The Panic is Over! ??

Good morning! Steve here!

Buy to Let (BTL) and interest rates have been a hot topic of late.

With the carnage that came out of the mini budget back in September and lender’s interest rates flying up, there was a lot of panic in the market as we had gone from seeing lender rates at 2% and 3% to suddenly 5% and 6%.

BTL was especially concerning as the markets had a base rate of 6% - 6.5% priced in for the peak of 2023.

Traders and economists had 8% - 10% predicted for where BTL rates were heading into next year.

Stress tests became more stringent and lots of applications suddenly cancelled as people panicked over affordability and not achieving what they expected.

I myself have a property portfolio, most of which was on base trackers, happily making profits and suddenly like many of you, faced with the dilemma of, do I ride it out? Fix for 2 years or fix for 5 years?

In the end, I left some on trackers and put some on either 2-year or 5-year fixed rates.

Fortunately, I managed to secure rates that were on the right side of okay.

I’m really pleased to report that we have been seeing many lenders now bring their rates back down.

This is because the base rate predictions have fallen and swap rates (the price at which lenders borrow money) reduced.

One of the largest BTL lenders has reduced some of its fixed rates by up to 0.95%. There is even a 1-year fixed rate at 3.89%. Normally most of us would sidestep a 1-year product, however, with inflation already showing signs of easing, this might not be a bad strategy. Fix for 1 year while rates have gone up and renew on a longer term fix next year when we might even see the base rate falling again. Not a bad shout when you think about it...

I have stated previously that banks have to get funds out of the door. They can’t just sit on their hands and not lend money. That’s not how the system works. They are very creative when they need to be. Because BTL mortgages differ in size and there are regional differences in yields (the rental income achieved as a percentage of property value), it makes sense to offer products with lower rates and higher fees (some fixed fees and some percentage fees). Also, some products have higher rates and either low or no product fees.

When you keep coming into emails from another lender lowering rates and seeing competition come back between the banks, you know the market is in a better place.

Then seeing a comment from one of Directors who heads up the landlord division which I’ve copied below, gives us all more confidence as we approach the end of the year.

“Greater?market stability?and a downward trend in swap rates means we’re able to make further reductions to our buy-to-let mortgage range and continue to support landlords looking to manage their finances through fixed rates”

Reach out to the team here?and book in a call to speak to one of our specialist advisors who can search the market for you and review your needs in no time!

Here’s to a solid end to 2022 and a successful year in property as we attack 2023!

All the best,

Steve

Express Mortgages is a trade name of Express Mortgage Services Ltd. Express Mortgage Services Ltd is authorised and regulated by the Financial Conduct Authority. [Reg No: 474427] Company registered in England & Wales no. 05167662

Your home may be repossessed if you do not keep up repayments on your mortgage. Some types of Buy to Let mortgages are not regulated by the FCA.?