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Lenders will lend on modular homes – Northview

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  • 12/05/2017
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Lenders will lend on modular homes – Northview
Fears that lenders will not provide mortgages on new construction types such as modular homes are unfounded, according to Northview Group.

Lenders also suggested that due to improved regulation the market and new entrants were far more stable and sustainable than they were pre-credit crunch.

Modern construction methods and modular homes have been highlighted within the government’s Housing White Paper as one way of helping to ease the housing crisis.

However concerns had been raised that lenders would not want to risk providing mortgages on these types of properties.

 

Healthy supply

Speaking at the MyHomeMove conference, Northview Group vice chairman of lending Keith Street (pictured) noted that lenders were not always the quickest to react, but that there would be sufficient funding.

“Lenders aren’t always on the cutting edge of technology to be fair,” he said.

“But lenders will come on board, [the process] won’t just require them, there will be insurers and the surveying community, but we have a very healthy mortgage supply market in the UK.

“It might not be the big players, it might be some of the regional players or someone specialist, but I don’t see a problem. If all of the constituent parts are there in terms of the builder guarantees and such then there will be finance available,” he added.

 

Strong and stable

Street was also asked about the sustainability of the market with so many new lenders having recently entered.

He noted there was “a lot of supply at the moment” with approximately 300 first and second charge lenders in the market.

However, despite some concerns this may be a case of over-supply, Street argued that this would enable niche borrowers to be served.

“We’re not serving everybody in the market. There are still mortgage prisoners out there,” he continued.

“Clearly we won’t go back to 2003-04 where people seemed to think they had a divine right to a mortgage, rather than they had to qualify for it, but I think there’s still reasonable head room in terms of the underserved at the moment.

“So that’s where some of the initiatives talking about modular building and perhaps some of the bigger non-served areas at the moment come in,” he added.

 

Regulatory praise

Legal and General director of housing partnerships Stephen Smith echoed Street’s views that newer lenders would service the niche areas.

And he also praised regulators for ensuring lenders entering the market were able to support their business plans.

“In 2009, when the Mortgage Market Review (MMR) was first mooted the government said it was going to intervene an awful lot upstream and it has done that by making it very difficult to get a mortgage license,” Smith said.

“If you talk to anybody who has launched a bank, it’s taken a long time to get through that FCA approval process and the FCA are right on your case about your business plan, its viability and that you’re not going to overcook it by throwing your underwriting book away.

“Sustainability is far greater and I think the people who’ve entered will have sustainable business models and see them through – but that’s got to be by looking at niches,” he added.

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