TBMC, the buy-to-let and commercial mortgage specialist, has published its Landlord Profile Tracking Index for Q2 2013. The index tracks developments in the UK buy-to-let mortgage market.
The index found that the average rate for mortgage offers dropped by 0.33 percentage points. Q2 2013 saw increased competition between lenders and a selection of sub-3.00% products being offered by The Mortgage Works, Santander, Principality, Mortgage Trust and Hinckley & Rugby Building Society. The average fixed rate for offers processed by TBMC in Q2 2013 was 4.15% (down from 4.48% in Q1) and the average variable rate was 4.35% (down from 4.68%). This represents a drop of 0.33% for both product types.
Andy Young (pictured), chief executive of TBMC, said fixed rates were more popular variable rates.
He said: “Since the beginning of the year average fixed rates (for TBMC offers) have been lower than variable rates with attractive rates available across all LTV bandings. These fixed rate deals have been very popular with landlords and 53% of offers received by TBMC during Q2 2013 were for fixed rates (up from 44% in Q1).
“The sustained fall in fixed rates over the last six months may be attributed to the impact of low swap rates and UK fiscal measures. However, the significant increase in swaps at the end of June may affect this trend over the rest of the year, with some industry pundits asserting that fixed rates may have bottomed out.”
TBMC found that as the appetite to lend in the buy-to-let market has increased so has the average loan-to-value for mortgage offers it received. Young said: “This is due to the excellent range of buy-to-let mortgage deals now available at 75% LTV and above, making up almost half (49%) of the total product offering at TBMC.
“Higher LTVs enable landlords to employ a higher gearing in their residential property investments and clearly many are opting to do so. During Q2 2013 the average LTV for buy-to-let mortgage offers at TBMC was 73.91%.”
Young added that the remortgage market in good shape. He said: “With such a wide choice of competitive products, many landlords are seizing the opportunity to remortgage existing properties to release equity, possibly to fund further purchases. During Q2 2013, 49% of applications received by TBMC were for remortgage products. A number of lenders including Mortgage Trust, Skipton Building Society, Leeds Building Society and Godiva, have excellent deals available specifically for remortgages, which include incentives such as a free valuation and free legals.”
He added: “The buy-to-let mortgage market continued to perform well during the second quarter of this year with a wide choice of lenders and products for brokers and their landlord clients to choose from. For landlords, now is an excellent time to invest in private rental properties, with average rental yields at over 6%, and this sector of the mortgage market provides an excellent opportunity for brokers to increase their revenue.“
