BTL2021: More BDMs coming but they will be targeted on top brokers – LendInvest
Presenting at the virtual event on Wednesday, Andy Virgo director of buy to let at LendInvest (pictured), said the lender was looking to hire more BDMs as the relationship building aspect of the role was irreplaceable.
He said: “This industry is about relationships as much as it is about product and service, we need BDMs to be accessible.
“Moving forward there’s no reason why those numbers should be cut.”
However, Virgo said instead of BDMs spending all day visiting brokers and having a lot of downtime while commuting, their meetings would be more productive.
He added: “There’s definitely more focus on the BDMs actually being more targetted in their approach and less coffee meetings where you used to turn up and have a chat – that’s not really effective.
“But actually focus 80 per cent of your time on that 20 per cent of top brokers that are using you as a lender most. Those are going to be the brokers we’ll focus most heavily on.”
Unregulated adviser and accountant charged over fraudulent mortgage applications worth £3.8m
Tassib Hussain, an accountant who managed Keystone Chartered Accountants in Nottingham and Larry Barreto, owner of unauthorised financial services firm Barreto and Partners have both been charged with conspiracy to commit fraud by false representation.
The charges have been brought against them following an investigation relating to mortgage applications worth £3.8m, carried out between January 2015 and March 2018.
It is alleged the applicants were clients of Barreto and where they did not have sufficient income for a mortgage, he charged them a fee which was paid in cash to Hussain.
Hussain would then create false self-employment and employment documents, improving the applicants’ affordability and making them eligible for the required mortgages.
Barreto has also been charged with two counts of carrying out regulated activities without authorisation.
This relates to advice given and arrangements made for regulated mortgage contracts between June 2014 and March 2018.
Barreto and Hussain appeared at Westminster Magistrates’ Court on 21 April. The case was sent to Southwark Crown Court for a plea and trial preparation hearing on 19 May 2021.
Fraud is punishable by up to 10 years in prison while unauthorised business is punishable by a fine up to two years in prison.
Clydesdale Bank adds 90 per cent LTV for first-time buyers
There is now a 90 per cent loan to value (LTV) two-year fixed product for those getting on to the property ladder. This has a rate of 2.89 per cent and a £1,999 fee. It also includes a free valuation.
A two-year fix at 90 per cent LTV for all borrowers has also had its rate reduced to 2.95 per cent. This also has a £1,999 fee.
Elsewhere, the bank has withdrawn a two-year fixed at 75 per cent LTV as well as a two-year discounted product with a rate of 1.74 per cent.
Clydesdale Bank has also updated the way it accepts product fees due to broker feedback. It now allows fees to be added to the total mortgage loan as long as it does not take a residential loan over 95 per cent LTV and a buy-to-let loan over 80 per cent LTV.
These changes came into effect today.
Low deposit borrowers still up to £175k short of average property prices
Considering current property prices and income data, a five per cent deposit would leave the average purchaser as much as £175,246 short on their home based on the maximum amount most lenders are willing to give.
Earlier this year, a raft of lenders tightened loan to income (LTI) multiples for borrowers on lower incomes to around four or 4.5 times income. This was also restricted for those requiring mortgages above 80 per cent LTV.
The recent wave of 95 per cent LTV mortgages has been no different and includes criteria that allows maximum income multiples of no more than 4.75.
The most generous LTI is 4.75 times income which is being offered by Skipton Building Society and is available to all buyers including first-timers.
Atom Bank will also lend up to 4.75 times income for borrowers with a single or joint income of £100,000 or more. For single or joint incomes under £100,000 the digital bank will only lend up to 4.5 times income.
Other lenders that have launched 95 per cent LTV mortgages both with and without the government’s scheme have capped LTI at multiples between four and 4.5 times their income.
Statista puts the average age of an English first-time buyer living outside of London at 32, while those in the capital buy their first homes at the age of 34.
Its data also says the average salary for men in the UK aged between 30-39 is £34,567 while for women, it’s £30,258.
