KM: Several new lenders have entered buy to let recently, but with fairly cautious offerings. What would make you take notice of a new buy-to-let lender?
PH: There are currently 67 lenders set up to do buy to let, but of course not all are doing new lending.
While criteria might be conservative, some of the new lenders have been very aggressive on price, which is to the advantage of brokers and clients and I would expect that to increase.
It is a difficult market to come into, because clearly some players got their fingers very badly burned in the past and that’s why new players are rightly cautious.
The Mortgage Works (TMW) has the advantage of experience and new players don’t necessarily have that. I wouldn’t expect new buy-to-let lenders to come in all guns blazing, with high LTVs etc, and the CML recently warned against it.
KM: Buy-to-let products have increased 35% over the last three months, according to recent research, but is funding really easing?
PH: Funding is there for landlords that want to borrow, but times have changed and margins are higher for lenders. I don’t see the market growing significantly; if anything, I see a slight suppression.
Investors are unsure whether to invest. There is a confidence factor at work and they are worried about tenants’ ability to pay the rent.
However, there are a lot of positive factors to acquiring – demand is colossal and rents are at their highest. It’s a fantastic time to become a buy-to-let landlord, but it has a price.
KM: What innovations are TMW considering?
PH: We have some things on the drawing board, but we have not decided whether to go into them yet.
There are further things that we can do in the market, but the most significant step we have taken recently is to move back into lending on new build flats. We pulled out of this area in 2005, but have decided now is the time to return to it.
For those in the market, it’s a very significant move.
KM: Is the continuing rise of rents sustainable?
PH: Month on month, we are seeing quite small increases in rent, but it’s a classic role of supply and demand, and there is simply not enough supply at the moment.
I’m not sure there is a ceiling to rents.
KM: How did it feel to win the Lifetime Achievement Award at this year’s British Mortgage Awards?
PH: It was a very surreal and quite fantastic moment. Not for one second did I think it would be me.
It’s something I’m very proud to be given, as the award is from your peers. I can’t think of a greater accolade.
The reaction has been phenomenal and I have been swamped with good will messages. It has also cost me a fortune taking my family out – a bill I’m very happy to pay.
KM: What more do you want to do in the mortgage industry?
PH: Since the awards, three people have asked if I’m retiring and one worryingly thought I had.
But I’m still going to carry on flogging mortgages to intermediaries; it’s what I do.
What I would like to see is the continuing progress of the mortgage market. I would like to be there when we establish the new normal, whatever that is.
We can draw lessons from the past and numerous ideas are being explored, such as the discussions between lenders and housebuilders to help first-time buyers.
These will bear fruit and we will see things getting easier, but it won’t happen quickly.