages have an advantage over your own established brokerage links.

    The latest flyer relates to the availability of 85% funding via Kensington Mortgages only the second lender to make such high loan to value facilities available in the current market. I do not like in these uncertain times such high levels of gearing but for some this might be attractive. In common with the other provider the interest rates are a little chunky at 4.89% Fixed for 5 years. If this is what floats your boat talk with your broker , you might indeed surprise him with your advance knowledge !

    Leave a comment:


  • loanarranger
    replied
    TMW RE-ENTERS LENDING TO LIMITED COMPANIES

    Today TMW announced that it was reentering the niche of lending to Limited Companies with lending up to 80% of the PP or Val whichever is the lower. Rental Stress rates range from 125% for standard property & 170% for HMO's.

    Interest Rates start with a 2 Year Fixed Rate of 2.99% , 3 Year Fix 3.24% and 5 Year Fix 3.49%. The 2and 5 Year product carry fixed Completion Fees of £1995 and the 3 Year product 2% of the loan.

    Although PG's are required and a First Charge they have gone to great lengths to affirm that they will not be seeking a Floating Charge over the company's assets

    Going forward they have also announced their intention at some point in the near future to consider Further Advances .

    This is a valuable re-entry by TMW.

    Leave a comment:


  • loanarranger
    replied
    The latest twist in lending strategy involves the lender offering reduced Tracker/ discounted rates but increasing the amount of upfront fees in the “ genuine” belief that borrowers would prefer to use the completion fees as a genuine offset in costings knowing that by the time 20/21arrives the degree of what amount of interest can be offset would become marginal , what they fail to acknowledge is that their reversionary rates is in the upper 5% mark and in the absence of aswitch product would prompt serious consideration of having to refinance and all the possible costs that would involve. To my mind I suspect that they do not fully understand the rationale of Buy to Let investors and importantly know that such increased completion fees only boosttheir1st years profitability.

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  • JayDavys
    replied
    Thanks LA, seems like a sensible approach in circumstances where it is clear a borrower can more than easily cover their outgoings when their income as a whole is at least partly taken into account.

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  • loanarranger
    replied
    As a follow up to my earlier posting I am detailing an extract of a note relating to a lender within the One Savings Group which is focused on addressing the affordability issues particularly for non portfolio borrowers and those who are high income applicants with low yielding properties.

    The lender has launched new affordability measures for buy-to-let which take a broader view of income, including landlords’ earnings from sources other than the property.

    The lender, which is part of OneSavings Bank, will use earned income to supplement the interest coverage ratio (ICR) for buy-to-let loans, where the rental property yield in itself does not meet minimum requirements.

    The changes are aimed at supporting non-portfolio landlords, whether they are borrowing through a limited company or as an individual.

    High earners are likely to benefit, particularly where they have low-yielding property.”

    I will try and keep Forum readers appraised of any subsequent lenders addressing this important element of mortgage applicant.


    Leave a comment:


  • loanarranger
    replied
    It is becoming evident that for some lenders the level of Buy to Let mortgage business is falling below their business targets and one key element is the difficulties being experienced in meeting the tough rental stress calculations. Trying to stimulate more business some lenders are now introducing "Top Slicing" whereby an element of primary income may be included to assist in meeting the stress testing. All brokers active within this sector are being appraised of such lending policies by email but also by numerous Road Shows designed to help brokers navigate the occasional complex world of Buy to Let funding.

    Leave a comment:


  • loanarranger
    replied
    Aldermore have kicked off the latest quarterly Libor Fixing from 0.55% to 0.65% and this is now reflected in all of their current new business products and mortgages which have completed and linked to this mechanism.

    I will update on other lender increases as they occur.

    Leave a comment:

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