The mutual opened up its policy to buy-to-let mortgage prisoners in March. The decision echoed its previous commitment to mortgage misfits – those borrowers trapped on Standard Variable Rates with their existing lenders due to tough affordability requirements brought in by the Mortgage Market Review.
Michelle Stevens (pictured), head of mortgage sales, Ipswich Building Society, said after its announcement to use the flexibilities offered by the Prudential Regulation Authority (PRA) to assess buy-to-let borrowers remortgaging on a pound for pound basis, it saw a 36% rise in call volumes compared to the whole of February. This was despite having one week in March left to go.
“We’re getting lots of calls from brokers who want support and guidance from us to explain the PRA’s rules, and how they can use them,” she said.
High street lender update
From the first of January, the PRA told regulated buy-to-let lenders they must use a stricter measure to assess the affordability of the loan.
However, the PRA has offered a get-out clause for existing landlords shopping around for a new deal. It said, that to avoid existing borrowers being adversely affected when remortgaging, its new affordability rules do not apply if the landlord is not increasing the size of their current mortgage, irrespective of which lender that contract is with.
In January, Mortgage Solutions asked the top six mortgage lenders by market share in 2015, if they would use the mortgage prisoner rules. At the time, only Nationwide had adopted the flexibilities.
Three months on and the position is largely unchanged, with Lloyds Banking Group, NatWest, HSBC and Barclays all still applying a full affordability assessment to pound for pound remortgage borrowers. A spokesperson for Santander said the bank was reviewing the policy and hoped to be in position to come to market very soon.
Stevens said the high street’s reluctance to adopt the PRA’s flexible rule for mortgage prisoners would stem from their status as volume lenders. “When they have to deal with something different it slows them down,” she said.
“Volume lenders tend to use a set methodology to assess applicants. Our smaller size makes us agile. We can identify where there are gaps in support for borrowers and move quickly to fill them.”