Private Finance's Mortgage Memo - 12th October 2021
This is our take on what is currently happening 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.
- Self-employed borrowers don’t know their tax calculations are now out of date for proof of income
- Market outlook for 2022
- HSBC launch BTL mortgage products for intermediaries and increase flexibility with let-to-buy products
Self-employed borrowers don’t know their tax calculations are now out of date for proof of income
As now more than 18 months have passed since the 2019/20 tax year has ended, self-employed borrowers now enter a period of limbo where their 2019/20 figures are too old for lenders now, but 2020/21 are not due until 31/01/21 – this means that the majority of lenders will not accept them for self-employed proof of income and could put borrowers in a difficult situation.
- While this issue remains the case annually, most self-employed borrowers are unaware. There are couple of specialist lenders who will accept tax returns over 18 months old, but with specialist lenders, borrowers tend to be paying higher rates.
- If you are self-employed and are going to want a mortgage in the next 4 months, we suggest you go and get your latest years return done ASAP.
Market outlook for 2022
Following recent conversations with banks and building societies we are now seeing some lenders hitting the bottom of where they can go on interest rates, especially with a lot of specialist lenders who cannot compete with a 0.85% 2-year fixed rate for example. This means that they have accepted that they need to innovate in other areas, and we have heard that there will lead to criteria and product innovation across many lenders likely starting late 2021 early 2022. We have already seen this with some lenders but expect to see more offerings at higher income multiples or other innovations marketing to the highest quality or highest earning customers specifically. It also sounds like there are going to be some big plays for market share in 2022 (led by rate and criteria) in both the buy-to-let and residential market.
- We have seen a slight rise in the 2-year fixed this last week up from 0.79% and there is much talk in the press of base rate rises before the end of the year given inflationary pressure, partly why we have seen a sudden surge in demand for remortgage products in the past few days.
HSBC launch BTL mortgage products for intermediaries and increase flexibility with let-to-buy products
More good news from HSBC this week as they have recently launched a new BTL proposition, albeit with limited criteria initially. Of course, there are a lot of lenders in this marketplace, but the entry of a major mainstream lenders adds to the competition in this and paves the way for some potentially interesting changes going forward. HSBC haven’t historically done BTL mortgages through brokers but see this as an expanding market for them. They have also now improved their let to buy criteria, where they used to count the background buy to let mortgage as a commitment without considering the rental income at all, they can now consider the projected rental income to help affordability and offset the buy to let costs.
- There is scope to improve their offering, however HSBC do expat deals on their standard products and we very much hope this is extended to their BTL offering, which if they do, it would be market leading by a significant margin.