Octopus reports surge in BTL product demand despite PRA regulations

Octopus reports surge in BTL product demand despite PRA regulations

Octopus Property has revealed it has seen a significant uplift in agreements in principles (AIPs) for its two- to five-year buy-to-let products during the final quarter of 2016.

The lender issued 233 AIPs compared with 108 during the same period in 2015, an increase of 116%.

Octopus Property has also already issued 32 AIPs for its buy-to-let loans in the first few days of January 2017.

These figures come despite new Prudential Regulation Authority affordability rulings coming into play at the start of the year.

This was expected to make it harder for landlords to finance buy-to-let properties through mainstream lenders.

Central to Octopus Property’s buy-to-let range is a two-year product at 6.99% pa.

Borrowers can choose to defer 2% of the interest payable, creating an effective pay rate of 4.99% pa.

This surge of interest in Octopus’ buy-to-let products meant that it saw a 45% increase in AIPs issued during 2016, growing to 2,405 compared with 1,656 during 2015.

Mario Berti, CEO of Octopus Property, pointed out that the buy-to-let sector had changed fundamentally over the past two years.

“Alongside the raft of tax changes, financing for landlords has become considerably more challenging.

“This is almost certainly the reason for the surge in demand for our buy-to-let products in the latter stages of 2016 and early days of 2017.”

Speaking about Octopus’ plans for borrowers, Mario added: “We cater for buy-to-let borrowers with less conventional circumstances that need more bespoke underwriting and for whom the high street has become a more difficult place to borrow.

“All the more so since the new regulations came into force on 1st January.

“It’s in this type of conservative lending climate that specialist lenders like ourselves can outperform.”

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