Uninformed Media Comment about Bradford & Bingley could kill off many would-be landlords says David Lawrenson of Lettingfocus.com
Who would have imagined that a large proportion of the UK’s landlords would end up with their properties ultimately owned by the Government?
This came about as a result of the State taking over Bradford & Bingley’s mortgage book - of which the Mortgage Express was the buy to let specialist (and for a long time the biggest buy to let lender in Britain.)
The fall from grace of Bradford & Bingley is a shame because for a long time Mortgage Express was the only player who really understood buy to let mortgages. They even had truly radical things like a customer mag containing useful tips for landlords and call centre staff who even knew stuff like what a tenancy deposit scheme was.
So, they were streets ahead of their mates at the other high street banks and building societies whose staff could not tell you anything much beyond what their interest rates were.
I even wrote for the Mortgage Express mag myself too on quite a few occasions so I do have soft spot for them.
Where it all went wrong was really on the funding side.
Bradford & Bingley were, like many other banks, in that they were a bit reckless in the way they sought funding from the money markets. They also made things worse when they bought some duff mortgage books from other players.
There is another story too about B&B too and which the press has missed out on. This was the way that Mortgage Express must surely have picked up quite a lot of poor buy to let mortgages by being “the last lender standing” in the curious “remortgage off the back of bridging loan finance” market. Click here to see my post at the beginning of June for more on this: Did Mortgage Express Catch a Cold on Same Day or Next Day Remortgages
MEDIA NONSENSE
The great thing is that this is all being melted down in the media and the spewed out as “How Awful Buy to Let Is as An Investment” – with struggling landlords and high arrears being well to the fore.
Er, not true actually – Ordinary residential mortgages have worse arrears than buy to let mortgages and many pro landlords have done very well and continue to make a lot of money.
But the way some in the media have reported B&B’s fall will put off the novice investor from getting involved in buy to let thus leaving the way open over the next two years for professional landlords with access to finance to gobble up more residential property at fire sale prices.
The “pro landlords” will not seek to correct the misreporting in the press – they will want novice investors to stay out of the way.
However, mortgage borrowing even for the pro landlords has just got a whole lot tougher because I don’t expect the government will be dishing out attractive re-mortgage terms at the newly nationalised banks.
The really smart landlords will be those who followed my advice and went for lifetime trackers two or more years ago – trackers tied to Bank of England base rates for life.
They are laughing all the way to the bank - and the best bit is, the banks must hate them.
Unfortunately, Mortgage Express never really did lifetime base rate trackers so pretty well anyone who has a buy to let loan with them will probably have to shop around for a new Buy to Let Mortgage when their mortgage deals expire and will almost certainly have to re-mortgage onto higher rates from the dwindling pool of lenders. That is going to hurt many landlords.
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the property experts.
I’m the author of “Successful Property Letting - How to Make Money in Buy to Let” which for the last 3 years has been the UK’s top selling property title - Buy Successful Property Letting - How to Make Money in Buy to Let. The new edition is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on buying property below market value.
I’m an expert property journalist, property speaker and a well known buy to let blogger
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general property investment advice
My works as a consultant helps private individuals with any aspect of property investing or buy to let. What’s unique about lettingfocus.com is that we are independent landlords mentors because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from any of these sources.
We give one to one unbiased advice and are often asked to evaluate other property investments.
In my corportate consulting role, I also help banks, building societies, housing associations and web portals with their buy to let and property products and services.
You can read more of my blog & find details of my networking, advice, property training programme at my website.Copyright: David Lawrenson 2008. This blog is updated once a week.
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Our home blog page should then open & you should then see my smiling profile. Then page all the way down and on the bottom right it will say “Site feed” - click there and away you go.
You then just copy the link that comes up into your News Reader or News Aggregator. Even a non techie like me managed to do all this.
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This came about as a result of the State taking over Bradford & Bingley’s mortgage book - of which the Mortgage Express was the buy to let specialist (and for a long time the biggest buy to let lender in Britain.)
