Buy-To-Let Mortgage Rates Fall Again

[Bruce Banner]

My wife uses AOL as her homepage......... this popped up today .

http://money.aol.co.uk/2016/09/19/buy-to-let-mortgage-rates-fall-again/?icid=maing-grid7%7Cmain5%7Cdl1%7Csec1_lnk2%26pLid%3D1151972114_uk

[CunningPlan]

If you've got a 2 year fix at 2.14% with a 2% fee, surely you have just got a 3.14% loan.

Except that - I guess the fee is wholly deductible against the rent, whereas the interest soon won't be. When will we see the first 2 year fix with a 0.1% rate and a 6% fee?

[GreenDevil]

Except that - I guess the fee is wholly deductible against the rent, whereas the interest soon won't be. When will we see the first 2 year fix with a 0.1% rate and a 6% fee?

Too FunnY...

[Neverwhere]

If you've got a 2 year fix at 2.14% with a 2% fee, surely you have just got a 3.14% loan.

Except that - I guess the fee is wholly deductible against the rent, whereas the interest soon won't be. When will we see the first 2 year fix with a 0.1% rate and a 6% fee?

HM Treasury appear to have forseen this trick as Section 24 actually removes the tax deductibility of all BTL finance costs, including fees as well as interest, and restricts relief to the basic rate of Income Tax:

This measure will restrict relief for finance costs on residential properties to the basic rate of Income Tax. This will be introduced gradually from 6 April 2017.

Finance costs includes mortgage interest, interest on loans to buy furnishings and fees incurred when taking out or repaying mortgages or loans. No relief is available for capital repayments of a mortgage or loan.

Source

[CunningPlan]

HM Treasury appear to have forseen this trick as Section 24 actually removes the tax deductibility of all BTL finance costs, including fees as well as interest, and restricts relief to the basic rate of Income Tax:

Source

My flabber is ghasted - someone at HMRC has a brain!

[righttoleech]

Some good news.

[jiltedjen]

Rates dropping for BTL is proof of the BTL market dieing a death. They were the only mugs borrowing and now they had all more or less stopped. Who will the banks lend to now? They are fighting over the last of the greater fools.

the gov have stopped the BTL bubble dead when it was just about to reach a blow off top.

the unrealistic sellers will find they are competing with 10 years worth of BTL unloading over the next two years.

not a lot we can do now but wait for it to unfold and keep saving.

[frederico]

Wait,. aol still exists and someone still uses their homepage, or have I misunderstood?

[Eddie_George]

Pretty criminal when you think that student loans are being charged at 4.6% and credit cards are often 20%+

I guess those rates price in the default rate in the former, and high levels of fraud in the latter.

[jfk]

Wait,. aol still exists and someone still uses their homepage, or have I misunderstood?

That was the most amazing thing about that post ...

[spyguy]

I guess those rates price in the default rate in the former, and high levels of fraud in the latter.

I see you're not up to speed with IO BTL.....

IO BTL needs to be charged at a similar rate as credit cards.

[eek]

I guess those rates price in the default rate in the former, and high levels of fraud in the latter.

Nope the former is the last desperate attempt to make the idea of self funded universities viable (I believe any recent survey would show that it's cheaper for government to pay universities directly) and the latter is due to wonga style profiting on those who don't repay or move balances

Keeping it on topic borrow to let loans are stupidly low but I think the lenders have no choice as there is no-one else left that they can lend to. Basel and affordability tests alongside insane prices have left btl mortgages the only expanding market left in town

Edited September 20, 2016 by eek

[Bruce Banner]

Wait,. aol still exists and someone still uses their homepage, or have I misunderstood?

She's a creature of habit, she only changed to AOL when they absorbed Compuserve and changed her email account from Compuserve to AOL. But why would anyone who is completely non technical think to do otherwise?

[eek]

She's a creature of habit, she only changed to AOL when they absorbed Compuserve and changed her email account from Compuserve to AOL. But why would anyone who is completely non technical think to do otherwise?

Yesterday we discovered an acquaintance (formerly an mp) had an aol account for the exact same reason. I then checked and my old the wall account still works so I definitely can't talk

[TheCountOfNowhere]

Carney's grand economic plan in action.

[Bruce Banner]

Yesterday we discovered an acquaintance (formerly an mp) had an aol account for the exact same reason. I then checked and my old the wall account still works so I definitely can't talk

I'm sure there are many more legacy AOL users than the Internet savvy members here would think. Don't dismiss AOL articles as an irrelevance.

[Pop321]

Nope the former is the last desperate attempt to make the idea of self funded universities viable (I believe any recent survey would show that it's cheaper for government to pay universities directly) and the latter is due to wonga style profiting on those who don't repay or move balances

Keeping it on topic borrow to let loans are stupidly low but I think the lenders have no choice as there is no-one else left that they can lend to. Basel and affordability tests alongside insane prices have left btl mortgages the only expanding market left in town

So the worry here is that rates will continue to decrease as banks fight for dwindling business. Will that allow refinance deals for the Borrow to Letters? Hope not.

Ps I still have a freeserve email account (taken over by Orange....only when I bought an old iPhone a while ago did I start a gmail account.

[Ah-so]

Wait,. aol still exists and someone still uses their homepage, or have I misunderstood?

According to Altavista, this is very common.

[Bland Unsight]

BM Solutions have dropped the rate on the no fee 2 year fix 75% LTV mortgage from 3.19% in July to 2.94% on the September product guide.

It's f**king bonkers.

Please go back to talking about old search engines and ISPs because that was making me smile, whereas the rates on 75% LTV interest-only buy-to-let mortgage is not making me smile to the same extent.

[zugzwang]

Interest rates on typical mortgages could fall below 1pc in the coming months in an unprecedented boost for home buyers, according to analysts at Bernstein Research.

Support from the Bank of England's interest rate cut combined with perceptions that the market is relatively low risk, as well as increasingly levels of competition, mean that banks are slashing mortgage prices.

The market is already very cheap, with a typical two-year fixed 75pc loan-to-value (LTV) mortgage costing just 1.66pc, according to the Bank of England.

Berstein’s study indicates that a similar 80pc LTV loan could cost just 1.1pc in the near future, with costs falling below that for borrowers in a stronger position.

“If you have 20-30pc cash and have a good credit profile, we reckon that the day where you will be able to actually bargain out a sub-1pc mortgage in this market is not too far off,” said analyst Chirantan Barua.

“The most important driver to funding costs in the UK is the Bank of England base rate and the market's future expectations of rate rises as expressed in the yield curve and the swaps market. The BoE has cut rates post-Brexit to 25bps and has signalled their willingness to do so again as a weapon against any post-Brexit recessionary trend.”

On a £200,000 loan a 0.5 percentage point fall in the interest rate translates to a monthly saving of almost £50.

The low cost of funding also represents a record low rate of interest for savers, who will receive next to nothing on their deposit accounts.

http://www.telegraph.co.uk/business/2016/09/20/home-buyers-set-to-enjoy-mortgage-rates-below-1pc/