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Demand for regulated bridging loans leads to further market growth

May 29, 2024May 29, 2024 interestratesinfo

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Demand for bridging loans continues to be buoyant, with £196.2m transactions in the first quarter of 2024, according to contributors to the Bridging Trends data.

Overall gross lending was up 0.4% when compared to the last three months of 2023. The most significant increase was in demand for bridging loans for business funding. These proportion of loans for this purpose almost doubled from 8% in Q4 2023, to 15% in Q1 2024 — the highest it has been since Q4 2021.

The most common reason for arranging a bridging loan was to purchase an investment asset, accounting for 21% of loans in the quarter. This was down from 24% in Q4 2023.

However there was an increase in bridging finance to prevent a chain break in the property market. This was the second most popular purpose for obtaining bridging finance over the quarter, rising to 19% from 16% in the previous quarter.

With conveyancing delays leading to protracted home purchase transactions and the potential for a greater number of broken chains, more homeowners are turning to bridging to secure the home they want to buy.

Mortgage Rates 29 May 2024

May 29, 2024May 29, 2024 interestratesinfo

The Bank of England held its Bank Rate at 5.25% in May, as was widely expected. It’s the sixth time in a row the Rate has been frozen since it rose to its current level in August last year.

The Rate had previously undergone 14 consecutive rises (between December 2021, when it stood at just 0.1%, and last August). The next interest rate announcement will be on 20 June 2024.

The plateau in interest rate rises has been made possible by continued cooling inflation. The Office for National Statistics shows that inflation tumbled from 3.2% in March to 2.3% in April. As recently as last September, the figure was 6.7%.

Experts reckoned that continued falls in the rate at which prices are rising will prompt the Bank of England to cut its Bank Rate – which helps determine mortgage rates – possibly as soon as June when the next decision is announced by its Monetary Policy Committee (MPC), or in August at the following meeting.

The next inflation figure will be announced on 19 June with the latest Bank Rate figure coming out the following day. But the significant fall in April’s inflation rate has already prompted lenders to make cuts to mortgage costs.

HSBC slashes mortgage rates on 140 products in boon for homeowners – full list of changes

May 21, 2024May 21, 2024 interestratesinfo

HSBC is among the major banks and building societies in the UK cutting mortgage rates in a boon for homeowners and prospective homebuyers.

The bank is making changes to around 140 mortgage products with rate cuts of up to 0.18 per cent.

Here is full list of the changes to mortgage rates being implemented by HSBC, as of today:

New Business residential rates cut by 0.04 per cent to 0.18 per cent
Buy-to-Let (BTL) new business rates cut by between 0.04 per cent and 0.14 per cent
Residential Switchers, customers who already have a mortgage with HSBC UK and are getting a new fixed interest rate, are seeing cuts by up to 0.11 per cent.

New mortgage deal launched for foreign nationals working in the UK

May 21, 2024May 21, 2024 interestratesinfo

A building society has launched a new mortgage deal designed for foreign nationals and expats returning from overseas.

Many people moving to the UK are shocked to learn they cannot get a mortgage on arrival, instead they have to overcome multiple hurdles put in place by lenders.

Most providers want foreign nationals to have been in the UK for at least two years and have built up a good credit file in the country, in order to demonstrate they can manage payments responsibly.

To combat these obstacles, Nottingham Building Society is offering a new mortgage deal where there is no minimum time of residency required in the UK.

There is also no minimum time remaining on a visa as borrowers are often required to have at least one year remaining on their documents. It will also require no minimum income and no UK credit history as it can access overseas credit files from 13 different countries.

Electrical Safety Inspections (installations and appliances)

May 21, 2024May 21, 2024 interestratesinfo

The Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020 came into force on 1 June 2020 and apply to all tenancies created on or after that date in England from 1 July 2020.

These new regulations require landlords to have the electrical installations in their properties inspected at least every 5 years and tested by a person who is qualified and competent. Landlords will also have to provide a copy of the electrical safety report to their tenants as well as to the local authority if requested.

For most landlords in the private rented sector this will not require a change in behaviour. The majority of landlords already check their installations regularly so they can provide the safest homes possible. However to ensure every landlord can comply with these regulations, NAPIT have produced the following guidance on the requirements.

Landlords selling up leaving 2,000 households a month in England facing homelessness

May 21, 2024May 21, 2024 interestratesinfo

More than 2,000 households a month are facing homelessness in England because private landlords say they are selling up, with some blaming uncertainty caused by government delays to renting reforms.

