Go back less than a year to the first lockdown and that confidence had undoubtedly drained out of the market, particularly if you were a non-deposit taking lender reliant on the capital markets for your funding.
Take it from someone who knows.
With the capital markets effectively closed, and with lenders like ourselves in a situation where new business could only go so far through the pipes without a physical valuation, this was a period of great uncertainty.
Anyone in a similar position who says they were not concentrating on survival back then, is either lying or had their priorities all wrong.
However, we’re all acutely aware of how quickly the picture can change.
Now, eight or so months on – and even with the existing horrific Covid situation – we are incredibly lucky to be working in a sector which is open for business, and where a strong second half of 2020 has set us all up for a more positive outlook.
We should all be incredibly grateful for that and confidence has clearly grown fuelled by increased tenant demand, landlords’ greater appetite to add to portfolios and access to quality finance arrangements.
Not forgetting the boost the stamp duty holiday has provided.
Capital market confidence
If you want evidence of that greater confidence look no further than the capital markets and new lender entrants.
Those working in other sectors often wonder why there is not more infighting between lender competitors in the buy-to-let space.
It’s pointed out that this is a highly competitive market and they would anticipate far more ‘argy bargy’ so to speak.
I tend to answer that a) we have all known each other for a very long time which gives a mutual respect, and b) we’re essentially benefiting from that competition and what it engenders.
The truth of the matter is that this sector works best when many players are thriving, particularly when it comes to investment in residential mortgage back securitisations (RMBS) and, of course, the ability to secure funding to lend in the first place.
Funders want to see exit strategies played out to a successful conclusion.
Virtuous circle from funders
So when, for example, Keystone announces a £400m securitisation achieving a price of Sonia plus 95 bps for AAA notes, funders of lenders like Fleet gain confidence in our ability to securitise.
Thus we get a virtuous circle whereby greater interest is generated not just from existing funders but also those seeking the same opportunities.
And when, for example, you have new lenders like LendCo coming into the market or you hear your peer group talking like you about the greater levels of lending they plan to achieve in the year ahead, this all adds to an environment which can be beneficial to all stakeholders – not least advisers and their landlord clients.
In other words, why would you carp from the sidelines at competitors being successful when it drives you to achieve and also gives everyone around the sector far greater confidence in what you’re currently doing, and what you might do in the future?
It is a win-win.
So, many congratulations to Simon Knight at LendCo and David Whittaker and the team at Keystone.
Let’s hope that is the first of many such deals throughout the year, and let’s seek to make this an excellent year for everyone involved in buy to let.