Are BTL mortgage s rates going up??

[vito]

I m not an expert but I have a BTL mortgage to renew in spring

just back from the pub with my mate and he is renewing now the BTL mortgage he has..

Both of us (although what happens these days with taxes and fees on BTL) were looking forward to renew our mortgages as we understood interest rates after brexit went down. So at least in last couple of months we had something to cheer up..

He is renewing his mortgage these days and met him at the pub after he had a phone conversation with his broker regarding his renewal..

I thought he would be in a party mood (finally after months of depression with brexit) but not! As soon as i saw him i understood he was in a bad mood but it took me less than a minute to understand he was in a really bad mood!

He says his monthly repayments (in his case interest only) are going up!!!!Broker still needs to look into things better but he (my friend) should expect to pay ?150/200 on top of what he s paying now..

I don t understand much about this things but how can it be????i thought the only "positive" of brexit was interest rate going down! I expected him (and myself) to pay less than before (but still more taxes fees etc etc)

On top of that He said he spoke with the same broker 4 weeks ago ca and he was reassured his monthly repayment will go down!!

Am i missing something? Is my mate gone mad? his broker gone mad? maybe something happened in the last few weeks that we are not aware..??

Pls help. He ll go for a meeting with his broker next week but i really would like to tell him something that make sense (positive might be too much to ask) over the week end.

He is really down ..and personally: I d love to understand that!

[TheArtfulDogger]

If you are in fixed rates then banks are currently betting Base rates will rise again soon hence why your mate may not be offered a good deal

Personally I can't understand why credit card rates appeared to go up when interest rates dropped or what makes a woman tick but both of those are pub conversations lol 😏🍸🍸🍸

[JohnL]

Looks like the banks don't want to offer BTL

http://www.theweek.co.uk/66688/buy-to-let-mortgages-pulled-at-fastest-rate-since-2009

and there seems more bad news around the corner.

If the pound falls sharply when TM invokes article 50 - at some point interest rates

need to go up to support the pound ... doesn't it - although that could be old school

economics

[vito]

Thanx!

Apparently also my friend was told "banks don t want to offer BTL.." why?

[malumbu]

Probably be helpful if they did go up and/or reduced availability.

First time buyers would then be a bigger influence on prices, rather than BTLs.

Prices would drop, demand for rented accommodation would drop as houses would be more affordable and we'd have a massive correction to the market.

Happy days or am I being simplistic.

[DovertheRoad]

Vito...you should be able to get ?250k for about ?650 per month BTL interest only at the moment with 40% equity plus. Of far greater impact if you have a decent sized BTL mortgage are the new tax rules coming into play from April and tapering in until 2020 where you lose the ability to deduct much of your mortgage interest from your profits.

Stamp duty for new BTL purchases will now also carry an extra 3%.

Over the next few years BTL is pretty much dead for amateur landlords IMO. Better investments to be had.

[Siduhe]

It likely depends on whether you are now classed as a "consumer buy to let" borrower following the implementation of MCOB in the UK. If you are, the banks have to include lots of new procedures and safeguards for you - more similar to a residential mortgage contract. Many of them prefer not to do that and to deal only with those who are classed as business buy to let borrowers.

[JohnL]

Siduhe Wrote:

-------------------------------------------------------

> It likely depends on whether you are now classed

> as a "consumer buy to let" borrower following the

> implementation of MCOB in the UK. If you are, the

> banks have to include lots of new procedures and

> safeguards for you - more similar to a residential

> mortgage contract. Many of them prefer not to do

> that and to deal only with those who are classed

> as business buy to let borrowers.

So would you be able to set-up a business (like IT contractors)

to run your BTLs then ?

[LondonMix]

You are being simplistic. Both house prices and rentals won't go down simultaneously unless nominal incomes drop dramtically and / or supply increases to meet demand. While there is still a supply and demand imbalance in the mainstream market, prices won't fall all else being equal. Getting rid of buy to let investors, will lower house prices but increase rents as its removing rental property from the market. A drop in house prices won't do much to shift total demand for rentals. All that happens is that people who were likely to buy this year anyway are able to buy for less or in a slightly better area etc.

malumbu Wrote:

-------------------------------------------------------

> Probably be helpful if they did go up and/or

> reduced availability.

>

> First time buyers would then be a bigger influence

> on prices, rather than BTLs.

>

> Prices would drop, demand for rented accommodation

> would drop as houses would be more affordable and

> we'd have a massive correction to the market.

>

> Happy days or am I being simplistic.

[DovertheRoad]

JohnL Wrote:

-------------------------------------------------------

> So would you be able to set-up a business (like IT

> contractors) to run your BTLs then ?

Absolutely. Just a Ltd co would odd the trick. There are tax advantages by incorporating a personal BTL business but you can't transfer in existing properties without incurring a CGT charge (as you'd be selling it to a company in effect). Also the BTL Ltd co would probably be charged commercial mortgage rates which are typically much higher than consumer BTL rates. It will be interesting to see how it unfolds.

Pass the After Eights will you Brian?

[Mick Mac]

DovertheRoad Wrote:

-------------------------------------------------------

>

> Over the next few years BTL is pretty much dead

> for amateur landlords IMO. Better investments to

> be had.

I agree - although if the London property market hadn't already had a 20 year bull run it might be different.