Landlords around the UK have received a major boost with the launch of a new wave of products by The Mortgage Works, including a sub-4.5% 5-year fixed rate purchase and remortgage product up to 55% LTV with a 3% fee.
Brokers welcomed the news, which follows data published by UK Finance last week showing that the number of buy-to-let mortgages in arrears was 29% higher during the third quarter of 2023 compared to the previous quarter.
According to Bob Singh, founder of Uxbridge-based Chess Mortgages: “TMW has really set the pace in buy-to-let with blistering rate reductions accompanied by reasonable fees. This move sets the tone for things to come in the wake of expectations for interest rates in 2024. Other lenders will be sure to follow.”
Craig Fish, director at London-based broker, Lodestone Mortgages & Protection, said buy-to-let is back: “TMW have well and truly started the Christmas party. A 2-year fixed rate at 4.34% blows even residential rates out of the water. This is a real statement and landlords up and down the country will be celebrating. And just like that, buy-to-let is back.”
Katy Eatenton, mortgage and protection specialist at Lifetime Wealth Management, said the cuts would be gratefully received: “Any rate reductions in the beleaguered buy-to-let market will be gratefully received. It’s great to see sub-5% rates with lower percentage fees. This will be a shot across the bows to other buy-to-let lenders as it is only TMW, Virgin and BM Solutions who seem to be trying to help landlords at present.”
Rowan Frayling, managing director at J Finance Ltd, said: “This move will breathe more life into the buy-to-let market, and it’s great that the fees aren’t as extravagant as some have been lately. Nationwide and TMW thankfully appear to be attempting to ‘build society’ again.”
Ben Tadd, director at Lucra Mortgages said the products won’t be right for everyone but eclipse the competition: “Whilst these new deals won’t be right for everyone, given the high fees involved, TMW has set a much-needed precedent in the buy-to-let market by introducing by far market-leading rates, easily eclipsing the nearest rate offerings from other providers in both the 2- and 5-year fixed rate space. This could well be the impetus the market needs and the start of a fierce mini-rate war in the buy-to-let market, with lenders jostling to gain market share and meet their lending targets.”
Justin Moy, managing director at EHF Mortgages, agreed with Tadd: “The Mortgage Works are showing their near-Christmas generosity with these excellent mortgage options. The 5-year deals are ideal for landlords looking to maximise their borrowing against their rental income, and will probably take the headlines, but with 2-year deals edging towards the 4% line, other buy-to-let lenders need to play catchup quickly to stay in the hunt for new business.”
Rohit Kohli, director at The Mortgage Stop, added: “These rate reductions from The Mortgage Works could be the sign that many buy-to-let investors were waiting for that, namely it’s time to start buying again. Yes, the product fees on some of these products are eye-watering but for the shrewd investor, these new rates could make buy-to-let viable again.”
While welcoming the rates, Stephen Perkins, managing director at Norwich-based broker, Yellow Brick Mortgages, said landlords should seek independent advice as the rates are more expensive than they initially appear: “Finally some good news for landlords. However, with the 3% fees on these products and 2% on just a 1-year fix, these rates are more expensive than they initially appear and landlords should ensure they receive independent mortgage advice on their most suitable options.”
Lewis Shaw, director at Mansfield-based broker, Shaw Financial Services, sang the praises of TMW but said many landlords will still be heading for the exit: “TMW, the bastion of buy-to-let, is rolling out the red carpet for struggling landlords who will welcome these rate reductions with open arms. However, it’s unlikely to stem the flow of landlords calling it a day.”
Meanwhile, Elliott Culley, director at Switch Mortgage Finance, said he would like to see affordability and stress testing improvements: “Rate reductions are always welcome, however it would be good to see TMW make some positive changes with their affordability calculations. Making amendments to their stress testing for higher rate tax payers looking to remortgage with no additional borrowing would be very beneficial to landlords in this current market.”
But Imran Hussain, director at Harmony Financial Services, was upbeat: “The Mortgage Works have just chucked everything including the kitchen sink into making buy-to-let deals work for the market. Let’s hope this injects some life into a sector that has been lifeless since Trussonomics.”
