The first buy to let lender to blink

The buy to let market has been very quiet for the last few weeks with little to report on rate changes, but the first lender to make their move appears to be the state owned Northern Rock.

The Northern Rock have reduced their rates by up to 0.36% and continue to offer a £500 Cashback on all of their buy to let product range

If you regularly follow the movements of buy to let products it is very common for one lender to cause a domino effect and for others to follow in the same direction trying to protect, or adjust their market share. I would therefore expect to see more news coming out of the market in the very near future.

It is very interesting considering the current climate in Europe to see that Northern Rock are still hungry for business. This means they may have secured more capital funding, or that their product range was falling behind the competition and are looking to protect market share.

Landlords may also benefit from the new Bank of England initiative to introduce an extra £140 billion of quantitative easing into the economy. The plan is to aim this stimulus directly at the banks upon the agreement that this will lead to increased lending. Hopefully buy to let will be seen as a safe and profitable way for lenders to show willing to the Bank of England and I will report back on any developments.

Northern Rock’s new product range starts at 60% Loan to Value on a two year fixed rate at 3.99% with a £1,995 fee and a two year Tracker at 3.98% with a £995 fee.

Although these rates have been reduced you still need to consider the value they offer. As the percentage Loan to Value you require increases so does the rate you pay, and the corresponding cheaper rates command bigger fees of up to 2.5%.

Northern Rock may not offer the best value, or higher LTVs (maximum of only 70%) that landlords are often looking for, but a move in the right direction is always welcome especially if others follow.

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