Friday, Jan 23, 2009
The latest spin on BTL lending
Citywire: Buy-to-let lending not doing as badly as the rest
Buy-to-let lending volumes held up better those for the housing market in general, the City regulator reported today, although it said that this changed in the third quarter of last year.The Financial Services Authority (FSA), which pulls together figures from all regulated lenders, said that new lending in general showed continuous weakening, having declined by 59% since its peak in the third quarter of 2007. On the other hand, it said lending for buy-to-let had been ‘more stable’, accounting for 11 to 12% of overall residential lending since the second quarter of 2007 even though actual volumes were in decline over the same period.
Posted by jack c @ 09:45 AM (512 views) Add Comment
7 Comments
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1. str 2007 said...
Hi Jack
I'm sure from the coal face you can fill us in on the actual data.
To me this article says that BTL Landlords are re-mortgaging onto cheaper rate deals - nothing more.
It does not say 'new' BTL mortgages are being taken out for 'new' purchases to portfolios.
2. str 2007 said...
GUYS & GALS
I think it was S2R1 the other day mentioned 23rd January as being a day when something could happen.
Have you seen what's happening to sterling.
Gold is already up 5% against Sterling this morning and it's falling against Euro and dollar quite steeply.
Maybe early morning trading, but this looks pretty ominous to me.
Sorry off topic for this thread.
3. mark wadsworth said...
This ties in with str's first comment - how much of this is 'reluctant landlords' who refuse to drop selling price, how much is BTLers desperately remortgaging? Are there really any people mad enough to buy new BTL properties?
4. jack c said...
str 2007/MW - I havent had a chance to really crunch the numbers but I simply see traditional residential mortgage lending having slumped faster than that of BTL lending and hence the spin on the higher BTL % of overall lending.
One thing I am now finding is that property investors are returning to the market to snap up properties at auction on which they reckon they can get a 15% yield. As most of you know I'm 275 miles north of London so this might not be representative of the whole of the UK. See following link to evidence what I'm talking about www.auctionhouse.uk.net/ but more specifically www.auctionhouse.uk.net/saramains/auctions_new1.asp
5. str 2007 said...
Quick excercise
160k flat at auction for say 100k.
Rental value £700 per month
£25k deposit
£75k mortgage
2.5% arrangement fee = £2k
Solicitors, 1 year mngmnt charge etc £2.5k
+ tenant finder fee £500.
So £30k down in total.
£75k Interest Only mortgage at 5% = £312 per month.
Rental at £600 per month
£600 per month - £312 per month = £288 per month x 11 months = £3128.
Roughly 10% return on Capital invested by my calcs. Assuming rents etc are sorted direct and no internal maintenance issues with said property.
But certainly 5% return looks quite feasable, 10% with a bit of luck, 15% optimistic, but I'm no expert.
Interesting to see Jack that your witnessing activity.
I recall you said the other day that there was a problem with re-mortgaging (colleague had 40 cases on his desk and find for any of them - perhaps these were domestic not BTL.
Surely though with regard to BTL taking an average portfolio at 66%LTV giving 34% equity at peak. Based on Haliwide peak to date falls of circa 20% that leaves the average BTL portfolio with 14% equity.
Not enough I'd have thought to re-mortgage onto these cheaper deals or am I missing something ?
How are the lenders viewing new applications from Investors ?
Certainly a better return than Bank deposits.
6. str 2007 said...
Oops
last sentence should have appeared further up and also I downgraded my initial rent of £700 p/m to £600 p/m to take account of current conditions.
7. jack c said...
@str 2007 - I'm going out of the office for the rest of the day - if this post is superceded by lot's of others I'll send you a reply direct offline - the 40 cases you refer to were all BTL mortgages and non of them were ever placed ! but BTL on an auction property ie distressed sale is a different proposition.