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Masthaven: Three quarters of brokers confident of mortgage market prospects

Almost three quarters (71%) of intermediaries remain confident in the mortgage market’s prospects for the next 12 months, despite the ongoing coronavirus crisis, research from Masthaven Bank has found.

In a survey of more than 200 intermediaries conducted in May some 65% said they were confident whilst 6% said they were very confident – a quarter said they were unsure.

Only 3% of intermediaries surveyed said they were not confident in the market’s prospects for the coming year.

Rob Barnard, director of intermediaries at Masthaven Bank, said: “Broker confidence is holding up well and that’s such an important part of the market, as it directly feeds through into the conversations intermediaries are having with customers.

“Now that the housing market has reopened and with the news that mortgage payment relief may be extended to help those customers in need, it’s good to see positive sentiment for the next twelve months from the intermediary community.”

The survey also found that more than half (51%) of specialist lending intermediaries are now using video calls to liaise with their customers, while 42% are sending regular email updates.

A small proportion of brokers have introduced live chat platforms on their websites (4%) or extended their opening hours (2%) since the start of the pandemic.

Nearly a third (32%) of specialist lending intermediaries said that they are recommending lenders based on their access to reliable funding.

Jon Hall, chief commercial officer and deputy CEO at Masthaven Bank, said: “Masthaven has remained open for business throughout the crisis.

“We have continued to work with intermediary partners to ensure they have access to a good range of competitive products.

“We have adapted our service offerings, launching a fee-free remortgage range in response to broker demand and increased our use of AVMs where physical valuations have not been possible. Our offices may be closed but we remain open for business.”

By Ryan Fowler

Source: Mortgage Introducer

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Most brokers think lending will recover to pre-COVID-19 levels within 9 months

Three quarters (77%) of brokers reckon mortgage lending will recover to pre COVID-19 levels within 9 months, while half (51%) believe it will happen within 6 months, research from Smart Money People has found.

Appointed representatives are more optimistic than directly authorised brokers, with 59% of ARs predicting that lending levels will recover within six months, compared to just 37% of DAs.

Michael Fotis, managing director of Smart Money People, said “Tentative steps are being taken to get the economy moving, and many lenders are talking loudly about their appetite to lend.

“That said, with job security likely to be a concern for many consumers, and predictions that house prices may decline by up to 13%, it’s really hard to see customer appetite for new mortgage lending returning until 2021 at the earliest.”

Brokers focused on the equity release market proved to be particularly sceptical of a full recovery, as just 19% felt lending levels will bounce back within six months.

BY RYAN BEMBRIDGE

Source: Property Wire

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Supporting brokers through the coronavirus lockdown

During the past few weeks we have seen significant efforts being made by lenders to support borrowers impacted by the coronavirus pandemic. In particular banks and building societies have responded by providing mortgage payment holidays to more than 1.2 million borrowers according to UK Finance. Exceptional times require decisive action.

But it’s not only borrowers who need lender support at this time of significant uncertainty. Brokers also face real challenges as the housing market suffers from the effect of the coronavirus lockdown.

The government has clamped down on people moving home. The number of new mortgage purchases has reduced dramatically, so brokers will clearly be worried about the decline in income from a lack of new business and the impact this will have on the future of their business.

In these unprecedented times, smaller lenders in particular have an important role to play in supporting brokers during this period of lockdown.

New business

Despite the decline in new mortgage purchases, several smaller lenders are still active in many niche areas where there remains a demand. Smaller lenders have a great reputation for providing niche products, which rely more heavily on sound advice from brokers.

At the Tipton we are still lending on our range of buy-to-let products (including ex-pat) for customers who want to purchase or remortgage properties. These buy-to-let products remain a useful source of new business opportunity for brokers as they continue to meet the needs of both first-time and experienced landlords.

Relationships

Relationships play a major role in any business transaction. They are especially important now when it comes to how lenders interact with brokers. Regular communication is critical at this time between brokers, BDMs and underwriters in order to find the right solution for the customer.

It must be a real challenge for brokers and their customers to navigate the current purchase market. A market which has almost ground to a halt as many lenders make significant criteria changes and withdraw products completely. However it is pleasing to see that many smaller lenders are still offering mortgage products of between 80% and 90% LTV.

Staying in touch

At this time of uncertainty it’s never more important to ensure BDMs stay close to their broker contacts. Brokers still need to remain up to date with a lender’s mortgage offering, to ensure the sourcing is made based on reliable information.

