He also said they would have the tools to increase, and decrease, capital requirements for banks in order to control house price inflation/deflation.

The spectre of the 125% Northern Rock mortgages still looms large in government thinking, and by giving these potential powers to the Bank of England, they are going to make sure that excessive loan to values are not going to happen again.

So to all the first time buyers out there, the message is clear – raising a big enough deposit, to be able to access a competitive mortgage deal, is going to continue to be one of biggest problems for first-time buyers at the moment.

We’ve also just heard that  if you currently have a mortgage with the Bank of Ireland then you may be eligible to switch to a choice of buy to let mortgages with Godiva – only available to current Bank of Ireland mortgage holders.  Now we’re not saying these are the best buy to let mortgages available, in fact we never say that because it depends on a number of things, but if you need more information give us a call.

Woolwich, a mortgage arm of Barclays, have today unleashed some new buy to let mortgage products at 75% loan to value. Whether they are competitive or not is a different question, but having the might of Barclays behind buy to let is very, very good news for the stability of the market. Here’s the skinny:

High Street lender confirms renewed appetite in Buy To Let lending by increasing LTV from 60% to 75%

Woolwich 75% LTV

Interest rate: 4.39%
Product Detail: Fixed until 02/01/2014.
Arrangement Fee: £1,999
Early Redemption Penalties: 6 months interest until  02/01/2014.

Interest rate: 4.99%
Product Detail: Fixed until 02/01/2017.
Arrangement Fee: £1,999
Early Redemption Penalties: 6 months interest until  02/01/2017.
Our thoughts: A welcome addition to the 75% LTV market with flat arrangement fees.

Are we on the brink of another credit crunch?

Recession, don’t you mean? No. I specifically mean a squeeze in credit availability. There has been recent murmurs in the mortgage press about the possibility of another credit crunch. One of the reasons (apart from the unfolding Greek tragedy with no apparent Deus Ex Machina) is they have been watching the increasing gap between LIBOR (the inter bank lending rate) and the base rate.

LIBOR has been steadily increasing over the last couple of months. So, even when the base rate stays where it is, when LIBOR increases then it’s likely that the cost of mortgages will also increase.
You may also find lenders starting to withdraw their tracker deals, faced with an increasing LIBOR rate they do not want to be committed to lending to you at a set rate plus bank base rate. This has happened with some lenders already.

Is the 85% LTV buy to let mortgage on valuation really back?

There has been rumors abound of mythical hedge fund finance, Hotmail addresses promising 100% buy to let finance and all sorts of deals promised but many of these are simply hot air.

And I should know – I follow these developments like a hawk because if these deals were available I know you would want to know straight away, and I would tell you.

Now I do feel strongly about giving you my view on this because I know many of you are considering doing these schemes because we are all desperate for more flexible finance and you’ve been told that this is a solution.

So lets look at whats on offer and I’ll tell you my thoughts:

85% loan to valuation

Upfront application fees to a hedge fund 85% on valuation deals.

Well theres a few of these doing the rounds at the moment however they currently seem to be in two categories.

1. Some are charging decision in principle (DIP) fees of several hundred pounds. You pay your money upfront often to an introducer (not usually regulated) who sends it to a lender (but they wont tell you the lenders name – why is that?) and it can come back as a decline and you’ve lost your application fee.

So, my questions on these deals are:

1.1 Why cant you say the lenders name? What lender do you know that doesnt release its name when deciding to lend funds?
1.2 Who does the application fee go to?
1.3 Why is it upfont and non-refundable just for a DIP? What comfort do I have on this that you arent just making it up?
1.4 And sometimes, and I kid you not I’ve seen it – why have you got a hotmail address. Surely if you a reputable lender/broker you could afford
your own domain name!

RB Verdict: Stay clear of sending any money until you’ve found out who the lender is and what their refund policy is.

Massive Application fees on Private finance 85% on valuation deals.

2. Other deals entering the daylight are ones where decision in principles are free but to reserve the funds you have to pay huge (and I mean huge) application fees (20k plus VAT ouch!) and that is only the beginning. There are also fees per property as well.

Now may questions on these types of schemes are:

2.1 Why 20k, isnt that a tad excessive!
2.2 Can I pay the 20k on completion of my first mortgage
2.3 What is the name of the lender?
2.4 Is the introducer involved regulated and therefore liable for any advice given.

