Base Rate moves upwards and we see fixed rates surge
The prompt increase in the interest rate kicked landlord’s into a buy to let remortgage phase. The interest rate rise led to ‘fixed rate buy to let mortgages’ deals accounting for well over 75% of all mortgages arranged in January 2007. Compared to the 2006 average this was an increase of 66%. The increase follows a period in which fixed rates had becoming more expensive in relation to buy to let tracker mortgages for a number of months.
Our landlords who have arranged fixed rate buy to let mortgages have made a shrewd decision. There is every chance of further rate rises in 2007 but this all depends on how the figures in the high street bank look over the coming months. In anticipation swap rates are very expensive at the moment.
Remortgaging your buy to let property onto the best buy to let mortgages will be a move in the right direction.
Buy To Let Growth
The growth of the buy to let market has seen property investment by individuals who historically would have owned only their primary residence. The lack of experience of certain investors in this sector has resulted in many underestimating the effect that having no tenant in the property, even for a short period, has on cash flow so resulting in an arrears situation. In multi property portfolios we are increasingly witnessing scenarios where the rent is being paid to the borrower on some properties but not being applied to the mortgage on that particular buy to let property.
Examples of problems buy to let mortgage companies are coming across on buy-to-lets are:-
Confirming the property to be secured by mortgage had vacant possession at the time the mortgage was granted.
Ensuring that prescribed assured shorthold tenancy agreements are created which specifically confirm that if the mortgage falls into arrears, then the tenants right to occupation (as against the lender) is automatically terminated.