Based on LTI multiples for 95 per cent LTV mortgages, the average man buying his first property on his own would be able to borrow up to £155,551 and a woman would receive up to £136,161 with an LTI of 4.5.
According to Rightmove, the average asking price of a home in the UK currently stands at an all-time high of £327,797.
This means a five per cent deposit of £16,389 combined with borrowing the maximum £136,000 would leave female buyers £175,246 short on the £311,407 needed to make up the shortfall.
Male purchasers would be down £155,856.
Looking at properties worth the average price paid by first-time buyers in March, reported as £203,564 by Rightmove, purchasers will still need to earn at least £45,000 either on their own or as joint borrowers to get a 95 per cent LTV deal.
Considering the maximum borrowing amount of £164,193 for a single purchaser, the North East would be the only affordable region with an average property price of £161,994.
Halifax offers the cheapest two-year fixed 95 per cent LTV, priced at 3.73 per cent. Putting down a five per cent deposit in the North East would mean monthly repayments of £789.55.
The cheapest five-year fix is offered by Coventry Building Society and priced at 3.99 per cent. For the same property in the North East, monthly repayments would be £803.
Chris Sykes, associate director and mortgage consultant at Private Finance, said this was not a new problem as prices had outstripped affordability for years.
He said this was also not just an issue at the upper 95 per cent LTV lending tier but added that banks being more “stringent” to higher risk loans made it more prevalent.
He added: “It is incredibly hard at any loan to value for a single first-time buyer to get a home unless you are living somewhere with much below the average property values or they have much higher than average income.
“It often is not possible for the average person to get the average property, either they have to settle for less or cannot get anything at all.”
Mark Robertson, partner at Chadney Bulgin said assessments were based on the regulator’s view of affordability.
He said although underwriters did factor in estimated and actual costs, they did not always consider potential individual circumstances.
“Some of these buyers will have rented and may well have been paying higher rents. I don’t think it’s a fair reflection.
“It should be true affordability of the individual. A single person on £34,000 might have more disposable income than a couple with a child,” he added.
End of the single buyer?
Robertson said these restrictions could lead to fewer people buying on their own and choosing to purchase with a partner, family member or even friends.
Based on the average pay figures, a joint application with mixed gender applicants with a combined income of £64,825 could borrow up to £307,918 on a 4.75 income multiple.
Two women could be able to borrow up to £287,451 while a lender could offer two men as much as £328,386. In this scenario, two male applicants could potentially afford a property at the current average price as stated by Rightmove.
However, this will depend on differing lender criteria.
For example, Buckinghamshire Building Society will either loan up to 4.5 times the first income plus 3.5 times the second income or will lend four times the joint income. TSB caps income multiples at 4.25 for applications where any borrower is self-employed.
Robertson also questioned whether people living in areas with lower property prices would be making salaries which would allow them to borrow enough to purchase.
According to Payscale, the average salary in the region with the most affordable property prices is £27,000. On an income multiple of 4.5, this would put the borrower’s maximum potential at £128,250, which falls short of the North East average property value by £33,744.
A borrower here would actually need a 21 per cent deposit of £34,018 to make up the difference, rather than a five per cent deposit of £8,099.
More options for buyers
Rachel Dixon, mortgage adviser at RH Dixon, agreed that affordability constraints even for the cheapest properties was an ongoing issue.
However, she said it was still a positive to see more options on the market at 95 per cent LTV as people would “at least have a shot at buying if they meet all other criteria”.
Adam Wells, co-founder of Lloyd Wells Mortgages, said the same as many of his clients were disappointed to find they would need to double their deposits when 95 per cent LTV mortgages disappeared last year.
He also said the low borrowing power would not necessarily be an issue for most first-time buyers.
“Although the average house price is £327,797, most first-time buyers aren’t looking to buy a three-bed property and will only be in their first home for a few years. Their buying power will improve if they are able to purchase with a partner, friend or sibling.
“It can also open up the conversation to other ways of purchasing such as the Help to Buy scheme, shared ownership and shared equity. Anything that can be done to help more people purchase their first home has to be a good thing,” Wells added.
