New lenders boost BTL sector

New kids on the block

Andy Young, at Property Hawk Mortgages says:

"2015 is shaping up to be an excellent year for the buy-to-let mortgage market. At Property Hawk Mortgages we have seen a significant uplift in business during the first quarter of the year as the demand from landlords remains strong.

Since the beginning of the year, a number of factors have contributed to this improved level of activity in the marketplace. Firstly, increased competition between lenders has pushed rates down resulting in some exceptionally well-priced products being offered, particularly for mainstream buy-to-let applications. For example, Property Hawk Mortgages has an exclusive scheme through Mortgage Trust at 75% LTV with a 2 year fixed rate of just 2.25%.

Secondly, a number of new lenders announced their entry into the market providing additional options for landlords, especially in niche areas of buy-to-let lending. These new lenders include Fleet Mortgages, Foundation Home Loans and Axis Bank.

Fleet Mortgages entered the market in January as a specialist buy-to-let lender with a wide selection of products including options for HMOs and limited companies. This niche area has primarily been serviced by Paragon Mortgages and Kent Reliance over the last few years, but Fleet Mortgages products are now proving to be a popular choice with landlords too.

Axis Bank is also offering a specialist range of buy-to-let products aimed at HMOs, limited companies and expat applicants and, following a short pilot, is expected to formally launch sometime in May through a number of specialist buy-to-let distributors, including Property Hawk Mortgages.

Foundation Home Loans is another new specialist buy-to-let lender offering a range of products available up to 75% LTV and will accept ‘light adverse’ applications. This means a maximum of one satisfied CCJ/default up to the value of £2000 within the last 24 months with none within the last 12 months; and a maximum of one missed payment in the last 24 months with none in the last 6 months.

It is likely that the buy-to-let mortgage market will continue to improve during 2015 and word on the grapevine is that more lenders may join the throng before the year is out – so watch this space.

Having additional lenders in the marketplace can be very healthy and as competition increases we may see more lenders trying to distinguish themselves through product innovation and changes to criteria.

For example, Mortgage Trust has recently started lending in Scotland, which is a woefully underserviced area of the market; TMW has removed its upper age limit at the end of the mortgage term; Metro Bank has removed its geographical restrictions and now provides buy-to-let mortgages throughout England and Wales. It also offers large buy-to-let loans up to £1.5 million.

Perhaps most interestingly, Woolwich has recently changed its affordability calculator for buy-to-let applications. If the rental income for a buy-to-let property does not fit the required 125% rental coverage, Woolwich will consider any personal surplus disposable income to make up the difference. This is unique in the marketplace at the moment.

From a broker’s point of view it is always good to have more options to consider when trying to place cases for landlord clients. During 2008 and 2009, Property Hawk Mortgages was placing almost all of its business with just two lenders – BM Solutions and TMW. Property Hawk Mortgages currently has 27 different lenders on its panel and places a good spread of business between them."

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