Plenty to be positive about in buy-to-let
Bob Young is managing director of CHL Mortgages
The buy-to-let sector has been a happier place than the wider mortgage market this year, but the cheer could be about to spread as we head towards the season of goodwill.
After a relatively inauspicious start, the Funding for Lending scheme seems to be gathering momentum with the number of participants more than doubling to 30 in October, including a whole host of building societies who are keen to take advantage of the subsidised funding on offer.
While big banks have shied away from lending this year, many mutuals have maintained a healthy appetite so a further funding injection could well see competition hotting up as temperatures chill.
Even before the Treasury bills filter through, building societies seem to be leading the way at the moment in terms of buy-to-let rate rivalry.
As I write this blog, National Counties Building Society has just launched an extremely competitive fixed rate while the likes of Leeds, Ipswich, Skipton and Market Harborough building societies have all recently sharpened their buy-to-let ranges.
Factor in the likes of Accord Mortgages, Virgin Money and Aldermore refreshing their propositions and landlords have a fair amount of product choice at the minute which hasn’t always been the case in the past few years.
In addition to existing lenders jostling for position, there are a number of new entrants looking to get their piece of the private rental sector pie.
Cambridge & Counties Bank, the institution part-owned by the esteemed university is the latest to try its hand at buy-to-let and joins a number of other new arrivals keen to service the demand from property investors.
Although such operations are only likely to be able to carve out small niches initially, it is encouraging that they are opening their doors at all given the economic climate and that they are willing to take the fight to the big banks.
Indeed, a renewed sense of competition may be one of the best things to come out of the global financial crisis as new institutions look to challenge the traditional status quo, mindful that many consumers and intermediaries have long memories and haven’t forgotten the way some lenders acted in the past.
On top of the buy-to-let sector regaining its competitive edge, further good news came in the shape of Paragon’s securitisation.
This shows that buyer interest in residential mortgage-backed securities is returning and provides hope that lenders will again be able to generate their own lines of funding in addition to the government-backed scheme available.
All things considered then, there is plenty to be positive about at the moment and a number of mortgage market pundits seem bullish about what the future holds.
It’s still too early to declare that we are definitively out of the woods yet, but there is certainly a rosier outlook than there has been for some time.
You know the mood must be softening when the FSA’s latest missive in the form of the MMR final rules drew so few brickbats, so maybe the light at the end of the tunnel is about to come into view.