"Since our return to lending we’re seeing growing interest from landlords looking to both refinance and add to their portfolios."
As doors are starting to open across a number of workplaces, big decisions are being made on how a variety of businesses will function going forward.
The impact of remote workforces and people working from home has been widely dissected, but I wonder how this has changed from week 1 to week 12 of the lockdown? Has the novelty worn off, or will this imposed period of working from home change operational outlooks for good?
From a personal perspective, I have largely enjoyed the freedom attached to working remotely. Maybe this is down to the type of commute I have and my previous experience of working for myself. From talking to people within Foundation Home Loans, some are itching to return to an office environment and others have adapted well to homeworking conditions which allow more flexibility but lesser personal interaction. As a company we have to think long and hard about how the business will operate moving forward, and the words flexibility and adaptability will have a major bearing on any decision.
The importance of these words is not restricted to a specialist lender. They apply to businesses across many sectors and also to landlords in terms of managing their portfolios. Like all areas of the mortgage market, the buy-to-let landscape has changed in recent weeks and it will continue to be impacted. Short-term holiday lets have obviously been hit but things are starting to change. Similarly, student accommodation is an area of concern for any landlord with portfolios containing a high proportion of these property types. Having said this, opportunities are continuing to present themselves for landlords.
Since our return to lending we’re seeing growing interest from landlords looking to both refinance and add to their portfolios. Slow but steady growth is also evident when it comes to the number of available buy-to-let products and we are seeing some rate reductions at higher LTV levels. According to the latest research from Moneyfacts, there are 280 more buy-to-let products available than there were at the start of May 2020. The product choice at 75% LTV is reported to have increased by 46 two-year fixed rate deals and 54 additional products are available in the five-year fixed rate bracket. The picture at 80% LTV is similar, with this traditionally smaller sector increasing by 26 two-year fixed rate products and 20 more options available for those seeking a five-year fixed rate over the month.
Average interest rates on fixed buy-to-let mortgages have risen slightly for two and five-year fixed rates overall, likely due to the increase in the number of products that these averages are based on. However, there is cause for celebration for landlords who have only a 20% deposit available, as rates on both two and five-year fixed rate buy-to-let products at 80% LTV have reduced, by 0.49% and 0.67% respectively.
Like many lenders, we re-entered the buy-to-let market cautiously but are now in a position to up our maximum LTV levels, cut some of our product pricing, broaden our criteria and introduce new products which we believe provide a greater degree of flexibility for landlords whose circumstances may well change over the next 12 months.
There is that word flexibility again, and this is important as we still can’t be sure of how wider economic conditions and market trends will affect landlord borrowers over the course of 2020 or what the longer-term future will hold. And this is where more flexible product ranges – incorporating features such as no ERCs - will allow landlords to adapt quickly should things change, or additional opportunities arise. Building a specialist lending proposition in this transitional period remains a difficult task but the greater choice, flexibility and adaptability we can offer through our products, criteria and underwriting, the stronger the buy-to-let sector will emerge.