The fall from grace of Bradford & Bingley is a shame because for a long time Mortgage Express was the only player who really understood buy to let mortgages. They even had truly radical things like a customer mag containing useful tips for landlords and call centre staff who even knew stuff like what a tenancy deposit scheme was.
So, they were streets ahead of their mates at the other high street banks and building societies whose staff could not tell you anything much beyond what their interest rates were.
I even wrote for the Mortgage Express mag myself too on quite a few occasions so I do have soft spot for them.
Where it all went wrong was really on the funding side.
Bradford & Bingley were, like many other banks, in that they were a bit reckless in the way they sought funding from the money markets. They also made things worse when they bought some duff mortgage books from other players.
There is another story too about B&B too and which the press has missed out on. This was the way that Mortgage Express must surely have picked up quite a lot of poor buy to let mortgages by being “the last lender standing” in the curious “remortgage off the back of bridging loan finance” market. Click here to see my post at the beginning of June for more on this: Did Mortgage Express Catch a Cold on Same Day or Next Day Remortgages
MEDIA NONSENSE
The great thing is that this is all being melted down in the media and the spewed out as “How Awful Buy to Let Is as An Investment” – with struggling landlords and high arrears being well to the fore.
Er, not true actually – Ordinary residential mortgages have worse arrears than buy to let mortgages and many pro landlords have done very well and continue to make a lot of money.
But the way some in the media have reported B&B’s fall will put off the novice investor from getting involved in buy to let thus leaving the way open over the next two years for professional landlords with access to finance to gobble up more residential property at fire sale prices.
The “pro landlords” will not seek to correct the misreporting in the press – they will want novice investors to stay out of the way.
However, mortgage borrowing even for the pro landlords has just got a whole lot tougher because I don’t expect the government will be dishing out attractive re-mortgage terms at the newly nationalised banks.
The really smart landlords will be those who followed my advice and went for lifetime trackers two or more years ago – trackers tied to Bank of England base rates for life.
They are laughing all the way to the bank - and the best bit is, the banks must hate them.
Unfortunately, Mortgage Express never really did lifetime base rate trackers so pretty well anyone who has a buy to let loan with them will probably have to shop around for a new Buy to Let Mortgage when their mortgage deals expire and will almost certainly have to re-mortgage onto higher rates from the dwindling pool of lenders. That is going to hurt many landlords.
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the property experts.
I’m the author of “Successful Property Letting - How to Make Money in Buy to Let” which for the last 3 years has been the UK’s top selling property title - Buy Successful Property Letting - How to Make Money in Buy to Let. The new edition is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on buying property below market value.
I’m an expert property journalist, property speaker and a well known buy to let blogger
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general property investment advice
My works as a consultant helps private individuals with any aspect of property investing or buy to let. What’s unique about lettingfocus.com is that we are independent landlords mentors because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from any of these sources.
We give one to one unbiased advice and are often asked to evaluate other property investments.
In my corportate consulting role, I also help banks, building societies, housing associations and web portals with their buy to let and property products and services.
You can read more of my blog & find details of my networking, advice, property training programme at my website.Copyright: David Lawrenson 2008. This blog is updated once a week.
WANT TO BE KEPT UPDATED WITH OUR LATEST BLOGS?
It’s easy.
Go to the bottom of this post, and click on “Link to this post”
Our home blog page should then open & you should then see my smiling profile. Then page all the way down and on the bottom right it will say “Site feed” - click there and away you go.
You then just copy the link that comes up into your News Reader or News Aggregator. Even a non techie like me managed to do all this.
Please note if you are thinking of reproducing material here - that’s fine but we DO require the full links shown in each blog to be included including also the links in the section “ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON” Please contact us via the Contact US button at our main site http://www.lettingfocus.com/ if you have any queries about this.
Labels: Bradford and Bingley, buy to let mortgages, Mortgage Express
This entry was posted by lettingfocus, on
Sunday, October 05, 2008.