BDMs therefore play a key role in this process by ensuring they remain accessible to their broker contacts and provide them with product and criteria information. For example, like other lenders, the Tipton is now offering desktop valuations on all house purchases, remortgages and buy to let mortgages up to 70% LTV.

It’s also important for brokers to be able to access lenders BDM’s who can in turn access experienced underwriters during this time to help find a solution, particularly for specialist and niche cases. This open and proactive channel of communication between brokers, BDMs and underwriters will be crucial to providing brokers solutions for the specific needs of individual clients throughout the lockdown period.

There is no doubt that some brokers will be under pressure and many will be concerned about the future of the mortgage market. However the mortgage market will recover and brokers will look back favourably to those lenders who provided proactive support in their time of need.

By Cammy Amaira

Source: Mortgage Introducer

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More adverse credit homebuyers seeking advice

57% of homebuyers with adverse credit would seek the advice of a broker to find the right mortgage, up from 40% six months ago, according to recent research carried out by YouGov on behalf of Pepper Money.

The study found that 57% of all adults who have experienced adverse credit in the last three years and are intending to purchase a property in the next 12 months would go to a mortgage broker to source a mortgage for them.

When it comes to finding a broker, 54% say they would carry out online research, which is up from 49% in the last report.

34% say they have an existing relationship with a mortgage broker, down from 44% last autumn and 48% would ask friends and family for recommendations, which is up from 36%.

Paul Adams (pictured), sales director at Pepper Money, said: “It is very encouraging that a growing number of people with specialist mortgage requirements understand the benefits of seeking professional advice, and we have seen a real surge in awareness over the last six months.

“We have also seen an increase in the number of people who would go online to find a broker and also a decrease in the number of people who say they have an existing relationship with a broker. This could possibly be due to an increase in the number of first-time buyers. Whatever the reason, it is clear that there is significant opportunity for brokers with a strong online presence to take on new clients.

“There are, however, still many potential homebuyers with adverse credit, who would go directly to a high street lender or seek advice from friends and family and these avenues may lead to them thinking that they have no opportunities to secure a mortgage. So, we still have plenty of work to do to raise awareness and understanding amongst customers, and potential clients for brokers.”

By Kevin Rose

Source: Best Advice

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Paragon: Brokers predict growth in BTL business

One in five brokers expect to write more buy-to-let business in 2020 according to research by Paragon.

Paragon’s FACT research, which has tracks broker trends, also showed that demand for buy-to-let finance for portfolio extension is also at its highest level for over two years.

Remortgaging continues to dominate brokers’ buy-to-let mortgage business.

Nearly one in four (24.5%) buy-to-let mortgages were written for portfolio extension whilst 50% was for remortgaging purposes, a fall from 55% the previous quarter.

Richard Rowntree, managing director of mortgages at Paragon, said: “Buy-to-let lending has been driven by remortgage business in recent years, so it’s great to see the proportion of lending for portfolio extension purposes increase and hit its highest level for nearly three years.

“It’s also encouraging to see that the balance of brokers expecting to write more buy-to-let business is positive for 2020 as confidence has been subdued for much of the past four years.

“These are green shoots and we hope that they will continue throughout this year on the back of a more certain regulatory, economic and political environment.”

Of buy-to-let landlords remortgaging during the final quarter a majority (61%) were doing so to secure a better rate of interest, with nearly a third (31%) remortgaging to raise capital.

Overall, brokers said that buy-to-let accounted for 17.7% of overall business during Q4 2019, the highest proportion for a year.

By Jessica Nangle

Source: Mortgage Introducer

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Brokers expect rise in demand for holiday let loans

The vast majority (85%) of mortgage brokers expect an increase in demand for holiday let loans, Cambridge & Counties Bank has found.

Of this, 29% expect a significant rise.

Meanwhile, around one in 10 (11%) expect demand to stay flat and just 2% expect a fall in demand.

Simon Lindley, chief development officer at Cambridge & Counties Bank, said: “The UK is very likely to become a much more attractive holiday destination and one result is an expected boom in demand for quality UK holiday lets.

“The specialist lending market for this sector has historically been underserved but Cambridge & Counties Bank is focussed on leading the market and we firmly believe our product provides a dedicated solution in the UK.”

On average, brokers expect lending volumes to grow 11% over the next 12 months with 5% of mortgage brokers predicting volumes will increase by more than 15%.

The key reason given for the rise in demand from property investors for UK holiday lets was a direct consequence of Brexit and the fall in the value of the pound favouring UK holidays, as cited by 45% of brokers.

Other reasons included the favourable taxation for holiday properties (41%); an expected rise in UK holidaymakers choosing UK holidays over the foreign trips (40%); and an expected rise in tourists looking for UK holidays (37%).