Some mortgages should give clients carte blanche to be responsible for themselves – Marketwatch
So this week, Mortgage Solutions is asking: If you had the chance to develop a product with a lender, what would it be?
Pete Mugleston, managing director of Online Mortgage Advisor
This might sound controversial – I don’t think everyone needs consumer protection, yet everyone is bound by it. Few discuss the negatives of this, and I’m beginning to question whether we crossed a line a while back and didn’t notice.
Otherwise, our industry is obsessed with ‘best rates’ which creates deep layers of complexity that takes considerable expertise to navigate. While this is mostly amazing and serves 99.9 per cent of people, not everyone cares.
We get thousands of customers every month, stressed, distressed, and scared to death of missing out on their dream home. Most just want the comfort of an affordable deal approved, not hunt around for the cheapest rate going.
Borrowers also lost something when the Financial Services Authority and Financial Conduct Authority stepped in – the option to be responsible for themselves.
I’d design an unregulated, self-responsibility, mega mortgage, addressing certainty and affordability.
A rate-for-risk ‘one mortgage’ approach, where all clients are approved and just given a deal that matches their situation. It might be an eight per cent rate, but if you don’t like it, try to get a better one elsewhere.
And let some people self-certify where credit indicators and loan to value tiers deem that more viable.
I’m not advocating 2007 and everyone having the power to ruin the country, but I do think there are savvy, experienced and sensible borrowers who are fully capable of making choices about the borrowing that suits them.
Then if they default, it’s completely their own doing. The lender takes no responsibility whatsoever and they have no rights to compensation.
Anthony Rose, director of LDNfinance
As holidays abroad remain a distant dream for the time being, the holiday let market has simply exploded.
The opportunity for savvy investors is huge but holiday home interest has grown so rapidly that products have been playing catch up – especially at the top end of the market.
An issue with current holiday let products for high net worth (HNW) clients is the restrictions around how the property is going to be used.
These typically fall into two strict categories to satisfy lender affordability concerns; those using the property as their personal holiday home and renting sporadically, or those primarily operating it as a commercial venture who’d like to stay there occasionally.
But for HNW clients looking to purchase high value holiday homes, these restrictions don’t make much sense.
The pandemic has refocused the fact that HNW individuals are after flexibility.
They don’t want constrictive mortgage criteria that demands they let out the property for no more than a certain number of days a year.
As such, we’d love to see a residential product whereby HNW clients have carte blanche as to how they use the property – their income and wealth structure being more than large enough to sate any affordability worries the lender may have.
It would be aimed at those with a vast wealth profile who want the flexibility to buy a second home and use it as they see fit.
Loans would be for mortgages over £1m and ideally on an exclusively interest-only basis as the property is not their primary residence.
Howard Reuben, owner of HD Consultants
Our core business is in the buy–to-let sector and our clients range from first–time buyers and first–time landlords, through to the experienced portfolio property investors with hundreds of properties.
If we could develop one product, it would be a combination of all of the best features of varying existing products but wrapped up in to one proposition.
With such a focus on tax planning and how much landlord tax has been hit over the last six years, flexible and variable features would be useful for our proactive and entrepreneurial property investor clients.
I would love to see a feature which would enable family members to be added to a flexible, offset, portfolio buy-to-let product. This would also enable succession planning and management or mitigation of the inheritance tax issue.
For the portfolio landlords who can deposit rents straight into the offset savings account, this would reduce the mortgage interest charged as the portfolio balances would offset against each other.
In one stroke we have a product that has helped with tax, cashflow and future estate protection.
The flexibility would also be there to enable quick drawdowns to buy other properties without the need for further fees and time constraints.
Ultimately the product would be a ‘self-lending’ one. A low cost, low tax planning vehicle, enabling some kind of retaliation to the George Osborne devastation that was imposed some years ago.
With a growing rental population and a desire in the property investor industry to support that, we still need the holy grail of all mortgage arrangements.
House prices jump 8.6 per cent in February – ONS
This was compared to a price growth of eight per cent in the year to January. On a monthly basis, house prices remained flat, suggesting a levelling off ahead of the original stamp duty holiday deadline.
