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Increasing competition in BTL sector

Nia Williams

October 19, 2010

TBMC’s Landlord Profile Tracking Index for Q3 2010 highlight several positive signs for the sector, including:

• An increase in both loan size and loan-to-value for mortgage offers obtained during the period

• A narrowing price gap between fixed rates and trackers, meaning that fixed rates are proving popular amongst landlords

• Demand for remortgages continuing to increase

Andy Young, chief executive at TBMC commented: “It is encouraging to have seen the steady increase in loan size over the last three quarters with the average buy-to-let mortgage now over 30% higher than it was during the final two quarters of 2009.

“This reflects the gradual recovery of property prices and the availability of some higher loan-to-value buy-to-let products in the mortgage market. The average loan-to-value is also creeping up slowly and was 66.13% in quarter three compared with 64.23% during quarter one.

“Over the last year we have seen a steady lowering in the price of the average fixed rate buy-to-let mortgage being offered. For mortgages offered in quarter three this year via TBMC, the average fixed rate was 4.71% compared with 5.24% in the final quarter of 2009. However, tracker rates have started to increase since the beginning of the year (4.15% in Q1 2010) and the average tracker rate offered in quarter three this year was 4.45%.

“As the pricing of trackers and fixed rates have converged we have, unsuprisingly, seen a rise in popularity of fixed rates and in the third quarter there were more fixed rate mortgages offered (55%) via TBMC than there were trackers (45%).

“For the fourth quarter in succession we have seen an increase in the percentage of applications received for remortgages compared to purchases, with an almost even split in quarter three this year. 48% of applications were for remortgages compared with 52% for purchases.

“This may reflect increasing competition in the market as new lenders have entered the market and established lenders like Paragon have re-emerged, resulting in more attractive buy-to-let products for existing landlords.”

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