80% Loan-to-value Buy-to-let mortgages are back

The Mortgage Works have launched a new range of buy-to-let mortgage products which include 80% loan-to-value products at very competitive rates.

This is very positive news for the buy-to-let sector as this is the first mainstream lender to offer 80% finance in over a year.

Highlights include;

  • 80% LTV, 4.69% until 31.07.2011, thereafter 4.99% (variable) 5.4% APR, 2.5% arrangement
  • 80% LTV, 5.69% until 31.07.2011, thereafter 4.99% (variable) 5.4% APR, 1.5% arrangement
  • 80% LTV, 5.99% until 31.07.2011, thereafter 4.99% (variable) 5.4% APR, £1,795 arrangement
  • 80% LTV, 5.49% until 31.01.2012, thereafter 4.99% (variable) 5.5% APR, 2.5% arrangement
  • 80% LTV, 5.99% until 31.07.2012, thereafter 4.99% (variable) 5.7% APR, 2.5% arrangement
  • 80% LTV, 5.99% until 31.07.2013, thereafter 4.99% (variable) 5.8% APR, 3% arrangement

Many of the brokers we speak to on a daily basis believe that other mainstream lenders such as BM and C&G will follow suit shortly and introduce an 80% LTV product to remain competitive.

*PLEASE NOTE: these are a guide and accurate as of 20/05/2010. Terms & conditions attached to the loans vary and for full information you should contact the Mortgage Works Direct or call the office and we will put you in touch with our recommended mortgage broker.

Finance Update From Mortgage BTL

Landlord confidence grows in buy-to-let market

A majority (64%) of UK landlords feel more confident about the buy-to-let market as 2010 begins, according to the latest rental confidence index from Upad. The figure represents a 6% increase from the same survey in December. (Mortgage Solutions 13/1)

Landlords enjoy a much healthier 2009

Landlords enjoyed a 7.6% annual return on their investments by the end of December 2009, according to the latest index from LSL Property Services. The value of their properties rose 3% in the year while rental income added a further 4.6%. This means in 2009, a typical landlord made a return of £12,740. By contrast, in 2008, a typical landlord would have lost 8.8% or £15,100. Arrears performed very well in 2009. On average 11.7% of rent was unpaid by the date it was due, down from 14.5% in 2008.
(Mortgage Solutions 15/1)


Fixed or Tracker Buy-to-let Mortgages for 2010?

Ah – the eternal investor’s dilemma is as relevant as ever. With the Bank of England (BoE) base rate steadily nailed at 0.5%, one would expect tracker mortgages to be hovering at 2- 3% and fixed rate ones around the 4% mark. Yet they’re not. At 75% loan-to-value, we struggle to get below 4.5% on trackers and 5 – 5.5% on fixed.  This makes for a tough call.

Going on a tracker produces a better cash-flow, but one vulnerable to rate hikes, which seem increasingly likely as we recover from the crisis. There certainly isn’t much leeway for further rate cuts…  For the sake of 0.5% or 1% difference, it is tempting to fix a rate, lock in a respectable return, and put our minds to rest.

Yet although we are soldiering our way up the road of recovery, interest rates are probably going to remain below 1% until the tail-end of the year, if not longer. The BoE is considering phasing out its some of its crisis policies such quantitative easing (i.e injecting money into the economy), but the requisite for low interest rates remains essential to revitalise consumption, business lending as well as the property sector.

So where does that leave us? It is obviously a matter of personal preference but we tend to recommend 1 year trackers around 4.3% at the moment as this is worthwhile as long as the base rate stays round 0.5-1% for the next 8 months or so. Even if it rises to say 1.5% towards the end of the year, the savings made on the repayments until then will more than compensate for the later ones, as the average yearly repayment is still lower than that of fixed rate mortgages. Another advantage is that going on a 1 year product avoids paying an early repayment charge (typically 2.5 – 5%) should you decide to sell or refinance in 2011.

Our conclusion is that for 1 year products, tracker rates at least 0.5% lower than fixed rates look like the more appealing proposition at present.

For investors wishing to sit on a property for over 18 months are probably better off fixing the rate to stabilise the cash-flow whilst plotting their next move.

Property Prices Continued to Rise in November

The latest Nationwide survey shows that house prices in the UK have risen for the seventh consecutive month.  The average value increased by 0.5% in November, surprising many observers as the pre-christmas period is usually sluggish for the property market. The latest figures reveal that the demand for housing is buoyant and considerably more resilient to macro-economic conditions than many experts intially thought.

Having been at forefront of the property industry, this reinforces Alpha Property Investment’s belief that movements in the housing market tend to be  the harbingers of the wider economic environment. Although the UK economy is still in a worrying state (notably in terms of unemployment , GDP growth, and a ballooning national debt),  the green shoots in the property market are indicative of a modest, yet sustained economic recovery.  Credit flows seem to be up-and-running again, thereby enabling mortgage lenders to ease their criteria and provide house-buyers with the financing facilities indispensable to maintain a healthy, wide-based demand in the property market. This could well be a self-reinforcing trend as lower interest loans helps consumers free up funds they can now spend on other goods and services, thereby spurring wider economic growth.

UK house prices 12-09

Increased competition induces reduction in mortgage interest rates

25th November 2009

According to Moneyfacts, the average interest on a 2 year fixed rate mortgage has fallen below 5%.  This is largely the result of the easing of inter-bank credit supply as well as revived competition between mortgage lenders as new (or returning) lenders come into the market. This is good news for borrowers as it is also leading to an easing of the general lending crieria attached to mortgages (e.g minimum income, arrangement fees, rental coverage…etc).