Buy To Let Finance Watch

[mrtickle]

Cool, thanks @Beary McBearface.

 

[nome]

http://www.thisismoney.co.uk/money/buytolet/article-5088689/Buy-let-lenders-relax-mortgage-rules-landlords.html

[Bland Unsight]

3 hours ago, nome said:

http://www.thisismoney.co.uk/money/buytolet/article-5088689/Buy-let-lenders-relax-mortgage-rules-landlords.html

That piece is within a whisker of being an advert for Lendinvest who appear to want 140% ICR when lending to higher rate tax payers and are charging people with 60% LTV 3.69% for a two year fix (market leading rate is presently 1.57%).

If paying more than twice as much interest for lending  at a 140% ICR instead of a 145% ICR constitutes rules being relaxed then "relax" has a very different meaning to sub-editors writing headlines in This is Money to the meaning it has more generally.

A misleading article - pretty poor darts just to post a link to it on this thread without any kind of comment or fact checking.

[spyguy]

10 hours ago, nome said:

http://www.thisismoney.co.uk/money/buytolet/article-5088689/Buy-let-lenders-relax-mortgage-rules-landlords.html

'Better known as a peer-to-peer investment platform, the lending side of the business is now offering buy-to-let mortgages in addition to short-term and development finance.'

Eyebrows raised .....

Im surprised they are not pricing the mortgage in bitcoins ....

Maybe, at the age of 45, Im an old fuddy duddy but Id not be happy taking out a mortgage from an operation from 2 kid + dog operation, operating from a bedroom.

Borrowing money from these challenger and, to me, challenged, financial companies - lets not call them bankls, as they are not, seems to be about as wise as looking for a wife using those postcard put in London phoneboxes *

* - a large metal building, with a mobile phone with a bit of wire attached to it.

Edited November 25, 2017 by spyguy

[Patient London FTB]

5 hours ago, Beary McBearface said:

A misleading article

Aye. I saw it earlier (not on HPC) and clicked through expecting to be enraged by lenders' duplicity, but it was a big ball of 'meh'. 

[SOLZHENITSYN]

BlueZest to offer 5.25% per annum fixed rate bonds. Proceeds to be used for lending to residential property investors.

question is, if the bonds yield 5.25% pa fixed rates, then surely the investors must be paying a premium to this, to loan the money? Much higher than current mortgage rates? Or am I not understanding this correctly?

 

https://www.property118.com/5-25-fixed-rate-secured-bonds/

[spyguy]

6 hours ago, SOLZHENITSYN said:

BlueZest to offer 5.25% per annum fixed rate bonds. Proceeds to be used for lending to residential property investors.

question is, if the bonds yield 5.25% pa fixed rates, then surely the investors must be paying a premium to this, to loan the money? Much higher than current mortgage rates? Or am I not understanding this correctly?

 

https://www.property118.com/5-25-fixed-rate-secured-bonds/

No, you understand it.

5.25% is the cost of the banks finance.

To that you have to add admin costs, defaults, regulation. And then an extra layer as this is a small op, so will have high costs for the amount of finance.

Anyone with any sense would be looking at the that yield and preparing for 8-9% borrowing costs.

 

[SOLZHENITSYN]

Thanks SpyGuy,

I’ll be honest, it just took me by surprise how high a yield that bond was compared to current lending costs for landlords. Especially when, as you say, you start to factor any kind of margin in for BlueZest. Way above current rates. 

”In the environment of subdued bank lending, we offer a compelling solution for borrowers, our ‘straight-through’ lending process uses innovative technologies and data which can deliver binding mortgage offers in 30 minutes”

First highlight gives a pretty good indication as to where BZ see the BTL mortgage market heading. Second highlight, I wonder if this 30mins includes portfolio landlords with 4+ properties? 

Seems BZ are putting it plain as day that they see mortgage availability drying up and rates rising significantly (certainly enough to support their 5.25% fixed bond yield). 

Now this post has had one reply so far over on PovertyL8R commenting on how good the yield is.....wonder how long until someone joins the dots?

[Bland Unsight]

21 hours ago, SOLZHENITSYN said:

Now this post has had one reply so far over on PovertyL8R commenting on how good the yield is.....wonder how long until someone joins the dots?

I advise against holding your breath.

[Pop321]

I am bearish as most on this forum....its just a question of timing. My Skipton mortgage fixed term is about to expire from 4.09% and I am offered 2.19% with £350 cash back (2.04% eq for 2 years). So once you allow for 20% tax relief that is around 1.6% borrowing....and it would be even cheaper for purchases. My savings are earning 1.5% so the cost is nominal. 

S24, higher rates feeding through and tightening criteria will stop the 118'ers with 'portfolio's' which in time will also be enough to drive out the BTL'ers from buying too. Just the effect we are seeing in my example may carry some 118'ers a little while longer....expansion though will be close to impossible for them.

To be fair my debt is 20% and I have the same in cash as I do in mortgages...but if I were paying £50k a month interest I wouldn't be sleeping at night?

[Ah-so]

On 30/11/2017 at 6:48 AM, spyguy said:

No, you understand it.

