British mortgage lending rates reach lowest rates ever

New mortgages launched for landlords attracted to higher yield HMOs  

The HMO mortgage sector is steadily growing as lenders launch new products in response to the increasing number of landlords turning to this specialist area.  

Data from Leeds Building Society reveals that houses in multiple occupation (HMOs) offer the highest yields of all types of rental properties. Average returns are 6.9%, as opposed to 5.8% for other property rental types. 

Leeds launched a range of mortgages tailored to small and large HMOs earlier this year, in response to landlords increasingly moving into this rental sector as they diversify their portfolios and look for alternatives to the traditional buy-to-let business model.  

Saffron launch four new mortgages 

Saffron Building Society has added four new products to their specialist mortgage range specifically targeting HMO landlords.  

The societies small HMO buy-to-let products (3.37% fixed until 31.10.2021, 75% LTV (two-year) and Light Refurb: 3.64% (SVR 2.0%), three-year discount, 75% LTV) are aimed at experienced buy-to-let investors purchasing their first HMO with up to four tenants, adding to an existing portfolio or remortgaging an existing HMO.  

They have also launched two ‘large HMO’ products 3.67% fixed until 31.10.2021, 65% LTV (two-year) and Light Refurb: 3.94% (SVR 1.7%), three-year discount, 65% LTV for HMOs with up to six tenants. 

Fleet Mortgages add two and five-year fixed mortgages to range  

A two-year fix at 4.39% and a five-year fixed rate offer at 4.49% both with 80% LTV, have been added to Fleet Mortgages HMO range.  Steve Cox, Distribution Director, said: 

“Professional and portfolio landlords are increasingly looking to add to portfolios via limited companies and are seeking to purchase both HMOs and MUBs in order to access greater levels of rental yield Fleet. However,  many borrowers’ own properties in their individual names and will continue to so…, which is why we were keen to ensure these 80 per cent LTV products were available...” 

Keystone cuts rates by 0.21% 

Keystone has cut its rates on their specialist range. Their five-year fixed 75% LTV has dropped from, 3.95% to 3.74 %, with a maximum loan value of £1m. Available to landlords of HMOs and multi-unit properties individually or as a limited company.  

Helping landlords maximise their rental yield with a range of new and improved HMO mortgage products is a strategic move by lenders competing in a tougher marketplace as landlords begin to feel the sting of regulation changes. However, HMOs may not be the only new focus for landlords; the Leeds study also found that multi-unit blocks (MUBs) of flats are offering an average yield of 6.3%.


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