AFI enters buy-to-let market

Yuan Phoon

December 12, 2011

Both deals come with a £1,495 fee and rental cover of 125% or above is required, calculated on an interest only basis. The minimum purchase price is £100,000.

Borrowers must be employed earning over £25,000 basic per annum aged between 21 and 70.

Applicants must already have a residential or buy-to-let mortgage and can only hold up to three secured loan commitments in total at application including a residential mortgage.

A maximum of two buy-to-let loans with AFI is permitted.

Houses in multiple occupancy are not eligible.

Phil Cliff, director of retail assets for Abbey for Intermediaries, said: “The buy-to-let market has seen strong growth throughout 2011 as demand for quality rented accommodation in the private sector continues to rise. Interest rates remain low and rental yields are at their highest level for some time.

“We are delighted to be able to support the intermediary market with the launch of our buy-to-let offering for non-professional landlords.

“The range is designed to meet the needs of new or small volume landlords adding a first or second buy-to-let investment property and we expect to see strong interest from intermediaries and their clients.”

Mortgage Introducer first revealed on 5 December that the long awaited launch of AFI in the buy-to-let sector would occur within the following weeks.

Santander’s launch into buy-to-let had been rumoured for over a year but reports suggested technical glitches delayed an April launch until October and then December.

Nigel Stockton, financial services director at Countrywide, said: “To have a major lender enter the sector in time for the New Year is great news for investors as it will create greater competition amongst mortgage lenders and drive much more competitive mortgage products to the market.”

He added that in a market currently dominated by two lenders, BM Solutions and The Mortgage Works, with over 80% market share, Abbey will need to ensure its lending criteria is competitive in order to make any significant impact.

He said: “There has been a marked increase in the availability of competitively priced buy-to-let mortgages over the past six months which has helped to make property investment an increasingly attractive option. “

Countrywide expects the volume of activity in the buy-to-let market to have increased by 20% year-on-year and lending to have risen above £12bn.

Stockton added: “The rental market has been one of the big winners in 2011 as demand for rental properties has reached record levels and we have also seen an increase in the number of new landlords entering the market, up by 23% over the last three months, with the growth in the rental market likely to continue well into 2012.”

Lea Karasavvas, managing director of Prolific Mortgage Finance, said: “It’s encouraging to see another major lender enter the buy-to-let space with a very respectable flat fee at £1,495.

“The rates themselves are not headliners however most of us never expected them to be as Santander did say that their offering would be quite a safe offering. These deals do however seem particularly safe.

“What is refreshing however is to see 75% buy-to-let products again with a flat fee. This should make other lenders srand up and take notice.

“I do look forward to when AFI does eventually become more aggressive and I suspect that will come in the middle of 2012.”

Ying Tan, managing director of The Buy-to-Let Business, said: “This is obviously a momentum occasion with a major player entering the buy-to-let that can challenge Lloyds Banking Group and Nationwide.

“The criteria for the products look tight but it seems to be a soft launch to make sure the quality of business is there first before they widen up to the rest of the market.

“Not being able to lend to landlords with three or more properties will alienate a lot of landlords however it is clear that AFI will be targeting a specific section of the market.

“As a business we look forward to developing a relationship with AFI over the next few months.”

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