Market update (early June 2020)

With relaxation of the coronavirus lockdown, we have seen the housing market reawaken with surveyors and estate agents going back to work.

Financing choices for buy-to-let mortgages that weren’t available during the lockdown period, are now improving.

June 2020 has seen a greater choice buy-to-let mortgage products coming on the market compared to the few months prior to this. HM Treasury Report analysis reveal there are some 280 more mortgage products available in June compared with May this year, although this is natural to happen with the easing of lockdown restrictions with valuers being able to conduct physical valuations again.

Although buy-to-let mortgage interest rates have increased slightly over the past month 0.08% for 2 year and 0.09% for 5 year Fixed rate, there are many lenders still offering competitive deals.

Landlords will be pleased to learn that 2 year and 5 year fixed interest rates for 80% Loan-to-value buy-to-let mortgages has dropped compared to March 2020, 0.49% for 2 year and 0.67% for 5 year Fixed rates.

Further good news for landlords who had difficulty letting their property during the Coronavirus “lockdown”, a Rightmove survey at the end of May 2020 saw a 33% increase in demand from tenants searching for property to rent compared to the same period last year.

It would be worth noting that although the number of products have risen in the market, the lending criteria, particularly with specialist buy-to-let lenders such as Kent Reliance and Precise Mortgages are still not completely how they were pre-Covid-19.

For example Kent Reliance and Leeds Building Society as of today are still temporarily not lending on HMO properties. Precise are also not accepting the “top-slicing” method for buy-to-let affordability at this current time. The latter is the allowance of personal income to support the borrowing amount if there is a shortfall in the required loan amount from the standard rental stress test.

Most lenders are still not ready for LTV’s as high as 80%, when it was interesting to see how popular these were becoming before the lockdown. Some mainstream lenders such as Skipton Building Society remain to cap their LTV’s to 70%.

A reminder that this is not reflective of every buy-to-let lender. Landbay, Godiva Mortgages and Nottingham Building Society have re-introduced back their 75% LTV products recently for both personal and Limited Company SPV buy-to-let.

For those seeking to capitalise on re-mortgaging or expanding their buy-to-let portfolio, there are currently over 1700 buy-to-let mortgages on the market, inclusive of both fixed and variable type rates. Finding a suitable buy-to-let mortgage is not straightforward as every lender has their own lending criteria with mortgages targeted at different borrowers. With us at Mortgage Advance, you'd have the advantage of obtaining advice of an experienced, established mortgage broker specialising in the sector which can save a lot of time and trouble in this uncertain time.