A trio of prominent buy-to-let lenders – Paragon Bank, ModaMortgages, and Darlington Building Society – have announced significant adjustments to their product ranges and application criteria, aiming to provide more diverse and accessible options for landlords across the UK. These changes encompass new tracker mortgage products, reduced upfront costs, and a more streamlined application process, responding to market feedback and evolving landlord needs.
Paragon Bank has notably broadened its Bank Base Rate (BBR) tracker mortgage offerings, introducing specific switch and further advance products tailored for existing customers. These new options are available at up to 80% loan-to-value (LTV) for switches and 75% LTV for further advances, covering single self-contained properties, Houses in Multiple Occupation (HMOs), and multi-unit blocks. For example, single properties at 75% LTV can access rates starting from 5.10% (BBR plus 1.35%) with a 1.50% fee, or 5.47% (BBR plus 1.72%) with a lower 0.75% fee. HMOs and multi-unit blocks see rates from 5.45% (BBR plus 1.70%) with a 1.50% fee. James Harrison, Paragon's mortgages product manager, highlighted strong engagement with their BBR tracker range, noting these additions will allow existing customers greater flexibility.
In a move to make its products more attractive, ModaMortgages has eliminated the application fee across its limited-edition two- and five-year fixed-rate buy-to-let products. This follows recent rate reductions, with two-year fixed rates now starting from 3.34% and five-year products from 4.94%. Free valuations remain a feature across their entire buy-to-let range, which caters to both individual landlords and limited companies at up to 80% LTV, including specialist products for HMOs and multi-unit freehold blocks. Becki Fraser-Tucker, head of sales at Chetwood Bank for ModaMortgages, stated this change significantly enhances their offering for brokers and landlords.
Darlington Building Society has also made notable adjustments, particularly by reducing the income evidence required for certain buy-to-let applications. Following feedback from mortgage brokers, applicants whose cases meet the society's Interest Cover Ratio (ICR) requirements will no longer routinely need to provide additional income evidence. This simplification applies across their buy-to-let range, including expat cases involving self-employed applicants. While underwriters may still request further documentation in complex situations, this change is expected to streamline the application process for many. Chris Blewitt, head of mortgage distribution at Darlington, explained that the adjustments aim to remove unnecessary friction where rental income already supports the lending.
These developments come at a time when the UK property market continues to navigate fluctuating interest rates and economic uncertainty. According to recent data from Rightmove, average asking prices for homes across the UK saw a modest increase in the last month, though regional variations persist. For instance, Halifax reported that average house prices remained relatively stable in May, showing a slight month-on-month dip but an annual increase. Mortgage rates, while having stabilised somewhat, remain higher than in previous years, making affordability a key concern for both homeowners and prospective buyers, including landlords. The Bank of England's base rate, which influences tracker mortgages, has remained at 5.25% since August 2023, impacting borrowing costs.
For landlords, these changes could mean more competitive borrowing options and a less cumbersome application journey. The introduction of switch and further advance options by Paragon provides existing customers with flexibility to manage their portfolios or raise capital, while ModaMortgages' fee removal could reduce initial outlay. Darlington's simplified income verification could speed up approvals, particularly for experienced landlords with strong rental income. These adjustments reflect a dynamic lending landscape where providers are keen to attract and retain landlord clients by offering more tailored and efficient services.