The region to report the strongest rise in property prices was the North West, which saw increases of 11.9 per cent annually. London recorded the lowest annual growth at 4.6 per cent.
A preference for more space and larger properties continued to influence prices during the month.
Detached and terraced houses reported increases of 9.1 per cent and nine per cent to £383,088 and £204,418 respectively. This was followed by semi-detached houses, where prices rose 8.9 per cent annually to £239,307.
Flats and maisonettes saw a relatively low 6.7 per cent increase to £214,114.
Karen Noye, financial planning consultant at Quilter, said: “New housing data show that house prices may have started to level off with there being no change from January to February 2021 — but they’re still an eye watering 8.6 per cent higher than a year ago.
“These sky high prices continue to be at odds with the turbulent economic year just gone and are yet to take into account the likely uplift from the new 95 per cent mortgage guarantee scheme, which may hot up prices further.”
She added: “Once government giveaways and reliefs are rescinded a correction is likely. However, money remains cheap and as the country gets moving again, we may see a less sharp correction than originally predicted.”
Keep growth sustainable
Kevin Roberts, director of Legal & General Mortgage Club, said: “Demand for homes has been remarkable since the start of the year and this has contributed to the house price increases seen in recent months.
“It is important that the whole industry works together and with policymakers, to ensure this growth is sustainable. By this, we mean supply must be boosted to keep pace with demand, ensuring the prospect of homeownership is an affordable reality for all; and also that these new homes are designed and built in ways that supports our country’s net zero emissions targets.”
Aspen and Avamore complete unusual refurbishment deals
The six storey property in Moorgate, London comprised of offices which are undergoing refurbishment and a ground floor restaurant.
The client was coming to the end of their existing debt agreement which covered several properties and needed to finance the shortfall, so wanted to use the Moorgate property for a £5m refinance.
The case was introduced by Callum Taylor, director at Watts Commercial, who knew the case that was already in progress would not meet the required timescales. Taylor approached Aspen to make use of its rapid desktop product.
The lender used its remote signing policy and law firm Fieldfisher’s office drop-off to allow the client to sign and provide security documents.
The £620,000 deal was completed on a flat rate of 0.89 per cent with no exit fees on an 18-month term.
Jack Coombs, director at Aspen Bridging, said: “This deal was enabled by our confidence in our professional partners and our asset team, who visited the property themselves.
“Aspen completed as required for the client with minimum hassle and thus avoiding substantial valuation costs.”
Taylor added: “Aspen’s practical approach on valuations and their commercially minded legal team at Fieldfisher were stand out here.”
Avamore allows adjustable leverage for £758k deal
Avamore Capital has funded £758,046 towards a light refurbishment in Maidenhead by providing the loan at an adjusted rate of 69 per cent loan to gross development value (LTGDV).
The borrower wanted to convert a five-bedroom house back to its original form of two three-bedroom properties.
Avamore originally agreed to offer the loan at 65 per cent LTGDV with a rate of 8.5 per cent per annum.
The site was later down valued, but as the lender was familiar with the developers who previously worked at Cala Homes, it decided to provide the loan at the new adjusted leverage.
Although the deal was structured as a light refurbishment which incorporates a build facility, the site was awaiting a Letter of Lawful Development to confirm it had permission to be reconfigured back into its original form.
The site is currently recognised by the council as one property.
While the loan would usually be taken out as a bridge then converted to a refurbishment loan once permissions have been granted, Avamore provided the loan as a refurbishment as it believed the works would be approved.
However, the deal has been structured to reflect a bridge loan in case the permissions are not granted. Avamore worked with brokerage Commercial Financial Specialists on the deal.
Saleem Akram, director of Commercial Financial Specialists, said: “I was impressed with the whole process from start to finish, it was quick and effortless. Avamore were communicative with the client and me.
“There were a couple of issues along the way but Avamore’s proactive attitude ensured that they dealt with and overcame them quickly.”
