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Commercial Mortgages & Buy to Let Mortgages
Trends in Buy to Let
11th September 2003
Trend 1: Opinions diverge about where property values are heading. Last Quarter we discussed the increased focus of residential investors on properties outside the South-East. Since then both Nationwide and CML (Council of Mortgage Lenders) have reported increases in house prices across all regions. In contrast, the Financial Times is warning that property price increases are slowing
What It Means to You: Increases in rental income will slow - and possibly fall as increases in property value slow
Trend 2: Fewer first time buyers. High property prices are forcing more young people to continue to rent.
What It Means to You: Rents for properties appealing to those unable to get onto the property ladder may be more stable.
Trend 3: Fixed-term interest rates are beginning to rise. Fluctuation in the money markets has meant the withdrawal of some of the lowest fixed rates.
What It Means to You:Variable rate mortgage payments may also rise. Investors with significant variable rate mortgages should consider refinancing at fixed interest rates to ensure that any increase in mortgage payments is capped.
Trends in Commercial Mortgages
Trend 1: Investment yields have fallen. Whereas last year many commercial investment properties were purchased with a return of 7-10% on the rent, we are currently seeing properties purchased at 4.5-5% within both top and bottom segments of the market.
What It Means to You: Competition amongst buyers of quality commercial properties is now more competitive.
Trend 2: Emergence of interest only mortgages for commercial investment properties.
What It Means to You: Lower mortgage payments as the mortgages do not require any repayment of principal.
New Buy to Let Mortgage Providers
Over the last quarter we have continued to add partners in order to make our mortgage panel as wide as possible:
Barclays - A high street name that you will recognise and which has strengths in both owner-occupier and investment properties
Royal Bank of Scotland- A new lender with interesting products for investors requiring SIPP/SASS pension facilities
Commercial First - A new commercial mortgage entrant specialising in "non-status" lending. This allows more options for companies who lack a long or consistent record of profitability.
We will continue to add new lenders to the Marketplace to help you find the right commercial mortgage solution.
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