Private Finance's Weekly Mortgage Memo - 22nd February 2021
This is our take on recent news in the mortgage market. Our views are often cited in several national publications, including; BBC News, The Times, Telegraph, City AM, FT Adviser and Daily Mail, as well as a number of key trade publications, so this should keep you ahead of the curve. If you have any questions on any of these stories, or would like further information, please do not hesitate to get in touch.
- Bridging: huge growth predicted as the market opens up
- The changing BTL market
- The return of 95% lending?
Bridging: huge growth predicted as the market opens up
We are seeing an increasing number of lenders, including MT Finance and Glenhawk, enter the regulated market and the market open up to an increasing number of borrowers or loan to values. We predict that we will see an increasing number of bridging loans in the coming weeks, with the end of the SDLT holiday and the potential for increased chain breaks it is likely many will consider this type of finance (although the savings may not justify the fees).
- Regulated lenders can lend to residential borrowers, whereas unregulated lenders are purely for investment property. With the increased potential for chain breaks we will see an increase number of borrowers turn to regulated bridging lenders in the coming weeks.
- We are also seeing some very competitive rates at sub-0.5%.
The changing BTL market
Interlinked with the above, we also expect the unregulated bridging market to grow as we have had many landlords and those looking to invest in property look outside of straightforward BTL’s. Unregulated bridging covers things like refurbishments, auction finance, uninhabitable properties or simply just investment and this links to a recent trend we have a seen with portfolio landlords moving towards other projects in the search for profits as they feel the full impacts of uncertainty, and the accompanying issues such as rental voids, of the BTL properties they hold.
- We have a seen a large increase in the number of clients and new enquiries seeking development, refurbishment, and self-build mortgages at present and highlights a shift away from straightforward BTL purchase financing. We have also seen many of our more traditional landlords looking into opportunities for HMOs, Multi unit freehold blocks as well as commercial and semi-commercial properties in the seek for higher returns as the tax changes have significantly impacted their profits.
The return of 95% lending?
One mainstream (big 10) lender has told us recently that they have the approval and ability to do 95% mortgages, but the only barrier is they do not want to be the only mainstream lender in the market to offer it as they would simply be inundated with enquiries… This marks a paradigm shift from 2020 where lenders were moving out of the 90% LTV and even the 85% LTV space – such is the confidence in the housing market, despite Covid.
- The return to 95% LTV lending would see a huge increase in applicants as buyers who were previously excluded for lack of deposit will be able to get on the property ladder again.
- We suspect the return at this LTV will be akin to a levee breaking rather than a trickle as when one lender moves all will follow… but when will we see the first lender dip their toes back in? We suspect from speaking to other lenders it could well still be a while. It could well also just be limited to the highest of high-quality cases, low-income multiples, specific property types, etc like we saw with 90% mortgages.