Buy to Let Market Update:
2021 has been a crazy year for property prices with values moving around significantly in the post Covid world. But what is the latest in the market. We have tried to sumarise some of the key changes that we have seen that you should be aware off as we move into 2022. House price growth slowed at the start of 2022, rising by just 0.3% in January. This is the smallest monthly increase since June 2021. This followed four consecutive months of gains above 1%, and with annual growth remaining at 9.7%, the average UK house price was little changed, edging up slightly to a new record high of £276,759.
Overall average prices remain around £24,000 up on this time last year, and £37,000 higher than two years ago. Following the peak activity of 2021, transaction volumes are returning to more normal levels. Affordability remains at historically low levels as house price rises continue to outstrip earnings growth.
Latest Bank of England figures show the number of mortgages approved to finance house purchases rose in December 2021, by 5% to 71,015. Year-on-year the December figure was 30% below December 2020. (Source: Bank of England, seasonally-adjusted figures)
So what does this mean for the 2022 property market:
These statistics indicate that the property market is continuing to boom but I think it’s fair to say that we can expect values to stabilise over the coming months. Or perhaps even start to fall slightly with the government considering options to slow the rate of inflation in the UK. With the cost of living going up, many people will find themselves struggling to afford the increasing house prices and simple supply and demand market forces could mean less buyer demand which in turn, leads to house prices falling.
Recent increases in the base rate has pushed up slightly the borrowing rates on offer but forced many lenders to introduce new incentives and longer fixed term products to fight for landlord business. Some interesting new product terms and criteria are listed below:
The Mortgage Works – has introduced a new 10-year fixed buy-to-let mortgage with certain products rates changing by around 0.20% and added no-fee options to their range
Accord Mortgages – has launched a range of 5-year fixed products with no early repayment charges from day one. Rates start from 2.39%.
Kent Reliance – has launched new criteria as well as improved pricing across their entire buy to let products. Fixed rates now start from 2.49% and they have also introduced a zero-lender fee 5-year fixed rate for loan sizes up to £500,000. They have also removed their maximum loan size up to 85% Loan to Value (LTV).
Barclays Bank – has brought out a green home buy-to-let (BTL) mortgage range for new and existing landlords that gives lower interest rates for those who buy energy efficient new builds. The products are available for new-build purchases that have an energy efficiency rating of 81 or above, or are in energy performance certificate (EPC) bands A or B. It includes a 2-year fixed rate at 1.64% at 75% Loan to Value (LTV), and a 5-year fix at the same tier with a rate of 1.87%. Both come with a £1,295 lender fee.
Paragon Bank – has introduced five brand new buy-to-let remortgage only products within their portfolio range. At 65% and 75% Loan to Value, these products start from 2.77% and offer free mortgage valuations, no application fees and a range of cashback options.
HSBC – has reduced rates across a number of their Buy to Let product for both 2- and 5-year fixed rates and for Loan to Values up to 75%.
Metro Bank – has increased the maximum loan size for its buy-to-let (BTL) products and made some changes to its criteria. The maximum loan size for its 75% Loan to Value BTL mortgages has gone from £750,000 to £2m. As well as this, the lender is also accepting ex-local authority flats and properties with thatched roofs on its applications.