Nearly three in 10 (29%) said that better yields from holiday lets versus traditional buy-to-lets was a key driver of growth.

However, almost half (45%) of brokers said that the market in lending products designed specifically to cater for holiday let investors was “under competitive” and ripe for new entrants.

Almost two thirds said products need to be tailored more for their specific needs and 26% found there is little differentiation in the market.

To further boost lending in the sector, two thirds of mortgage brokers (66%) said products should be made available for larger portfolios and borrowings.

In addition, two fifths of brokers said that mortgage terms should be lengthened whilst 31% said income criteria should be relaxed.

By Michael Lloyd

Source: Mortgage Introducer

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Brokers unsatisfied with how lenders handle adverse credit

Brokers are least satisfied with how lenders handle adverse credit and commercial buy-to-let cases, Smart Money People has found.

Following broker feedback in its Mortgage Lender Benchmark, broker satisfaction with mortgage lenders’ handling of adverse credit cases is 74.6%, rising to 77.1% for commercial buy-to-let cases.

The average satisfaction across all mortgage case types is 81.1%.

Nate Harwood, co-founder of Smart Money People, said: “Brokers appreciate that adverse credit and commercial buy-to-let cases are trickier and more specialist in nature.

“That said, they’re not prepared to cut lenders operating in these areas any slack.

“And with some 1.3 million people with adverse credit expected to be looking for a mortgage in the next year, how lenders handle adverse credit cases in particular, really does matter.”

When it comes to adverse credit cases, brokers are particularly dissatisfied with the speed to process applications through to offer.

The average adverse credit lender received a 59% rating around speed, 15% lower than the average across all cases (74%).

Broker satisfaction with the ease of determining the maximum loan amount is another key weak spot, and stands at 76% which is 7% lower than the average (83%).

Meanwhile, the ease of determining product eligibility proved to be the key point for brokers leaving feedback for commercial buy-to-let lenders.

The average commercial buy-to-let lender satisfaction rating is 77%, some 4% lower than the average seen across all cases (81%) and 2% lower than residential buy-to-let cases.

The research has also identified the highest rated lenders for adverse credit and commercial buy-to-let cases.

Brokers highlighted the best adverse credit lenders as Bluestone, Pepper Money, Precise Mortgages, The Mortgage Lender and Aldermore.

Furthermore, the top commercial buy-to-let lenders according to brokers are BM Solutions, Leeds Building Society, The Mortgage Works, Kent Reliance and Precise Mortgages.

By Michael Lloyd

Source: Mortgage Introducer

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Brokers call for innovation around short-term lets

More landlords are looking at short-term and holiday lets and lenders have to match this interest with more innovation, brokers have claimed.

Andrew Montlake, director at Coreco, said few lenders would place holiday let cases, but Airbnb is a bit more complex and lenders are more selective.

He added other than rates, it’s location and short-term lets that landlords are looking for.

Montlake said: “There has to be more innovation around Airbnb and how lenders deal with that because that’s something a lot of portfolio landlords are doing with at least part of their portfolio.”

Michael Lawlor, business principal of Mortgage Advice Bureau in Finchley, added: “We’re getting more of these enquires, they’re very difficult to place and we’d like to see more options for landlords.

“I’m getting more enquiries for Airbnb than I’ve ever had so it’d be great if some other lenders joined that market to give more option to our clients.”

Adam Kasamun, associate director at LDNfinance, said if there are restrictions saying it has to be a holiday let then many lenders will not do it.

He said: “I think for people (landlords) to diversify they have to be able to take risks as well.

“HMO can be quite risky and there is a lot of regulation around it and with holiday lets, not many people want to do it.

“Airbnb, we know about that. It’s about maybe landlords being ahead of the curve.

“The limited company thing is a lot more mainstream than it was four, five years ago.

“More people are aware of it but the people who did it four, five years ago are seeing the benefits of it now because they were ahead of it. Do it now and you can make more from it.”

Jeff Knight, director of marketing at Foundation Home Loans, said that Foundation underwriters short-term let buy-to-lets in the same way as normal buy-to-let cases.

He added: “The only difference is that we do not ask for an AST (Assured Short Term Tenancy Agreement).

“By underwriting these in the same way gives the landlord the flexibility to revert to normal letting should they require to do so, giving fair customer outcomes.

“Having undertaken some landlord focus groups recently, I can say that this market will grow, albeit it will still be very much a niche area, as it gives portfolio landlords in particular opportunities to diversify their portfolios.”

