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Fleet Mortgages: Lending prudence is key until we establish the ‘new normal’

by: Bob Young, chief executive officer of Fleet Mortgages
  • 13/07/2016
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Fleet Mortgages: Lending prudence is key until we establish the ‘new normal’
These are early days but it appears that (slowly at least) we are moving back towards some sort of governmental political stability with Theresa May to be installed today as the new Prime Minister.

What is going on within other political parties, notably Labour, is an altogether different story and one that we may have to wait a while to see some or any sort of resolution.

Unfortunately, when it comes to the economic ramifications of Brexit and how this might pan out for the mortgage and property markets I suspect we are some way away from the certainty we all crave. This being the case there are of course some important decisions to be made, particularly as a lender operating in the buy-to-let sector. In order to continue lending responsibly it’s both crucial that we, and our peer group, do not shy away from making those decisions.

This view, fuelled by an increased level of uncertainty, has undoubtedly led our thinking in this area and, from our perspective the need to be prudent rather than reckless is self-evident. Advisers will have noticed our move towards a more conservative approach to lending at higher LTV levels since the EU referendum result was announced. The reason(s) for this are clear – we do not wish to see borrowers potentially over-borrowing at a time when the direction of the property market is unknown.

Our view is that it is prudent – there’s that word again – to take such an approach until things become clearer or, in this case, we understand what the ‘new normal’ looks like. For what it’s worth, I tend to disagree with some analysts who are already calling this ‘credit crunch 2’ and suggesting the market is about to bomb, however until we understand more about the Brexit fall-out/negotiations/impact, we believe such a response is the right one.

I’ve previously said (many times) that any idiot can lend money badly – and recent history provides plenty of choice examples – but at Fleet Mortgages we make decisions in the round. By that I mean not only do we take the borrower’s situation into account but we’re constantly reviewing what the market is doing.

This may well be a short-term approach however at this time it’s simply too early to say. We remain 100% committed to both the buy-to-let sector and the intermediary community, we will keep on lending – indeed in June we received record levels of mortgage applications – we have broadened our criteria, and we will keep a watching brief on how the market responds and reacts. It is what you would expect and anticipate from a lender that is in this for the long term.

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