5.25% is the cost of the banks finance.

To that you have to add admin costs, defaults, regulation. And then an extra layer as this is a small op, so will have high costs for the amount of finance.

Anyone with any sense would be looking at the that yield and preparing for 8-9% borrowing costs.

 

While it is the cost of this bit of finance, it may only be a small portion of the total, so this may increase the average cost of funding a bit, but the overall average cost of funding the balance sheet liabilities is probably less than the mortgage cost. There is overall a positive net interest margin. 

So why might they be doing it? Two possible reasons spring to mind. 

One is that they are a bit short to fund a bit of some mortgages and have not secured the wholesale funding that they need to fund them. 

The other is that as an institution they are too reliant upon wholesale funding and are seeking to diversify into retail too so that there is a second channel open in an emergency. To have this funding channel they need to be a name in the market and have some bonds in issuance, even if they are a bit expensive. But in an emergency they could be used to raise some funding. 

[spyguy]

http://www.bluezest.com/borrow/buy-to-let/

BlueZest are not that big, so you (dont) pay your money and take your chances.

Maybe theyll last, maybe theyll not.

The APRs - 4%-5% - pretty much wipes out most ofl the IO BTL of the last 10 years.

 They say they offer individuals and LtdCos BTL, then only list LtdCo criteria:

- Maximum 4 Directors with all registered directors being party to the mortgage agreement

- All Directors must reside as a tax resident in the UK, and have done so for at least 3 years with indefinite leave to remain

- All Directors must have a traceable credit bureau record of 3 years or more

- All Directors must have held an active UK bank current account for at least 3 years

- No Director can have had any personal mortgage arrears in the last 12 months

- No Director can have any unspent criminal convictions other than for minor traffic offences

They might as well just say No P118er with that list.

[spyguy]

8 hours ago, Ah-so said:

While it is the cost of this bit of finance, it may only be a small portion of the total, so this may increase the average cost of funding a bit, but the overall average cost of funding the balance sheet liabilities is probably less than the mortgage cost. There is overall a positive net interest margin. 

So why might they be doing it? Two possible reasons spring to mind. 

One is that they are a bit short to fund a bit of some mortgages and have not secured the wholesale funding that they need to fund them. 

The other is that as an institution they are too reliant upon wholesale funding and are seeking to diversify into retail too so that there is a second channel open in an emergency. To have this funding channel they need to be a name in the market and have some bonds in issuance, even if they are a bit expensive. But in an emergency they could be used to raise some funding. 

All well and good.

But ....... they are just starting out, so we can assume the borrowing rates are a loss leader.

https://beta.companieshouse.gov.uk/company/10685117

Cant say if they are fly by night as we are only mid morning ...

 

[mrtickle]

5 hours ago, spyguy said:

http://www.bluezest.com/borrow/buy-to-let/

BlueZest are not that big, so you (dont) pay your money and take your chances.

Maybe theyll last, maybe theyll not.

[....]

They might as well just say No P118er with that list.

 haha, yes!

[Tapori]

http://www.yourmortgage.co.uk/buy-to-let/buy-let-mortgage-rates-rocket/

Buy-to-let mortgage rates rocket

0

Written by: Christina Hoghton

04/12/2017

The latest challenge for landlords comes in the form of higher mortgage rates

Buy-to-let mortgage rates have shot up in the last month, since the Bank of England hiked its Base Rate.

According to Moneyfacts, the average two-year tracker buy-to-let mortgage rate has risen by 0.20% to stand at 2.43% today.

The financial information provider said that 2017 has been a trying year for the buy-to-let mortgage market, which has been faced several regulation changes as well as rising rates.

Fixed rates rise too

Average two-year fixed buy-to-let rates have also risen from 2.89% to 2.93% in the last month.

Charlotte Nelson, finance expert at moneyfacts.co.uk, said: “Variable rates are designed to track Base Rate, so an increase to the two-year tracker rate is little surprise.

“However, not only has the average variable tracker rate increased, so too has the average two-year fixed rate, seeing rates bound upwards and nearing June 2017 levels with the highest monthly rise since April 2015.

“The criteria changes for portfolio landlords and the rising fixed and variable tracker rates will start to eat into the returns of landlords, making many consider whether buy-to-let is still the right option for them. With rates on the rise, it is important that buy-to-let landlords weigh up their options carefully.”

[Fletcher]

3 hours ago, Tapori said:

http://www.yourmortgage.co.uk/buy-to-let/buy-let-mortgage-rates-rocket/

Buy-to-let mortgage rates rocket

0

Written by: Christina Hoghton

04/12/2017

The latest challenge for landlords comes in the form of higher mortgage rates

Buy-to-let mortgage rates have shot up in the last month, since the Bank of England hiked its Base Rate.

According to Moneyfacts, the average two-year tracker buy-to-let mortgage rate has risen by 0.20% to stand at 2.43% today.

The financial information provider said that 2017 has been a trying year for the buy-to-let mortgage market, which has been faced several regulation changes as well as rising rates.

Fixed rates rise too

Average two-year fixed buy-to-let rates have also risen from 2.89% to 2.93% in the last month.

