What's in this edition?
- Paradigm Compliance Update - The Buy to Let market in 2017
- The Coventry for Intermediaries - Making retirement more rewarding
- Useful Documents
- Santander for Intermediaries - Great news from Santander Intermediaries
- Paradigm's guide to Retention proc fees
- The Mortgage Lender - The digital revolution- an opportunity and a threat for brokers
- Paradigm's Upcoming Events
The Buy to Let market in 2017
The buy to let (BTL) market continues to be a topic of conversation. It is still very early days in terms of what the knock-on effects will be regarding the new rental stress calculations but I am already hearing from you as to the increased amount of work which is now involved with assessing a product for a BTL client and how difficult it is to get a deal sorted for a client, particularly in the South of England. That in itself is ultimately going to have an effect on the amount of business written in the sector this year. The Intermediary Mortgage Lenders Association (IMLA) predicted an increase to £48bn for 2017 but Mortgage For Business feel it is more likely to be around the £37bn area. The amount of BTL transactions being written in the Limited Company space are on the increase and I am sure we will begin to see new entrants offering limited company BTL products this year.
Let’s also not forget that on the 30th September, the second half of the PRA PS28 around portfolio landlords will be implemented and, although we do not exactly know how lenders will interpret that policy, they will need to look at the following when assessing any landlord with more than 4 BTL properties:
All of this is indeed going to be an interesting development and will only serve for brokers to consider the use of Limited Company SPV transactions further. Let us look on the bright side, it is not all doom and gloom, there are still 30+ lenders vying for your business and at least 14 of those offer limited company BTL transactions and these are Precise Mortgages, Kent Reliance, Keystone Property Finance, Foundation Home Loans, Axis Bank, State Bank of India, Norwich & Peterborough, Aldermore, Interbay, Fleet Mortgages, Shawbrook Bank, Vida Homeloans, Paragon and Market Harborough. Generally, underwriting has not changed in terms of income, ID, AV and bank statements required and Personal borrowing still has flexibility on rental stress rates if a client opts for a 5yr fixed rate product. It is good to see Coventry extending their maximum age on their BTL range and further good news is that Paradigm has added Vida Homeloans to the panel so that you can access even more choice for your clients in the BTL market. Don’t forget to check out our BTL rental stress calculation sheet which was produced in January to help you save time looking up lender rental stress rates, click here to view.
- Client experience and their full portfolio of properties and existing mortgages
- The asset and liabilities of the borrower including any tax liability
- The merits of any new lending in the context of the borrowers existing BTL portfolio together with any business plan
- Historical and future cashflows associated with these properties
For further information please contact Christine Newell on 07824 708 956 or firstname.lastname@example.org
In September 2016, the Coventry for intermediaries announced the decision to raise its age limit on BTL maximum age at end of the term from 75 to 85. The number of BTL applications from older borrowers has been steadily growing since the announcement was made.
Making retirement more rewarding
David Morris, Head of Product at Coventry Building Society said: ‘More people are working later in life and buy to let investors may want to keep their investment property to supplement their income or to help save for the future. Making the decision to raise our age limit has had a big impact on our BTL business. We’ve been leading the way with innovative products for a long time,’ explains David. ‘Our unique Flexx for Term range for BTL customers offers more flexibility - allowing customers to borrow more on the same product at the same rate (subject to availability and up to the maximum LTV of the product). Flexx mortgages also come with no ERCs. Our Flexx and Flexx Fixed pricing for BTL continues to deliver long term value and is hugely popular with brokers and their clients.’
'Further changes in the BTL market are inevitable. At the Coventry, we’re committed to launching great products and monitoring the market to see how we can help meet the needs of our intermediaries,' David continued. ‘We’re seen as a ‘safe choice’ for older borrowers who are typically more financially aware and more risk averse. The increase in applications from this group of people has supported our thinking and we’re delighted to be able to help.’
For more details visit coventrybuildingsociety.co.uk/intermediaries
Great news from Santander for Intermediaries
We want to help even more of your clients get a Santander mortgage through our competitive pricing and policy improvements. Since the start of the year we’ve announced the following improvements:
Retention proc fee
We’ll soon be launching the payment of a 0.20% procuration fee on residential and Buy to Let retention business submitted via our existing Online Mortgage Transfer Service that then goes onto complete.
What’s new in Introducer Internet
- We’ve improved Introducer Internet to make it easier for you to do business with us:
- New look and feel making it user friendly and simpler to complete AIPs and FMAs
- Case tracking (MATS) fully integrated into Introducer Internet giving you a simple view of all your cases, uploaded documents and notes
- Use on tablet devices helping you do business on the move
- Accessible through more web browsers – Internet Explorer 10 and above, Chrome and Firefox on desktop/laptop and Safari and Chrome on tablet
Please Click here to watch our short video showing all the great features of Introducer Internet.
Please give your dedicated contact a call if you would like more information or to discuss any new cases that we may be able to help you with.
Paradigm's guide to Retention proc fees
At Paradigm, we are always striving to ensure that our members, and the wider intermediary market, are getting a fair deal. We will continue to encourage all of our lender partners to pay retention proc fees as ultimately the work put in for a first time mortgage, remortgage to a new lender or remaining with the same lender is the same. See our retention fee help guide here which shows which of our lenders currently pay retention proc fees and those who will start to pay in the foreseeable future.
The Digital Revolution – An opportunity and a threat for brokers
In the past few weeks we’ve seen Yorkshire Building Society follow HSBC and Clydesdale and Yorkshire Banks in announcing further branch closures. This saw the number of high street branches lost in the last year hit 1100, roughly 10%. It’s a pattern we’ve seen before, and no doubt will again.
The reason given for these closures is usually the rise of digital banking, but that just means lack of footfall from people they can sell to in order to pay for the bricks and mortar. And despite their digital strategies, none has really mastered online mortgages. Now this creates two opportunities for brokers: a channel for the not-so high street banks to distribute their mortgages, and as a competitor with access to the wider market speaking to those borrowers in communities without a branch.
For too many years a bank having someone’s current account or a building society having someone’s savings meant they got their mortgage business, and the further we get away from that the better for competition and borrowers.
But the reality is that what banks and building societies are facing now with branch closures is something that will, in time, come to mortgage brokers. While there are a few online brokers, it’s fair to say the vast majority of mortgage business is written with the borrower present in the office and getting their advice from a skilled individual, it wont always be like that.
So, now is time to make hay while the sun shines. A recent survey suggests not having a digital presence costs a small business £20,000 per year, and that’s only going to grow. Most will have web presence, but social media is what is now driving traffic, and does face-to-face mean ‘in person’ or is Skype a tool that makes you more accessible?
The withdrawal from the high street by lenders is without doubt an opportunity, but those who are developing their proposition now will be the one who benefit from it most.
Paradigm's upcoming CPD events
Throughout this year, Paradigm will be running a series of Mortgage Masterclasses, Specialist Protection and Mortgage and Protection events. These are extremely rewarding and allow our members to gain an insight into lenders and providers Key USP's and recent changes. Structured & Unstructured CPD points will be provided. See below for our upcoming events for 2017, you can click on any of the links for full details and to register:
28th February- Specialist Protection event- Maidstone
7th March- Mortgage Masterclass- Colchester
9th March- Specialist Protection event- Southampton
16th March- Mortgage Masterclass- Exeter
28th March- Specialist Protection event- Cobham