We are also likely to see the market driven by remortgage business this year, as fixed rates mature coupled with a slowdown in BTL purchases.
As the tax change solutions deployed by lenders settled-in and with the true impact of the mortgage interest rate changes themselves yet to be really seen, it was portfolio landlords who had more to cope with than most as minimum stress and new underwriting standards came into effect.
Many lenders in this sector have provided solutions to the new regulations – which is great news for the market, meaning there are still a range of options out there for landlords with more than four properties on their books.
These options have differed from lender to lender, introducing a layer of complexity.
Some have gone for a semi-automated approach, either building these in-house or outsourcing to a third party, while others have opted for a wholly manual solution.
Given the Prudential Regulation Authority’s requirements, I suspect the majority of portfolio applications will require some form of human intervention at some point in the process.
We are already seeing the changes impacting some lenders’ turnaround times, but this is an inevitable result and brokers have been patient and understanding of the reasons why things may take a little longer than we may be used to.
Brokers to be more important
We’ve also seen the criteria for portfolio landlords differ from lender to lender which again can make things a little more difficult for the broker and consumer alike.
We laid out four key criteria including a £30,000 minimum income, 75% maximum portfolio loan-to-value, 145% minimum rental coverage ratio (RCR) and 5.5% stress rate in order to simplify the choice up front.
The changes overall can feel confusing for borrowers, but it does mean that brokers will play a more important role than ever to provide clients with good quality advice and help them choose the best option to suit their individual needs.
We ran a national broker roadshow campaign to help intermediaries get to grip with the new changes and how they translate for clients and for their own businesses.
Like a number of other lenders, I’m sure there will be further enhancements on the horizon when it comes to portfolio.
Product transfers popular
On the remortgage front, we’re are already seeing a lively start to the year given that March 2018 is the second anniversary of the rush to beat the additional stamp duty charge for buy-to-let and second property purchases.
Product transfers are also proving popular for the right client, particularly as they can provide landlords with the opportunity to remain with their existing lender without the need to meet the new criteria.
I’m confident we’ll see an increased level of product transfer business across the market in 2018, and that there’s a lot of opportunity for brokers who can retain strong relationships with clients.