RB Verdict: Why is the application fee so excessive? What happens if every property you try to buy is turned down at application stage and then the funds are withdrawn, have you lost your 20k.

85% loan to purchase/70% loan to value

And finally you have the entrance of two bridging companies Tiuta & Drawbridge – who have entered the 85% buy to let mortgage world – albeit only if you buy under market value and
the loan to valuation isnt over 70%

Now these deals are transparent and you know who the lenders are. However they’re still not cheap! Initial rates are coming in at 6.99%/8.99% (and has 3% fees) however a decision in principle shouldnt cost you anything.

RB Verdict: Both lenders have a strong track record in lending and you can utilise the services of a reputable directly authorised broker like ‘resident broker’.

So now lets drop to:

80% loan to value.

Well there been a lender offering this for a while but its costs and product have put alot of people off.

You are looking at a rate of 6.49% with 130% rental cover based on a capital repayment basis.

RB Verdict: Difficult to get this to actually fit many properties with the type of rentla cover needed. If you can find the extra 5% and drop to 75% lending you will have more choice.

75% loan to value.

OK so we are in more familair territory now. There are a number of lenders at this level. And one of our favourites BM Solutions often has very competitve products available at this loan to value.

RB Verdict: At the moment this loan to value is where you need to be for standard buy to let mortgages. You can get 9 from BM SOlutions/C&G and lenders like Natwest will allow 10.

60 – 70% loan to value.

You will now have access to almost all the buy to lenders in the market.

There are lenders like Godiva mortgages that really do have some very low rate/arrangement fee products.

RB Verdict: It is at this level where you may benefit from remortgaging away from your existing lender to help you save money. Always check with an expert though as the devils in the detail and its not always about rate.

Buy To Let Mortgages – do we do ‘em?

Before I start on this week’s news I just wanted to confirm something.

I received an email last week from someone asking if we advise on buy to let mortgages. Now, I know this newsletter is jam-packed with salient information and crucial top-tips, but obviously one of the core messages has somehow fallen on stoney ground, as they say in the good book. So, just to make sure there is no doubt:

Resident Broker is an award winning mortgage brokerage that specialises in securing buy to let finance for the property investor and landlord.

You can call us from 8.30am to 5.30pm on 01424 205 373 or email us 24/7 and we will do our very utmost to help you find and re-organize finance for your investment properties. Indeed, our initial mortgage advice is always free and when it is time for us to submit a mortgage application on your behalf, we are always transparent about what fees are due.

In fact – some people have been known to call me up just for a chat! Anyway moving on…

Tenant enquiries jump by almost 50%.

Countrywide has seen a stark rise in the number of applicants registering to rent between January and March, with a 48% increase in the number of tenant enquiries. Well, if thats not good news to start the day with I’m not sure what is.

From personal experience I have a house in North London I rent out – 3 years ago it took me 2 to 3 weeks for it to finally rent. Last month, I let it on the first viewing withan additional increase in the monthly rent – no wonder I’m feeling chirpy. A sign of the times? Possibly.

Imagine having to remortgage this!

From 2011, lenders will have to find about £300bn to repay the government for the money it spot them via its emergency support schemes – the (snappily titled) special liquidity scheme and credit guarantee scheme – at the height of the banking crisis. As such, mortgage lending will continue to be rationed, the CML said.

And you thought you had problems raising capital. Flippancy aside, I think the key message is this:

If you are looking to remortgage and raise capital, now may well be the prudent time to arrangeit. As there is no guarantee the situation may me better next year. Even if you don’t need the money straight away, you can use techniques like offset mortgages to enable you to release the capital and not necessarily pay interest on it before you use it.

I received an email last week from someone asking if we advise on buy to let mortgages. Now, I know this newsletter is jam-packed with salient information and crucial top-tips, but obviously one of the core messages has somehow fallen on stoney ground, as they say in the good book. So, just to make sure there is no doubt:

Resident Broker is an award winning mortgage brokerage that specialises in securing buy to let finance for the property investor and landlord.

You can call us from 8.30am to 5.30pm on 01424 205 373 or email us 24/7 and we will do our very utmost to help you find and re-organize finance for your investment properties. Indeed, our initial mortgage advice is always free and when it is time for us to submit a mortgage application on your behalf, we are always transparent about what fees are due.

