PRA regulated Buy to Let mortgage lenders implement minimum standards that firms should use to underwrite BTL loans.
- Stricter affordablity testing
- Special underwriting process for landlords with four or more mortgaged BTL properties.
Asking price growth slows to lowest rate in almost four years as housing market stalls
Rightmove’s index of asking price for properties found that the annual rate of growth was just 2.3%, the lowest since April 2013.
- Slowest rate of growth since February 2009
- Buyers are unable or unwilling to pay what sellers are asking
- Reasons include tighter lending criteria & Brexit uncertainty
West One Loans parent company continues growth strategy with acquisition by Exponent
Exponent intends to fund Enra's expansion into the specialist buy-to-let and second charge mortgage market, continuing to focus on products that meet the needs of underserved customers in a sector that is experiencing significant change.
Brexit Article 50 triggered
Britain is officially leaving the European Union after 44 years.
- Article 50 is the process for any country that wishes to exit the EU
- There are 2 years to reach an agreement
- The exit deal must be approved by a "qualified majority" of EU member states
Changes to personal tax relief for residential landlords
- Mortgage interest tax relief will gradually be cut back to 20% between 2017 and 2020
- Higher-rate taxpayers can no longer offset all their mortgage interest against rental income before calculating the tax due
- Higher rate taxpayers will no longer be able to offset mortgage interest payments against their rental income before making their final tax calculation
Buy-to-let product numbers for limited companies doubles
- Lenders pressured to react to changes in legislation and growing demand from landlords becoming limited companies
- Compared to the previous year, there were 133 BTL products for limited companies. This grew 135% to 313 BTL products available
- An average two-year fixed rate BTL mortgage for Ltd companies at 4.22% in May 2017, compared to the average two-year fixed rate for the rest of the market at 2.97%
Bank of England tells lenders to test affordability a new way
- This means a 3 percentage point increase in their current reversion rate, usually the standard variable rate
- In June 2017, the bank base rate was 0.25%
- The new rules push the average stress rate closer to 8%.
FCA reduces fees mortgage intermediaries must pay for 2017/18
Mortgage brokers and lenders will see their 2017/18 FCA fee fall 4.7%t
- A18 Fee Block; total bill for this category will fall from £18.2m to £16.3m
- A2 Fee Block; bill reduction from £18.6m to £16.6m
Help to Buy Equity Loan Scheme confirmed until 2021
The government announced its extended funding of the housing scheme largely aimed at first-time buyers
- Commitment of £10bn funding
- Estimates to help around 135,000 more people to buy homes by 2021
- 81% of home purchases using the scheme so far have been made by first-time buyers.
10 years on from UK credit crunch
PRA new rules for BTL portfolio landlords come into effect.
PRA regulated lenders will be forced to implement stricter underwriting processes on portfolio landlords
- Assessment of total portfolio for any landlord with 4 or more BTL properties
- Assessment of landlord’s income – both from portfolio and elsewhere
- Stricter affordability testing, including ensuring the 5.5% standard interest cover ratio, including recent tax changes and a stress test on interest rate rises
UK Inflation climbs to 3% and highest rate in five years
- Increased transport and food costs contributed to widespread increases in typical prices
- Increased pressure on BoE to raise interest rates
- On the plus side, annual state pension income to rise by £250
Bank of England Base Rate rises to 0.5%
- From its historic low of 0.25% to 0.5%
- Back to same level prior to August 2016
- First increase since July 2007
West One Loans releases Issue 29 of its Bridging Index
- Gross annual bridging lending reached a new high of £4.7bn in September, eclipsing the pre-Brexit £4.4bn high.
- Annual growth underpinned by strong Q3 performance while in the typically-quieter summer holiday months.
- Shift in market dynamic sees higher volume of smaller size transactions in recent months.