The Turner Review may impact Buy to Let warns Lord Turner

The Tumer Report covers a broad range of sectors but has reserved its judgement on Buy To Let and second charge mortgages until September. If some of the commmentary on how they might restrict Loan to Income multiples might be applied in future goes ahead in its current form (such as 3.5 x Multiple applied whether interest rates  are 12% or 4% rather trhan expressed as a%age of disposable income with in a minimum notional rate to cater for articially low rates like now !!!), then the Buy To Let lenders will be facing an uphill struggle.

There is an essential principle at stake which is being overlooked. Buy To Let is a business activity whether you own one or 350 properties. You are in it for profit and drawing a line between the owner with a single Buy To Let to enhance their overall retirement provision  to the active landlord refurbishing property , extending others, perhaps even selling some to use up CGT gains would require the judgement of Solomon which has been remarkably lacking in the FSA to-date.

In its effort to regulate Buy To Let it is likely that the FSA will create a regulatory monster so as to embrace all the complexities of a Buy To Let property and the business aspirations of the borrower......this might add such a burden to the time and "real" cost of the process that borrowers will approach lenders on a commercial mortgage basis to avoid the FSA paper trail. After all, this is where Buy To Let came form and many professional landlords keep Buy To Let property in "pot" facilities at banks.... or do we think that the FSA proposes to move further up the lending scale to include all aspects of business lending ???

There is also a tendency for some commentators to suggest that the lender and broker to a transaction are giving investment advice to the borrower at point of purchase which is false. Quite correctly the Buy to Let mortgage or loan needs to suit the borrower's needs but whether the investment or is appropriate or will perform over time is the commercial decision of the borrower.

Read the Turner Report here.

Lloyds/ HBOS commit additiomal £3Bn to mortgages this year

The news that Lloyds/HBOS has finally agreed to a deal on the APS will increase its mortgage lending in 2009.

Lloyds / HBOS fell on the sword finally and gave up some £260Bn of "assets" into the APS and in return found  UKFI now owning 65% of its shares and a commitment to increase its proposed mortgage lending from £9Bn to £12Bn this year. The split between pure residential mortgages and Buy To Let mortgages has not been defined but a cynic might argue for a bias towards the former group as that is where votes in any upcoming general election would lie.

An additional £9Bn is also promised to business lending but the challenge as with all these things is proving the benefit ie borrowers actually finding it easier to obtain credit.

You can follow developments on our quantitative easing updates and views page.

Now that Base Rate has dropped to 0.5%, it's time to fix!

As expected, the MPC has continued to use the tools at its disposal and slashed rates again to a record low of 0.5%.

This will of course continue to improve the cash-flow of those borrowers on Base Rate linked loans (without collars!) but unlikely to have much of an affect on new mortgage products.

Only a 3rd of lenders passed on any of last month’s 0.5% cut and I would expect even fewer lenders to act this month. That said, there are a handful of lenders (C & G, Nationwide, Skipton & Halifax) who have Standard Variable Rates (SVRs) that must never be more than a set percentage above Base Rate – they will have no option but to reduce their SVRs. For the rest, don’t expect much movement and for those of you looking to move house or remortgage, I would reiterate that the products available now are probably as good as they are going to get and if you are looking for fixed rate mortgages for your home or Buy to Let fixed rate mortgages over the next 2, 3 or 5 years then now is certainly the time to act.

The additional announcement that the BoE will embark upon £75Bn of asset purchases financed by the issuance of central bank reserves is a welcome move in terms of trying to improve liquidity. Perhaps the most significant phrase in the published statement was "in the first instance" thus demonstrating the BoE's commitment to stimulate the economy with a series of measures if necessary.

None of this will change the economy and, in particular, the housing market overnight but these are alll essential building blocks on the way to recovery.