In fact – some people have been known to call me up just for a chat! Anyway moving on…

85% buy to let mortgage – on valuation

Is it a dream or is there really a way for investors to purchase properties for 85% of the valuation, regardless of the purchase price? It’s almost we’re back to the old days!

Now a number of these schemes have been around for a while now, and some have gone and new ones introduced, but none yet have delivered on their promises.

The latest one doing the rounds wants huge upfront fees (up to £20,000) in order for you to secure 85% finance on property valuation. However, the upfront fees are payable before you buy your first property.

Now, I’m not judging whether this is scheme is good or not (as I haven’t used it) but all I want to say is – be careful. If you are truly tempted, do your own due diligence and if any money has to change hands, why not put it in an escrow account so if you need a refund then it will be easier?
We are keeping our eye on this product very carefully and if it is all it seems then we will get involved promoting it, but at the moment we are standing back and waiting for proof – and I strongly suggest you do the same. If there was a honest, proven and legal method of obtaining 85% buy to let finance, then you dear readers would be the first to know. OK, I know; rant over!

Marketwatch

It’s been a great week for rate cuts. On the residential side we have had Abbey and Woolwich and on the buy to let mortgage side Godiva.
I know I may sound like a broken record ,but if you are on you lenders standard variable rate (SVR) then give us a call right now, we may be able to save you money, and how’s that for service.

The impact of such a move shouldn’t make too much of a difference from a mortgage advice point of view, (here at Resident Broker we treat buy to let mortgages in a similar way to regulated mortgages anyway), however it may have connotations from a lending point of view – after all if the concept of affordability is passed onto buy to let mortgages then it may tighten the amount lenders are prepared to lend to any one person. Better get those buy to let mortgages in quick then!
On the subject of the Financial Services Authority, I also read this week that the FSA will have to demonstrate its value to the National Audit Office next year -  the FSA’s current budget stands at a cool £437m a year. We have the greatest of respect for our regulatory masters and therefore have no comment to make.

And finally Kensington has today announced it is back in the market. Even though it will be a small re-entry, it is a good sign that the lender has managed to secure funds and is tentatively dipping their proverbial toe in the post-nuclear financial pond. Lets hope more will follow.

He muses, “Regulators see lenders and intermediaries as the sweetshop owners – or worse, the drug-dealers at the school gates of the mortgage market, enticing innocent consumers in and then getting them hooked, for their own evil profit-driven purposes.”

I just wanted to assure you that in no way, shape or form do I see myself as a sweetshop owner.

The commission has demanded a break up of both the Royal Bank of Scotland and the Lloyds Group – RBS is to sell off 318 branches, while Lloyds will dispose of more than 600 branches over the next four years.

Northern Rock was also told by the commission last week that it must not appear in the top three of the mortgage best buy tables until the end of 2011. These requirements don’t come into force until next year, however since the ‘relaunch’ of Northern Rock mortgages, they really have been very competitive in the market (see best buys below) so it really will be a case of snapping up these deals whilst they are still available.
One way round it, of course, is that most best buy mortgage tables don’t include broker exclusive deals. Mind you, as discerning and intelligent readers that you already knew that and more importantly you knew that there’s no substitute for tailored, specialist advice from your resident broker!

Darling (no, not you, I’m talking about our Chancellor) has said that the break up could result in three new high street banks over the next three to four years. For example, Lloyds is understood to be looking to sell off TSB Scotland, Cheltenham & Gloucester and Intelligent Finance. Importantly, the banks assets will only be sold to new entrants in the mortgage market to help boost competition.

Darling tells us, half a dozen big providers was not acceptable. For once, we agree.

Still, to mix my metaphors, with every silver lining theres a dose of reality. The latest data from the Bank of England has revealed that major lenders are expecting to increase mortgage fees in the coming months, to compensate for a reduction in spreads. Or, to take another view, because they can.

What does this mean? Well, it will probably effect the residential mortgage market the most, as lenders will be looking to reduce their rates as the market gets more competitive but may well be countering these rates with higher fees.
At the moment though, we are seeing (almost on a weekly basis) a reduction in residential mortgage rates, and if you have a low loan to value with provable income, then there are some very competitive rates about. For lifetime trackers rates, they start from 2.79% (free legals and valuation, £995 fee) to 5 year fixed rates from 4.99%. Worth considering for the Tip of the Week 1 below.