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Metro starts specialist lending expansion by easing BTL stress test – exclusive

  • 05/11/2020
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Metro starts specialist lending expansion by easing BTL stress test – exclusive
Metro Bank has begun its expansion into more specialist forms of mortgage lending by loosening its stress test for buy-to-let borrowers and increasing its maximum age for applicants.


In an exclusive interview with Mortgage Solutions, Metro Bank director of mortgage distribution Charles Morley, said the move was the start of a 12 to 18-month period of growth in the area, with several changes expected by the end of the year or soon after.

Morley said this would involve new product lines along with tweaks to current offerings.

However, it appears unlikely Metro will be venturing too far from owner occupier and buy-to-let offerings with areas such as bridging or development finance not being a key focus.

The first set of changes made include reducing the stress test rate on five-year buy-to-let (BTL) mortgages, from 5.5 per cent to 4.5 per cent.

And the maximum age for a BTL applicant at the end of their term has been increased from 80 to 85, which Metro said was to assist more borrowers who may want to continue using a BTL property to help with their retirement planning.


Product focus

“You’ll see a lot more products coming from Metro Bank not only this year but through 2021,” Morley said.

“And over the next 18-24 months I’d like to be seen as one of the leading if not the leading specialist lender in the UK.

“It’s about having a very strong criteria-based offering that appeals to a much wider set of customers and that’s the journey we’re going on.”

Morley noted that buy to let has been an important product area for the lender and it was looking to “make the offering more flexible than has been”.

And on the residential market he continued: “You will see us change criteria in the residential market – we’ve already reaffirmed in the last few weeks that we do look at impaired credit.

“We’ve always looked at impaired credit but its maybe been a hidden part of our offering that brokers weren’t necessarily aware of.”

He added: “There are parts of the marketplace that we don’t see as part of our future moving forward but I think that we are fundamentally a residential and buy-to-let lending institution and we will remain so, but we’ll be expanding the offering to a much wider breadth of criteria.

“We think it’s a natural progression.”


BDMs and distribution

As a result of the specialist expansion Metro will be growing its mortgage team.

It has already brought on one new business development manager (BDM) and will be adding another one along with other operational staff such as underwriters and telephone BDMs.

“Yes, we are looking to expand the team for what we want to do in the specialist sector,” Morley said.

“A number of those vacancies will start appearing in the marketplace this week, and that’s a really nice thing to be doing in the current environment.”

However, there is unlikely to be a significant shift in its distribution routes as Morley ruled out moving into the packager market, instead relying on existing partners.

“We have no plans to expand into the packager sector, we have a very wide distribution into the intermediary market,” Morley said.

“I do think we will see business grow – volumes will increase but it may be with different distributors who already use us but not as much as they potentially could.”

He added that there may be “one or two people we’ll bring on board we’re talking to at the moment, but otherwise think we have the majority of bases covered”.


Maintain core offering

Morley concluded by noting that maintaining service levels would be vital as the new proposition rolled-out, especially in the current high demand environment

“We’re already in joint borrower sole proprietor (JBSP), large loans and BTL – to me those are properly specialist sectors, we already operate in,” he said.

“What we do now we will continue to do, our core offering will remain, you will just see wider offering.

“As we expand our product range we are just taking our core values and continuing them,” he added.



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