Brian Murphy - Head of Lending at MAB
In today’s highly competitive market, mortgage lenders change their rates, products and fees on a regular basis. They do this partly because they are required to do so through regulatory changes, such as new European directives, or changes by our own government or regulatory body: the Financial Conduct Authority (FCA).
They also make changes to mortgage finance based on how the economy is performing and whether it is easy or difficult to acquire funding.
These changing circumstances mean buy-to-let mortgage deals are reviewed and altered on a regular basis, making it essential to keep up to date.
The biggest change since 2014
Since 2014, the buy-to-let mortgage market has been influenced by many changes. The biggest was the introduction of increased regulation through the Mortgage Market Review (MMR) in July last year. This was a new directive by the FCA who believed that prior to 2007, “while the mortgage market had worked well for many people, it had been a cause of severe hardship for others” and that consumers had not been as well protected as they could have been from “high-risk lending and borrowing.”
Positive effect on buy-to-let
From a buy-to-let perspective, this initiative has actually had a positive effect because MMR has made it more difficult for lenders to lend on the basis of a borrower’s affordability. This in turn has made it harder for people to borrow, so they are more likely to continue renting. As buy-to-let finance isn’t affected by these tougher rules, lenders are keen to work with landlords and with this perspective; they often reduce rates or develop new products for you to choose from.
Falling mortgage rates
In addition to regulatory changes, we have also seen mortgage rates falling, allowing the opportunity for those who can remortgage to reduce their costs. Moneyfacts.co.uk show that the average variable rates fell from 3.99% in August 2014 to 3.6% a year later and average fixed-rates fell from 4.29% to 3.8%, meaning if you were able to re-finance at these levels, your buy-to-let mortgage costs could fall by 10% and 11% respectively.
Greater choice of products
Along with these more competitive rates, more products have become available, with Moneyfacts.co.uk showing that “the number of products on the market hit a seven-year high of 1,000” this year, which is worth investigating as some may suit your needs better than the loan(s) you currently have.
With new lenders looking to enter the growing Buy-to-Let market we are seeing more niche products being developed. For example, if you found it difficult to finance Houses in Multiple Occupation, property development or secure funding if self-employed, changes in the last year may mean financing is much easier.
Is it time to review your mortgage finance?
So due to the regular changes in the Buy-to-Let finance market, if you haven’t reviewed your mortgage(s) since last year, now might be a good time to do so.
For further information call 0330 2210 200 or click here.
You may have to pay an early repayment charge to your existing lender if you re-mortgage.
There is no guarantee that it will be possible to arrange continuous letting of the property, nor that rental income will be sufficient to meet the cost of the mortgage.
Your property may be repossessed if you do not keep up repayments on your mortgage.
There will be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1 per cent but a typical fee is 0.3 per cent of the amount borrowed.