Adam Butler, relationship manager at Avamore, added: “It was great pleasure to work with Saleem and the borrower on this unique deal.
“It really highlighted our core strength of being customer focused and ensuring that we continue to be adaptive which, in turn, resulted in us getting a strong deal structured.”
First 4 Bridging collaborates with Roma Finance for semi-exclusive loan
The product is available for residential and refinance purposes. It is offered up to 75 per cent loan to value (LTV) and rates begin from 0.65 per cent per month. It has a reduced arrangement fee of 1.85 per cent.
The loan has a term of up to 24 months and is available for standard bridging loans between £400,000 and £3m.
Private individuals, limited companies, special purchase vehicles and limited liability partnership borrowers will be eligible for the product. It will only be available through a select group of distribution partners.
Donna Wells (pictured), director at F4B, said: “This product is an excellent addition to Roma’s lending proposition and, as one of a limited number of packagers with access to it, we expect it to be a popular option for new and existing introducers and intermediary partners.”
Nick Jones, commercial director at Roma Finance, added: “We are always looking for new ways to ensure borrowers have options to best fit solutions while supporting partners at the same time.
“We use inclusion as a value for our business and as we see the need for bridging continue to increase, we are identifying areas where we can create extraordinary options.”
Jones said working with F4B was a “natural fit” for the product and added: “Their ability to identify the right product for the right customer is exceptional and we are delighted to have their experience and support as part of this distribution”.
MPowered Mortgages joins Paradigm panel
MPowered Mortgages, the buy-to-let arm of MQube, launched last month through TMA and Mortgage Advice Bureau (MAB).
It has since been added to the lender panels of Legal and General Mortgage Club and SimplyBiz with plans to roll out to other broker partners.
The lender uses artificial intelligence (AI) during its application process to pull applicant data from documents and external sources to avoid underwriting errors.
It offers mortgages for individual landlords, limited company and portfolio borrowers.
John Coffield, head of mortgages at Paradigm Mortgage Services, said: “The launch of a new lender is always exciting however some propositions also demand your attention because they are using cutting-edge technology and offering something new to the market.
“This is certainly the case with MPowered Mortgages and we’re very pleased to be one of the first distributors to be able to offer our member firms access to its range of flexible buy-to-let mortgages on its new lending platform.”
Emma Hollingworth (pictured), distribution director at MPowered Mortgages, added: “We’re delighted to be launching with Paradigm today and look forward to supporting Paradigm’s members.
“MPowered has been designed with brokers, not just for them, so we’re excited to work with Paradigm members to continue evolving the platform and make the mortgage application process even smoother for everyone involved.”
Q1 house price falls reversed with stamp duty holiday extension – Reallymoving
Following strong growth in the second half of 2020 the firm said prices were on a downward trend in the first three months of the year and showing signs of returning to more normal levels, but that has since been flipped.
Reallymoving records the prices buyers agree to pay for properties when they search for conveyancing quotes, which is typically 12 weeks before the sale completes.
According to this data, the average price agreed in March was £313,235, a 2.6 per cent drop on February.
This indicated a slowdown in activity as people who were agreeing on sales 12 weeks prior in December suspected they would not meet the original stamp duty holiday deadline, it said.
However, searches for conveyancing quotes doubled by the end of the month after the extension was announced, suggesting a resurgence in demand.
May drop, June bounce
According to information entered by site visitors, the firm predicts prices will drop 5.3 per cent month-on-month to £296,560 in May, based on the sentiment of buyers in February.
This will then rise by 2.8 per cent to £304,782 in June as buyers realised they were given a second chance to benefit from the tax break in March.
This suggests that the stamp duty holiday extension fuelled demand and saw buyers willing to pay more for their desired properties.
Rob Houghton, CEO of Reallymoving, said: “Agents and portals across the UK have been reporting a surge in buyer demand following the stamp duty extension announcement.
“Now through our analysis of conveyancing quote data, we’re seeing the first clear evidence that this activity has led buyers and sellers to agree deals at higher prices in March, which will become evident in Land Registry data in the early summer.”