By Michael Lloyd

Source: Mortgage Introducer

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More brokers searching for lenders who accept first-time landlords

In June lenders who accept first-time landlords was the most popular search on criteria sourcing system Knowledge Bank.

This follows a raft of recent product and criteria changes by lenders and suggests that potential landlords have not been put off by a loss of tax incentives and the ban on tenant fees.

Nicola Firth (pictured) chief executive of Knowledge Bank said, said: “The buy-to-let sector has taken a few punches over recent years with the removal of tax incentives, the ability to charge fees and even lenders going into administration.

“However, this is a resilient market and with competitive interest rates, and a wide product selection, potential landlords are asking brokers to find them a home for their loan requirements.

“Buy-to-let is another example of a sector where criteria changes are made on a daily basis so it’s vital for brokers to whittle down the lenders who will consider their clients in advance of any product sourcing. There’s no point finding a great product only to discover that your client is refused on criteria.”

Recent reports also show that product availability for first-time buy-to-let mortgages is the highest it has been for five years, coupled with an average fall in interest rates over the same period.

In other product areas; the monthly criteria activity tracker showed that the maximum age borrowers could be at the end of the mortgage term was the most searched-for criteria in the residential mortgage category.

Other search highlights reveal that the maximum loan-to-value continues to be the most popular search for second charge loans and the minimum age of borrowers at application the most searched for criteria within equity release.

By Michael Lloyd

Source: Mortgage Introducer

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Brokers call for more buy-to-let offset mortgages

Some brokers have called for more lenders to offer buy-to-let mortgages, arguing there is a demand for it.

It’s a niche area, with Moneyfacts data showing nationwide out of 2,199 buy-to-let products across 75 providers there’s only 16 buy-to-let offset mortgages offered by five lenders.

Dean Mason, a self-employed broker at Masons Financial Planning, said more products would be useful for landlords who could draw money out of a savings account to fund refurbishments and purchase properties at auctions in future.

He said: “Buy-to-let landlords want quick access to their money tied up in their properties and having an offset mortgage on their existing properties gives them that flexibility and a pot of money to draw on to invest.

“I get a lot of buy-to-let landlords who want flexibility to put money aside and either use it or draw it out and even put money aside for tax bills. It seems to me it’d be tailor made for the buy-to-let market to offer, but lenders say there’s no call for it.

“There’s a whole concept in offset mortgages which fits so seamlessly into what a buy-to-let landlord would want and the flexibility they need.”

Payam Azadi, director of Niche Advice, said it’s a good product from a professional landlord’s perspective because you can draw down from funds when needed rather than doing a remortgage or getting a bridging loan.

He added: “There’s demand for buy-to-let offset mortgages. We like the product changes made in the sector and the more innovative the products the better.”

David Hollingworth, associate director of communications at L&C Mortgages, said additional pressures on landlords, like the reduction of tax relief on mortgage interest, means they are more focused than in the past on keeping their costs down and their interest bill to a minimum,

He said: “I’ve always thought they were a good idea. We’ve seen people that have liked the idea of them in the past. Landlords could put spare income into the offset account but retain easy access to it, which I think they quite like.

“With mortgage tax relief changing, offset could be an attractive kind of product for landlords as they’ll be more focused on keeping their interest bill lower.

“I’m not saying there’s a huge market there and loads of landlords would flock to it, but I think some would like the flexibility that offset gives them.”

Dilpreet Bhagrath, mortgage spokeswoman at online mortgage broker, Trussle, agreed and said after the amount of tax relief that landlords can claim on their mortgage was significantly reduced, many will be considering other routes, such as offset mortgages, to reduce costs elsewhere.

She said: “Offset mortgages are alluring for some buy-to-let customers, with the reduced interest that comes with an associated savings pot.

“This approach might hold more appeal for investors who want to be more agile when managing their costs.

“However, there’s often a premium associated with offset products and rates can be higher than the standard rates. Landlords should speak to a broker to balance their personal circumstances with how much they’ll use the offset provisions, to ensure it benefits them.”

Family Building Society offers two buy-to-let offset mortgages, something which the society’s director of business development, Keith Barber said receives positive feedback every time he mentions them at broker roadshows.

He said: “It’s one of those financial planning tools that astute investors will use because it’s to their benefits and the sort of product advisers should be aware of when helping buy-to-let investors make the most of their assets.

“I’m all for competition and innovation from lenders. I think there should be more buy-to-let offset products, but it’ll never be a dominant product line in the market.”

By Michael Lloyd

Source: Mortgage Introducer