Dale Jannels is managing director at Impact Specialist Finance
When talking about the current mortgage market, it’s difficult to know exactly where to start. It’s as fast-paced and frenetic as a back-to-back-to-back Super Sunday of Premiership football.
With inadequacies around defenders and goalkeepers coming under the spotlight in the early stages of the season, I thought I would start with a sector which – in sharp contrast – has arguably been the most resilient and stable in recent times, buy-to-let.
Of course, there have been some tightening of belts from BTL lenders in terms of rate rises, higher LTV lending restrictions and criteria shifts. Inevitably, product numbers remain down from pre-crisis levels but the number of available BTL deals have increased significantly since the property market sprang back into life in May, and many of these remain highly competitive.
A number of factors continue to drive activity throughout the BTL sector. The obvious one being that a growing number of landlords are taking advantage of the current climates and expanding their portfolios and tapping into some changing tenant demands – in relation to property type, flexible home working capacity, location and outside space. The return of the student population has also played a key role in both increased activity and demand.
There was no guarantee of this happening during the early summer months and this represents a significant proportion of the BTL market, especially for professional landlords.
The more specialist areas such as holiday lets and ex-pat BTL are also seeing additional options emerge and this charge is largely being led by the building society sector. Societies such as the Cumberland, Hanley Economic, Dudley, Saffron and Buckinghamshire have all been active within these areas over the past few weeks.
With BTL and residential volumes hitting new heights, it’s little wonder that all lenders are coming under additional pressure when servicing these huge swathes of business.
Logistical issues blighted the Summer months as lenders had to deal with remote working constraints, pent-up demand, case backlogs and the furloughing of staff.
The aforementioned stamp duty injection piled on the pressure and – quite understandably – many lenders have struggled to handle this unforeseen combination of factors. Additional attention on changing customer circumstances has also slowed down underwriting timescales.
As we all know, this has led to many lenders withdrawing products or repricing in order to manage service levels. Things are improving, but it was also reassuring to see the Intermediary Mortgage Lenders Association (IMLA) step in to help identify the challenges which are impacting these service levels. Armed with a greater understanding, IMLA will work with intermediaries and industry bodies including the Association for Mortgage Intermediaries (AMI) to find possible solutions.
This is a positive move but what more could intermediaries be doing in the meantime?
Well, there is the option for brokers to utilise the support on offer from specialist distributors to find a way around these service obstacles. Specialist distributors deal with a huge number of lenders across many different sectors day-in, day-out and a key role within this is understanding exactly what lenders want in these challenging times and when they want it.
This isn’t easy when brokers are suppling individual cases here and there to a wide variety of lenders, all of whom have differing policy, criteria, capacity and servicing concerns. One thing that separates specialist distributors when it comes to cutting through these issues is volume. By this I mean we send lenders a number of cases at a time.
This then opens the door to a dedicated underwriting resource which can help speed up the process and often get cases through quicker than if an application was made direct. Something that might be worth bearing in mind if you are constantly hitting the lending service wall.