Charlotte Nelson, finance expert at moneyfacts.co.uk, said: “Variable rates are designed to track Base Rate, so an increase to the two-year tracker rate is little surprise.

“However, not only has the average variable tracker rate increased, so too has the average two-year fixed rate, seeing rates bound upwards and nearing June 2017 levels with the highest monthly rise since April 2015.

“The criteria changes for portfolio landlords and the rising fixed and variable tracker rates will start to eat into the returns of landlords, making many consider whether buy-to-let is still the right option for them. With rates on the rise, it is important that buy-to-let landlords weigh up their options carefully.”

Shot up?  Is a 0.2% rise from 2.23% to 2.43% really "shooting up"? Oh but wait..

"Average two-year fixed buy-to-let rates have also risen from 2.89% to 2.93%"

o_O

Let me know when it hits 5%.  But my guess is that that will never happen again. 

 

[Tapori]

4 hours ago, Fletcher said:

Shot up?  Is a 0.2% rise from 2.23% to 2.43% really "shooting up"? Oh but wait..

"Average two-year fixed buy-to-let rates have also risen from 2.89% to 2.93%"

o_O

Let me know when it hits 5%.  But my guess is that that will never happen again. 

 

Sorry, that was their headline. You could argue if this is perceived as  a rocket for them God knows how they're gonna take the inevitable whole number increase!

[Ah-so]

2 hours ago, Fletcher said:

Shot up?  Is a 0.2% rise from 2.23% to 2.43% really "shooting up"? Oh but wait..

"Average two-year fixed buy-to-let rates have also risen from 2.89% to 2.93%"

o_O

Let me know when it hits 5%.  But my guess is that that will never happen again. 

 

The increase in the tracker rate is actually a 9% increase in annual interest payments albeit from a low base. 

One thing is clear, with Basel changes coming down the line, BTL is definitely not going to get any cheaper. 

[TheCountOfNowhere]

3 hours ago, Fletcher said:

Shot up?  Is a 0.2% rise from 2.23% to 2.43%

 

0.2 of 2 = 10%

 

Did you get a 10% pay rise this year ?

[TheCountOfNowhere]

59 minutes ago, Ah-so said:

The increase in the tracker rate is actually a 9% increase in annual interest payments albeit from a low base. 

One thing is clear, with Basel changes coming down the line, BTL is definitely not going to get any cheaper. 

Rents Up Innit

[Pop321]

4 hours ago, Fletcher said:

Shot up?  Is a 0.2% rise from 2.23% to 2.43% really "shooting up"? Oh but wait..

"Average two-year fixed buy-to-let rates have also risen from 2.89% to 2.93%"

o_O

Let me know when it hits 5%.  But my guess is that that will never happen again. 

 

Have faith. TPTB will do everything to keep rates low.....but a new force awakens which will restore balance. (Been watching Star Wars trailers)  and joking apart....they won't be able to keep rates down forever. End of 2018 the creep will come - big falls 2019.  

1 hour ago, TheCountOfNowhere said:

Rents Up Innit

There are some tribes as yet undiscovered in the Amazonion rain first who knew someone would say this....and it's still funny ??

[Fletcher]

11 hours ago, Ah-so said:

The increase in the tracker rate is actually a 9% increase in annual interest payments albeit from a low base. 

One thing is clear, with Basel changes coming down the line, BTL is definitely not going to get any cheaper. 

I am not sure that this is true.  I just worked it out on a mortgage calculator:

2.23% on 100K is £435pm.

2.43 on 100K is £445pm.

That's on a repayment mortgage.  I used the MSE simple mortgage calculator at https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator

Did I make a mistake?  If I didn't, an extra tenner a month on 100K is, almost literally, peanuts. 

[Fletcher]

10 hours ago, TheCountOfNowhere said:

0.2 of 2 = 10%

 

Did you get a 10% pay rise this year ?

Please see my reply to ah-so. My calculations show that that's a tenner per month on a 100K repayment mortgage.  Perhaps my calculations are wrong. But if not, I stand by my original assessment. It's peanuts.  Not going to move even the flakiest needle.  

[Fletcher]

9 hours ago, Pop321 said:

Have faith. TPTB will do everything to keep rates low.....but a new force awakens which will restore balance. (Been watching Star Wars trailers)  and joking apart....they won't be able to keep rates down forever. End of 2018 the creep will come - big falls 2019.  

There are some tribes as yet undiscovered in the Amazonion rain first who knew someone would say this....and it's still funny ??

I think you are right: TPTB will indeed to everything to keep rates low, including debasing the currency.  Doing so would make the whole population pay (with a debased currency) to prevent property owners having to make distressed sales.  Yet another huge shift of wealth (actually, just a continuation of what we've seen since 2007). 

[LittlePig]

14 minutes ago, Fletcher said:

Please see my reply to ah-so. My calculations show that that's a tenner per month on a 100K repayment mortgage.  Perhaps my calculations are wrong. But if not, I stand by my original assessment. It's peanuts.  Not going to move even the flakiest needle.  

Repayment mortgages are not relevant to this thread.