Official figures show that more than four in 10 families who have asked councils for temporary housing after a private landlord ended their tenancy are in the predicament because the owner told them they were putting the property on the market.

Meanwhile, almost a third of landlords plan to reduce their rental portfolios and only 9% say they likely to grow them, a survey by the National Residential Landlords Association (NRLA) found. Stubbornly high interest rates are another key cause of sales, the association said.

Recent data showed that the number of children living in temporary accommodation in England had hit 145,800, a record high and up 12% in a year. The homelessness charity Riverside said this was evidence of a “humanitarian crisis unfolding behind closed doors in towns and cities across England”.

‘Blame the Government, not us, for rising rents’ says landlord peer

May 21, 2024May 21, 2024 interestratesinfo

Rising rents and lack of supply in the privately rented sector (PRS) are the result of long-term failure in government housing policy and is not landlords’ fault, peers were told during the Renters Reform Bill second reading last night.

Lord Truscott (main image) who has been a landlord for 30 years, said it was unfair to blame the current housing crisis on landlords when the government had repeatedly failed to meet their housing targets of 300,000 new homes per year.

Although the PRS had survived during buoyant times, it was now in serious trouble. “Landlords are being seriously squeezed,” he said.

“Some 1.7 million landlords have buy-to-let mortgages, and some face a tripling or quadrupling of their mortgage interest because of interest rate hikes.

“Capital values are so high, and rentals so relatively low, that the return on capital, even without a mortgage, is less than 2%. With tax and voids, a landlord may end up paying a tenant to rent from them in parts of the country.”

Landlords Make Radical Mortgage Changes to Ease Rising Costs

May 21, 2024May 21, 2024 interestratesinfo

Many buy to let landlords have made financial changes during the cost of living crisis to mitigate the rising costs of operating private rental units, including renegotiating mortgage finance, increasing rent or selling property.

That’s the claim in the latest Landlord Trends report, carried out by Pegasus Insight for Foundation Home Loans.

Landlords were asked to identify the changes they had made over the past 18 months: 30% said they had renegotiated their mortgage with their existing lender; 29% had increased rents; 25% had cancelled plans to purchase additional units; 22% had remortgaged to another lender; 15% had paid part of their monthly mortgage payment from savings or other non-rental sources; and 15% said they had sold a property to reduce outgoings.

One in six landlords now carry out more property management themselves in order to cut costs, while 8% had stopped using letting agents completely.

The research, comprised of 774 online interviews with landlords, was undertaken between March and April this year.

My mortgage was declined because the home isn’t in a ‘saleable’ area: What can I do?

May 21, 2024May 21, 2024 interestratesinfo

I’m a first-time buyer and hope to get on the property ladder this year.

I had an offer accepted on a flat in one of the cheaper areas of Greater Manchester. It is within easy commuting distance from the city centre where I work, and being sold at a price I can afford. I paid a £2,000 fee to reserve the apartment.

The property is an off-plan new build due to complete in three months, so I didn’t think there would be any issues. Neither did my mortgage broker who provided an agreement in principle.

However, the mortgage valuation has now come back stating there is ‘a lack of/no owner occupiers living in the immediate area’ and that it is ‘not in a saleable location.’ The application has therefore been declined.

My broker said they could try again with a different lender, but that the application would be at the mercy of the next valuer’s comments, which could say the same.

Does this mean no lender will offer me a mortgage? Could I lose my £2,000 reservation fee? Would it be unwise to proceed anyway, in case future buyers face the same issue and I am unable to sell the flat in future?

‘I had no choice but to get a 35-year mortgage’

May 21, 2024May 21, 2024 interestratesinfo

Young homebuyers are facing huge challenges when it comes to getting on – and staying on – the housing ladder.

Nicola Webb, a 34-year-old nurse, felt she had little choice but to opt for an ultra-long mortgage when purchasing her first home last year.

It’s set to end when she is 68, but she says stretching out the repayments is “the only way I can just about afford my mortgage as a single homeowner”.

“I’ve not known lower mortgage rates so I just accept what it is.”

Despite the fact that she managed to save a chunky deposit for her £147,000 two-bedroom flat in Gloucestershire, Nicola’s five-year fixed rate mortgage costs £598 a month – about a third of her monthly wages after tax and student loan deductions.

Once her student loan is paid off – or eventually written off – she hopes to reduce the length of her mortgage term from 35 years, or look at using any extra disposable income to overpay it.

She says she’s grateful she has been able to get on the housing ladder at all. While mortgage costs take up a large part of her income, she thinks it is still cheaper than renting in her local area.